I’ve had a credit card since I turned 18 and landed my first co-op job in school. I remember getting one was my #1 priority after getting a job and proving I had an income, and I signed up for the only one my bank would give me: a $500 student card. I still remember my first purchase with that card: a pair of rubber boots. Living in wet Halifax weather, having waterproof footwear was a high priority, even if I didn’t have a way to pay it off. I swiped for that purchase, but fortunately I had a rudimentary knowledge of credit cards and I never carried a significant balance on that card or any other.
My First “Adult” Credit Card
After graduating (and before my personal finance awakening) I decided to get a “grown up” card with a higher limit. Knowing next to nothing about credit cards, I chose one from my primary bank with a low interest rate and no monthly fees. Since I didn’t have an emergency fund or a line of credit, a low interest credit card seemed like a good idea. I’ve kept this card ever since. It’s served me well, but it wasn’t until a recent visit to the Ratehub.ca headquarters in January that my eyes were opened to how stupid I’ve been with my credit card all these years.
I’ve always known that I haven’t been taking advantage of the rewards offered by certain credit cards and that I’ve been missing out on cash back or free travel, but I wasn’t aware just how much I was missing out on until I tried out Ratehub.ca’s new credit card comparison tool. This is a pretty cool tool that analyses your spending habits and credit card preferences and suggests cards that will get you the most bang for your buck. I took a look at my suggestions and was dismayed to see that my card wasn’t even in the running:
So I think it’s time to start taking advantage of some of the rewards programs out there, which means I’m going to have to spend some time digging into Ratehub.ca’s database and figure out exactly which card I should choose. But there are so many choices! This sounds like a good February project. Maybe once I have a rewards card I’ll finally feel like I’ve graduated from “beginner” to “intermediate” in the personal finance world, since using credit cards to get rewards is what all of the big kids do.
A Note About Rewards Cards and Credit Card Debt
Rewards cards are only worth it if you have a stellar track record of paying off your credit card every single month. Most of these cards carry a high-interest rate and many of them have a steep annual fee. If you carry a balance on your card, even a small one and even for a short period of time, you’ll probably end up paying more in interest than you’ll reap in rewards.
Myself, I’m not awesome at paying off my credit card. I usually do a pretty good job, but there have definitely been months when I’ve been dinged with interest charges because I gave in to temptation and overspent without a plan to pay it off. I read this finance brokerage answer for how to apply for bad credit car loans and it was pretty enlightening in terms of how various things affect your future credit. Because of this, I’ll be extremely wary about how I use whatever new card I get. I don’t want to go swiping my card for everything in an effort to get points, and then end up screwed with a credit card bill I can’t pay.
I suggest you be honest with yourself before signing up for a rewards card. If you can’t use it responsibly, don’t use it.
Ok, done with the doom and gloom. Tell me, which credit card do you have?