Card cards offer a convenient way to make purchases and earn rewards points – as long as they’re used responsibly. That means paying off your credit card balance in full each month.
Credit cards have been steadily growing in popularity for years in Canada. When it comes to paying for goods and services with plastic, we rank among the highest in the world. In 2012, cashless transactions totaled just over 9.9 billion – with credit cards making up 32% of those transactions and debit cards at 44%. (Source: CPSS – Red Book Dec 2013) This is compared to an average of 40 per cent for all card use worldwide in 2009.
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Prepaid cards have exploded in popularity in recent years as a substitute for cash. In 2011, the market was worth $850 million; in 2012, the market grew to an astonishing $3.3 billion. These convenient cards have taken off as an alternative to traditional credit cards – they’re perfect as a gift for travelling abroad or for your son or daughter going away to university. Unlike traditional credit cards, there’s no credit check required, and there aren’t any interest charges; they come pre-loaded with funds to make purchases and withdraw cash from ATMs.
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We constantly advocate the importance of using your credit card responsibly. That means only purchasing what you can afford and paying off your balance in full each month. With so many credit cards to choose from, for some cardholders it can make sense to have more than one credit card. For example, you can have a cash-back credit card for your everyday purchases and another for travel rewards.
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Don’t think credit card fraud can happen to you? Think again. A recent news story highlights the seriousness of credit card fraud. A man was recently arrested by the RCMP and charged in connection for allegedly using a stolen credit card to purchase thousands of dollars’ worth of home improvement products in Hamilton, Ontario.
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Move over CIBC, there’s a new top credit card issuer in town. TD Bank became the top dog when it acquired credit card receivables to the tune of $3.3 billion from CIBC’s Aerogold Visa portfolio, after loyalty rewards company Aimia jumped ship from CIBC to TD. TD Bank has been on a credit card buying spree since 2011, buying a whopping $17 billion in credit card assets.
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Bankers in the Great White North are less optimistic than our banking neighbours south of the border when it comes to credit card debt. A recent survey by analytics software firm FICO found that Canadian bankers are more concerned about credit card delinquencies than American bankers. With the household debt-to-income ratio at 162 per cent for the fourth quarter of 2014 in Canada, it should come as no surprise credit card debt is a major concern.
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