Credit cards: personalized tips

Paying the full balance on the due date is always the best way to take advantage of everything your credit card has to offer.

Isabelle Paradis | Contributor

Credit cards are commonplace, but we don't all use them in the same way. Read on to determine your credit card user profile, and get some tips, too! 

1. Careful 
You like being prepared for any situation, and hate being caught off guard. You have two or more cards, just in case ... You usually pay your balance in full, because you only spend when you have the money.

You'll need: a suitable limit and a good debt ratio 
When you apply for a loan, your financial institution will calculate all of your available credit, whether you've used it or not, to determine your debt ratio. You're better off not having too many credit cards; it could damage your credit rating, just as too high a credit limit would. Your limit should be established based on your actual, not potential, needs.

2. Budget-loving
You like to calculate everything. You have a budget and money set aside for unexpected expenses. Promotions and coupons make you very happy. You pay all your bills on time and have an excellent credit score. You have one or two credit cards. 

Calculate: annual fees and rewards
Many credit cards offer rewards or cashback. Some also offer insurance coverages, like travel insurance and even extended warranties for certain goods. Compare the annual fees on different cards and the advantages of each to determine which one really meets your needs. 

3. Impulsive 
Credit cards allow you to buy whatever you want, even if you don't always have the money in your account to pay for your impulse buys. When your credit card payment is due, you realize you aren't able to pay the full balance.

Consider: interest paid and your credit file 
Even if you make the minimum monthly required payment, or more, the interest is still calculated on the total amount of your purchases. As long as you haven't paid the full balance, the interest will continue to accumulate. Your credit rating will also be negatively affected if you don't make the minimum required payment or if the balance on your credit card is always close to the authorized limit. Before using your credit card, be sure to determine your actual needs and ability to pay your balance in full on the next payment date.  

4. Vulnerable 
You feel like you've lost control of your credit card, despite your best efforts! You have a budget and you try to stick to it, but your fridge gave out right when your car needed major repairs. Basically, it's one unexpected thing after another, and your credit card is the only way to get out of it.

Ask for: expert financial advice 
To cover unforeseen expenses without breaking the bank, don't hesitate to meet with an advisor. They can give you financing options that might be a better choice for you, based on your needs, like a lower-rate credit card, line of credit or specific financing to make a purchase. While you're at it, why not ask them to help you revise your budget, as well.

Credit cards are a convenient and secure payment option, and paying the full balance on the due date is always the best way to take advantage of everything they have to offer.

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