The Smart Way to Use a Credit Card

We all know that when it comes to borrowing, it’s always smarter to tap into your home equity using things like a home equity loan or a HELOC instead of using high-interest credit cards. But in an ideal world, we also like to have that small piece of plastic tucked away for emergencies, or to use while we’re rebuilding our credit. Credit cards can be very helpful, but you can get even more out of the one you use if you know how to use it wisely. We’re not talking about making sure you pay your minimum balance every month, and other obvious ways to avoid the pitfalls of credit cards. While those are givens with any card, there are other ways you can get even more out of that card.
The first way is to use a credit card that is tied in with a major department store, such as Costco. The advantage of this is that you can set the budget for most of your household items and use your credit card for all or some of those – but only those. Using your card only at that store helps you set a budget, and it helps you stay on that budget much more than simply whipping out that card whenever you need it for gas, groceries, movie rentals, or all those other little odd and end things that come up every day. All those little things that, when a credit card is used unwisely, can quickly get you deep into debt. Keeping your spending, and your bills, all in one spot will help you track it more easily and will also make it easier for you to stay on budget.
Another advantage of using a credit card linked to a store card is that by doing so, you can actually put more money back into your budget – and the Costco card is a prime example of this. By using the Costco TrueEarnings American Express for every purchase, you actually get money back on every purchase. Every time you use that credit card to pay for your Costco purchases you’ll get a percentage of money back – which comes in the form of a cheque the following year. The more you spend, the more you get back. We’re not strictly promoting Costco here. There are a number of other Canadian stores that have these same types of savings, such as Shoppers Drug Mart and Zellers. Even if you don’t want to use one store’s specific credit card (say you want to use MasterCard rather than American Express,) you can still sign up for the store savings, and use your credit card separately.
Everyone knows that if you’re going to use a credit card, you have to use it wisely. But in addition to paying off your monthly balance and not overspending, there are other little tricks you can use to get even more out of that card. So you can stop using it so often, and leave that HELOC for your bigger borrowing needs.