If you are a Canadian or live and work in Canada or just have a Canadian credit card, then this article is aimed at you. There is a big credit card incentive award war going on and its escalating, which means Canadians can benefit from intelligent research. What I have found to be quite “entertaining” is how we all micro-manage small purchases, such as comparing the price of cucumbers in the market and evaluate large purchases such as buying a house or a car, but we never consider researching the benefits and costs of holding a credit card.

With interest rates rising and debt levels starting to bounce back up, it is time to evaluate what you can get from your credit card. Before we start, a quick note about credit ratings. One of the factors that make up your credit rating is the age of the card. The older your credit card, the higher it impacts your rating. So, if you have a card for 10 years, and think about replacing it with a different one, a new one, don’t destroy the old one. Keep it for its added credit rating benefit. The credit card utilization ratio is based on the total balance of all your cards divided by the sum of the limit of each card. The credit utilization ratio is important when determining your applicability for large loans such as mortgages.

Another rule that you have to factor into any decision is what is your budget and how much will you spend on your credit card. Also, if you own more than one credit card, how do you balance out your expenses on each one, for instance, groceries and supplies, transport and communications, utilities, and travel. Each type of spending has a card that is better suited to pay. This means that you have to consider what benefits are being offered on each card and see how you can maximize your return through smart utilization.

Click here to compare credit cards.

There are two types of incentive that credit cards offer, they are cash back and loyalty rewards.

  • Cash back cards are the simplest to understand. They provide a percentage of return on every purchase made, where the percentage is set by the commodity being purchased or vendor being purchased from. In this instance, you will need to calculate your average annual spend and then work out how much your cash back incentive is in compassion between all the cards.
  • Loyalty rewards are harder to calculate since they offer you a “deal” that you wither get for free or a discount when reaching a certain level of points and is collected from a specific source. This means that you have to calculate what rewards interest you and whether they are “worth” you taking them.

There are also different kinds of rewards for different expenditures, for instance, the more affluent you are, the more likely you are to travel. Business class travel discounts, hotel discounts, and concierge services are all attractive to large spend card owners that travel a lot for business and pleasure. These same rewards are not particularly interesting to lower income levels who prefer a discount on gas and groceries. The reality of success is knowing where you are and what will improve your life.
Now let’s take a look at the credit card market in Canada.

Standard Income Cards

Scotiabank Gold American Express Card

This card has a plethora of travel based rewards that include discounts on many hotels, flights, cruises, vacation packages and car rentals. Card owners get access to airport lounges and concierge services. If you order this card before the 28th February 2018, you get an annual fee waiver that saves you $99 for the first year, and new cardholders will earn 25,000 bonus points (equivalent to $250 in cash) if you spend over $1,000 in the first 90 days.

  • This card adds a 19.99% annual interest on all purchases.
  • You need to have a minimum annual income of $12,000 and a credit score range of 650-749 (Good).

Scotiabank Scene Visa

This card is preferred by students since it comes with no annual fees and points perks for entertainment and culinary services such as Cineplex film tickets, Montana’s, Harvey’s, and Swiss Chalet restaurants. Points can also be processed through Fanxchange for concerts and sporting events. This is no-fee card has the highest earn ratio, but the points are focused on specific service providers.

  • This card adds a 19.99% annual interest on all purchases.
  • You need to have a minimum annual income of $12,000 and a credit score range of 650-749 (Good).

MBNA Platinum Plus Mastercard Credit Card

While this card is Platinum and provides Platinum rewards such as auto rental insurance and travel interruption insurance, it is the best card for managing your accumulated debt. This card has zero interest for the first year on any balances you transfer to the card within the first 90 days. This means you can plan your yearly debt without having to worry about interest payments. It also has no annual fee, which makes it a great card for debt handling.

  • The card adds a 19.99% annual interest on all purchases.
  • There is no minimum annual income required, and a credit score range of 650-749 (Good).

High Income Cards
BMO CashBack World Elite Mastercard

This card is a cashback giant but has a higher annual fee of $120. However, it comes with a 4% cash back rate on all purchases during the first 4months of use. After four months the cash-back rate drops to 1.5%. Since this card is aimed at the higher income bracket, it provides 24/7 BMO concierge services, 25% discount on some vehicle rentals, free roadside assistance, and travel medical insurance.

  • The card adds a 19.99% annual interest on all purchases.
  • You need to have a minimum annual income of $80,000 for individuals and $150,000 for households.
  • You will need an excellent credit score range of 750-900.

Card Holder Planning
By creating a clever mix of cards, you can maximize you spend costs and even enjoy interest-free debt repayments. Therefore, holding more than one credit card, and using each one for specific functions is important for the modern household.
One of the worst debts in the world is generated by credit cards. Misuse of credit cards is common, where cardholders are swayed to buy more and more goods and service by card, splitting the payment into monthly increments without checking their total monthly expenditure and how it matches their income. One of the reasons a lot of households go into extreme debt is by living on the premise that they will earn income constantly. Then when one of the household members is laid off or is ill, and their income drops or is needed to cover unexpected expenses, the debt they accrued through overspending bites back.

Tips for Credit Card usage
By following these five tips, you will never find yourself in debt.

    1. Create a monthly budget in excel. List every basic service and resource you need to “survive” this is your basic living overhead. Everything above it is an extra which you can afford if you prefer to spend that to save.
    2. Meter out your extra spending, don’t go over your monthly income limit. This means, factor in all monthly payments and add them to the overall expenditure of every month. This will set your budget within what you earn every month and will not lead you to be in debt.
    3. Buy only what you can afford in one payment. This means if you can afford to buy it in one cash payment, then buy it in one cash payment, don’t defer payments.
    4. Use each card only for targeted spend. This means to plan your expenditure by spend source, such as electricity, water, municipal taxes, food, transport, communications, education, entertainment, etc. Select a card for each spend group; it will help you monitor your monthly budget.
    5. Save, always put aside at least 10% of your income into a cash savings account and don’t touch that money.

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