Credit cards are one of the most popular types of credit in Canada. They allow you to borrow money up to a preset credit limit, with the option to pay off your balance over time or in full each month. The main advantage of credit cards is their flexibility — you can use them for everyday purchases, emergencies, and even large expenditures.
Types of Credit Cards:
- Rewards Cards: Earn points, cash back, or miles with every purchase. These cards are ideal for those who want to get something back from their spending.
- Low-Interest Cards: These cards offer lower interest rates compared to standard credit cards, making them a good choice if you plan to carry a balance.
- Balance Transfer Cards: If you have high-interest debt on other cards, a balance transfer card lets you move that debt to a card with a lower rate, helping you pay it off more quickly.
How Credit Cards Affect Your Credit Score:
Your credit card utilization ratio and payment history have a significant impact on your credit score. By paying off your balances on time and keeping your utilization low, you can build a strong credit score.
