Do You Carry The Wrong Credit Card?

credit card

Why did you choose your credit card? Was the plastic in your wallet picked for the right reasons? It’s a question that applies to literally millions of Canadians – 85 per cent of us carry a credit card, according to the Financial Consumer Agency of Canada. Not only that, but another 58 per cent report double timing their credit, and pack more than one.

While it’s no surprise consumers depend on their plastic (as perhaps painfully illustrated by Monday’s nationwide Visa outage), the question remains: could your card be doing more for you?

When in Doubt, Money Talks

A recent consumer study conducted by RateSupermarket.ca found that when it comes to selecting credit cards, consumers are after a payoff, far preferring cards offering rewards instead of low interest options. A full 67 per cent said a high rate or reward return was the most important factor when picking their credit card. 26.4 per cent said that a low interest rate was the most attractive feature, while only 5.5 per cent said they would consider a card based on a low balance transfer.

Cash is the Clear Winner

Of those rewards lovers, 61.5 per cent said that they prefered a card with cash back options on everyday purchases like gas and groceries (after all – what’s better than perks on things you need to buy anyway?).

Twenty two per cent of poll takers said travel rewards like flight discounts, VIP access and concierge services were their top choice. Specialty rewards, like retailer discounts and freebies, came in at 14.3 per cent.

Why Rewards Shouldn’t Always Be Your Top Choice

While it’s plain to see Canadians love their freebies and perks, the truth is some consumers are better off without them. If you’re guilty of common credit card sins like carrying a balance, paying only your minimum payments, or indulging in cash advances, using the wrong card could find you in a heap of debt – fast. For these consumers, a low interest card can be a better bet for paying down lingering balances, and taking control of credit.  They may lack the instant gratification of a rewards card, but the long term rewards of being debt free offer far more bang than a rewards buck here and there.

How Balance Transfers Can Help

For those seeking refuge from a deadly credit debt cycle, cards with balance transfer features can be heaven sent. These cards feature a special super-low interest rate for those who transfer their existing balances from other cards – often, these interest breaks are as low as 0.99%! While this special rate is only around for a limited time for new customers (and applies only to transferred balances – new purchases will be charged at the full interest rate!), that gives the cardholder a real shot at paying down their debt without all that pesky interest – and it can make all the difference.

Some Options to Consider

If you had the chance to switch to a better card… would you? What if the deal was sweetened with FREE money? Right now, RateSupermarket is giving away a free $100 gift card to those who qualify for one of three featured Scotiabank credit cards. Each card includes some fantastic features, depending on your credit needs: pick from a cash back rewards card, low interest / balance transfer card, or travel rewards. To apply, and get your free gift card (from your choice of four retailers), click this link:

Comments

  1. I hadn’t given this much thought in the past…thanks for this insight, you have me thinking if my credit card is giving me the biggest bang for my buck.

    • Every so often we gotta review our credit cards and accounts to see whether they offer us the best we can get. Changes happen frequently, and only time the creditors update us is when they need something. Thanks for stopping by.

  2. I got my most used cards for cash back rewards. The others were for balance transfers. Each has or had a purpose. Now I only use my cash back cards.
    Grayson @ Debt Roundup recently posted..The Reality of Family Debt and How To Manage Your Way OutMy Profile

  3. I don’t see ever needing a low interest rate as I intend to never carry a balance, so rewards are more important to me. 5.4 % is an awesome rate though. I think my lowest is around 12%, but shouldn’t matter at this point.
    Kim@Eyesonthedollar recently posted..Reformed Spenders Adjust to Life on a BudgetMy Profile

    • I don’t chase rewards – just not my thing.
      I’m a huge believer that reward cards are set up in place so you spend more.
      Maybe cash back CC are better in USA, but I don’t find them that attractive in Canada.

  4. Usually, cash back cards give a lower rate of return than something like travel cards. At least around here. Rewards are great if you can pay down your card each month and stay on top of it, but if you are lining the banks’ pockets with cash from interest, your not really getting a reward!
    Tushar @ Everything Finance recently posted..Filing Taxes – Mortgage Insurance Premium Tax Deduction Revived but Set to Expire at the End of This YearMy Profile

  5. Love my cash back CC :)

    Mark
    My Own Advisor recently posted..If disability insurance is good enough for RGIII then it might be for you and meMy Profile

  6. We use a credit card for all of our purchases for the rewards only BUT we pay them in full each month. There hasn’t been a lick of interest paid to any credit card we own, ever. Now with the Target Redcard hitting the scenes shortly that’s another card to ponder 5% discount is pretty good….but do I really want ANOTHER card in my wallet.Time will tell…. but for someone who doesn’t pay the balance in full each month, really there are no “rewards” but some fail to see this.
    Canadianbudgetbinder recently posted..Financial Advisors: 101~Get The Inside Scoop!My Profile

  7. Here’s an interactive tool that can help you compare features and find the credit card that best suits your needs: http://bit.ly/qb6SWM

  8. I am a credit card junkie but I never pay interest and am addicted to rewards! Rewards are quite a bit higher in the U.S. though, from what I’ve heard. There is nothing wrong with sticking to cash though if it works better for you =)
    Holly@ClubThrifty recently posted..VIP Club Roundup – 17th EditionMy Profile

  9. Every time I see one of these posts, I’m reminded that yes, I STILL have not gotten around to picking up a cash-back credit card to use for our groceries and bills. :S

    I have two cards, one for using on items that I have money saved up for in the bank (eg. clothes, hair cuts, etc) and one with a low limit for online-only purchases but I don’t put a lot of thought into maximizing rewards. But I keep meaning to…
    CF recently posted..Updates: Jan 24 – Feb 2My Profile

  10. I am one of the 65% who chose credit cards for the rewards, rather than on low interest rate. Thanks for this post, it made me realize I should prioritize on being debt free rather than taking rewards.