It’s Your Business: How to use your credit card responsibly

(NC) Credit cards allow you to make purchases or put down a security deposit on services. They are very effective and can certainly be extremely useful, provided they are used responsibly.

Here are some tips to help you make better use of your credit card.

Pay the balance on time. After making purchases, if the balance is paid in full before the statement due date, you will not be charged any interest. However, if the statement balance is not paid in full, you will be charged interest from the date of purchase.

Your credit card balance can be paid in a variety of ways: online, by phone, in person at a branch, by pre-authorized debit or by cheque. However, to avoid late payments, contact your credit card issuer to find out how long it takes to process payments using one of these methods. This information, which might also appear on your monthly statement, will let you know when to make your payment depending on the chosen method.

Make the minimum payment. Paying the balance in full is the best option if you can do so. If you cannot pay your credit card balance in full, pay at least the minimum required. However, you need to know that by paying only the minimum it will take longer to pay off the balance and you will pay more interest. Use the credit card payment calculator developed by the Financial Consumer Agency of Canada to compare your payment options.

Avoid cash advances on your card. When you withdraw funds using your credit card, interest charges apply immediately, that is, from the date you withdraw the funds until the date you make the repayment. This means that if you withdraw cash with your credit card, it is important to repay the entire amount even before you receive your statement.

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