Frequently Asked Questions on Canadian Credit Cards

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Credit cards can be very useful tools. But just like any tool, you need to read and understand the instructions before you use it. That’s why we’ve compiled the top 10 credit card questions here, so you’ll know how to use a credit card to your best advantage.

1. What’s the difference between secured credit cards and unsecured credit cards?

Secured credit cards are usually given to those with bad or no credit history. A deposit is made, say $500, which gives the customer a $500 limit. The customer isn’t allowed to spend more than the amount of the deposit. As the deposit decreases, so does the amount the customer is allowed to “charge”. That’s why these cards are sometimes called prepaid credit cards, or bad credit credit cards.

An unsecured credit card is granted to those with a good credit record, because they have a history of paying their bills on time.

Capital One Canada - has a good number of credit cards that are really popular. Listed Below

Here is a easy Guaranteed MasterCard from Peoples Trust (MasterCard) - Canada

2. How are my credit card finance charges calculated?

This is something you need to check out before you apply for a credit card. There are three basic ways finance charges are calculated, and they range from favoring you to favoring them. That’s why you need to know what method they use.

The first method is the Adjusted Balance method, where the balance on your previous statement is added to any charges. Then any payments you’ve made are subtracted, and the result is multiplied by the interest rate. This method is the most favorable for you.

The second method works out fairly even. It’s called the Average Daily Balance method, with charges and payments being added and subtracted as they occur. Then, at the end of the statement period, these charges are averaged, with that average being multiplied by the interest rate.

The other method, which will cost you the most, is called the Previous Balance method. The balance on the previous statement is first multiplied by the interest rate, then your charges and payments are calculated. With this method, in effect, you’re paying interest on the same amount twice.

3. Can I get a credit card for business use?

Business credit cards in Canada are becoming very popular these days. They’re a great help to the accounting department because the monthly statements can be itemized, so they know who spent how much on what.

4. My credit card has been stolen – what should I do?

Stealing credit cards is a huge business these days. Credit card fraud is at an all-time high, with identity theft at the source of most stolen credit cards. The first thing you need to do when you discover you don’t have your card is call your credit card company. They’ll immediately cancel your card so no one else can use it.

Next, you’ll need to get a copy of your credit report. If you’ve acted quickly, there probably won’t be any changes on it. But if it’s taken a while to realize your credit card is gone, then your identity may have already been stolen, with the criminal making charges in your name.

Identity thieves may also put in a change of address to the credit card company, so you won’t know they’re running up your bill. That’s why it’s a good idea to make use of a credit monitoring service, so you can be notified immediately of any changes on your credit report.

5. What’s a balance transfer?

A balance transfer is used as an advertising tool by credit card companies. To persuade you to use their credit card, they’ll offer to pay off any existing cards you have, and add the balance to a new card with their company.

Visa, MasterCard, and American Express, the big three of credit card companies, are constantly competing for your business by offeringbalance transfers at reduced interest rates.

6. What’s a smart card?

Smart cards are becoming very popular these days, mostly because of their security features. They also allow credit card companies to be more versatile in their service to you.

Smart cards have tiny microchips embedded in them. These chips hold much more information than the black stripe on the back of most credit cards. Eventually, your credit card, debit card, ATM card, and check card will all be consolidated into one smart card.

7. What are pre-approved credit cards?

This is another method credit card companies use to get your business. They get a list from a CRA (credit reporting agency), or credit bureau, of people who have good credit records and favorable payment histories.

These people have a history of paying their debts, so they become prime targets for pre-approved credit card offers. In effect, that’s exactly what the credit card company’s done – they know you’ll pay, so they’ve already approved your application.

And to further entice you, they’ll usually offer you a low interest credit card. But watch that interest rate – it could go back up within a short period of time! We recommend American Express Canada and MBNA Canada

8. Do credit cards have hidden costs?

Generally, credit cards don’t have hidden costs. What they do have is extra charges, such as application fees, annual fees or late fees. Although these fees aren’t hidden, you need to read the entire “Terms & Conditions” that comes with your credit card – all the fine print – to be aware of these charges.

9. Can I get a credit card if I’m under 18?

You can’t legally have a credit card in your name if you’re under 18, but there are other ways to get one. You can get a prepaid credit card, or a secured credit card. Or you can get a parent or legal guardian to get a credit card on their account, with your name on it. That’s a great way to start building a good credit record.

If you’re a student, 18 or over, you can get a Canadian student credit card . That’s also a good way to start working towards establishing a positive financial picture. If you are a resident of the USA you can get a student credit card here.

10. What’s the best credit card to apply for?

There are many different Canadian credit cards, all with their own unique features. You’ll need to check out all the online credit card offers to find the one that suits you best.

A few examples of credit cards available online are MBNA Canadian Mastercard , Capital One Visa, Chase Visa, Chase MasterCard, Citibank Visa and Citibank MasterCard. There’s also the American Express credit card. And that’s really only the beginning of a long list. Get online and check them out!

In Conclusion

Credit cards are designed to make your life more convenient. If you use them properly, you can build a solid financial picture that’ll put you in great shape when you apply for a home mortgage.

Your credit history is important, and it can really affect your life, negatively or positively, depending on how you’ve managed your credit card. So use your credit card wisely.

And don’t forget to check out the Internet for all kinds of instant approval credit cards. Charge!

Credit Cards for Canadians - American Express offers CapitalOne  Canada - Credit Cards with Rewards

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