Money and finances.Debit and Credit Cards in Canada (2 of 2)

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Continuing with what we saw last week, let´s talk about debit and credit cards.

When DEBIT is the Best Option:

• When the vendor o the other part needs the money inmediately. It is the fasted method of payment 
• When you want to control the amount of money you spend. You can use your card as much as you want, but only up the amount you have in your account. This way, you won´t have to pay interest for purchases made in the heat of the moment. 
• When you want the best exchange rate for a foreign currency. If you are planning a trip outside your country, you can exchange some money but the best way to save the fees the bank usually charges is to withdraval money from the ATM.

Source: www.mybudget360.com

When CREDIT is the best Option:

Credit cards are not for people with hard time managing their money. But sometimes, they can be a good election because you are usually more protected from identify theft, and disputes are resolved quickly without you having to pay to get your money back.

Situations to use credit over debit:

1.-Improve one´s credit rating. If you want to build your credit history, you should use your credit card. Debit card transactions are not usually reported to the major reporting agencies 

You will need your credit history for a lot of things you wouldn´t even think: i.e. get a monthly plan with a telephone company, ... so your strategy with your  credit card should be to make small purchases regularly and pay them off immediately. This shows the institution that gave you the card that you can responsibly pay back your credit balances

In Canada, having a strong credit history is really important — it can make it much easier to make important financial transactions in the future, specially for:

• Getting a mortgage for a house.
• Getting a loan for personal expenses.
• Getting good deals on new credit cards.

2.-Online purchases: It is much harder to get a refund using a debit card than if it is with a credit card

3.- Renting a car. Most major credit cards offer an auto rental collision damage waiver. In addition, several major car rental companies do not accept debit cards as a form of payment

4.- Travel related purchases.You may need a credit card when you make a travel reservation.  And some companies, give you insurance when you book a trip with your credit card.

5.- Rewards. Some credits cards give you points/cashback when you pay with them, and you can get items, shopping cards, miles to travel...  

If you want more information about cards and montly payments, visit: Credit card payment calculator tool

Think which is the best option for you and be careful with your credit!