Selecting a Card

Why do you need a credit card in the first place?

Credit cards have become part of Canadian lifestyle. Not surprisingly, people find it more useful than ever to have a card or two at their disposal. Plastic has been popular for many years and for many reasons, namely simplicity, safety, and financial strategy.

Simplicity:
Credit cards can help you manage finances, control expenses, and purchase goods without having to carry a lot of cash. And, with the prevalence of mail, phone, and online purchasing, credit cards have made the entire process safer, easier and quicker. Read Self–Defense 101.

Credit cards are also a good source of identification and can be used for reservations, out-of-town purchases, or rentals. And, when traveling, credit cards often yield a better rate of exchange than buying local currency.

Safety:
Unlike cash, if your credit card is lost or stolen, you're usually protected from unauthorized purchases. Some cards also allow you to dispute purchases that don't meet the terms of sale. Read about MasterCard's Zero Liability protection.

Strategy:
Credit cards offer a great way to build your personal credit history. Generally they are the first source of credit you receive and, many years down the road, your responsible use of a credit card might be the deciding factor in a mortgage or personal loan application. With a little diligence, it's easy to keep one or more credit cards in good standing. If you can do it, you're on the road to establishing a good credit history that you'll never regret.

Review Before Making Your Choice

Currently there are more than 70 individual banks operating in Canada that issue credit cards. Given the variety of choices, you might feel a little overwhelmed.

Instead of randomly choosing a card, take a minute to train your eye. It's easy to find the credit card features that you need and want, while also weeding out those you don't. Simply have an idea of what you're looking for, and grab a pen.

Write down all of the features you need (perhaps a low annual fee), followed by all of the features you want (grocery or travel "points", for example). Then, with all of the options in front of you, match each card against your list. Hold on to those that meet your needs and discard the rest.

Use this list of credit card terms to help you write your list:

  • Annual fees are charged by card issuers to cover various administrative fees and customer services. Though no-fee cards do exist, most cards have fees ranging from $15 to $150. They are generally billed in one lump sum on one bill.
    TIP: A rule of thumb is the more features you receive the higher your annual fees.
  • Ongoing Interest rates can be fixed or variable. With a fixed rate you'll pay a set amount of interest each year — a percentage of your purchase charges, stated up front with no surprises. A variable or "floating" interest rate mirrors the prime rate plus a stated percentage (e.g. prime + 3%).
    TIP: If you plan to carry a balance from month to month, a low Annual Percentage Rate should be high on your "needs" list.
  • Introductory rates, a 'thank you' of sorts for picking a specific card, gives new cardholders a preferable Annual Percentage Rate for a short period.
    TIP: Introductory rates don't last forever, so make sure you know what your actual Annual Percentage Rate will be once the introductory period is over.
  • Grace period is the time between your purchase date and the day interest charges begin to accumulate.
    TIP: Some cards offer grace periods of 25 days, others have none.
  • Other fees may be charged for late payments, cash advances, or administrative transactions.
    TIP: Most fees should be outlined on your application, make certain you read it.
  • Perks and benefits have become very popular with cardholders and usually offer "points", awarded for using your card toward travel, groceries, and other rewards.
    TIP: Weigh the benefits against the cost of the card and decide what's right for you.

Your list of surviving cards should be small. Once you make your final choice, be confident that you will face fewer hassles and enjoy your card more. Congratulations, you've made a wise choice.

Safeguards against scams and fraud

Although credit cards are generally safer to use than cash and cheques, their spending power makes them a logical target for pickpockets, scam artists, and fraud. There are many safeguards to protect you and your card.

We stand on guard...

Most credit cards offer some level of liability protection. With MasterCard Zero Liability, for example, you can have peace of mind in knowing you won't be responsible for unauthorized purchases made in a store, over the phone, or online*. If you suspect unauthorized activity on your account, stop using your card and contact your issuer immediately. Read more about Zero Liability*.

Guard your card

Beyond the protections provided by your card issuer, there are some common sense steps you can take to defend against card loss, card fraud, and unauthorized charges. Loss and theft usually occur in circumstances that can be avoided. So, learn to guard your card.

  • Never provide personal details that make you uncomfortable.
    TIP: If you access your credit card information online, never tell anyone your password. Similarly, if you use your card for cash withdrawals at an ATM, don't allow others to see your access code and don't write it down — memorize it.
  • Sign each new card and record your card number. Signing your card makes it more difficult to use. And, reporting a lost or stolen card is easier when you know the card number.
    TIP: When you're done with a card, cut it in pieces immediately so others can't use it, and contact the issuer to close your account.
  • Don't leave your credit cards lying around. Unfortunate as it may seem, credit cards are most often stolen in the workplace. And places such as cars, restaurants, or hotels are also popular with thieves.
    TIP: Keep your cards in your wallet or your purse, and keep them with you.
  • Report lost or stolen cards as soon as possible.
    TIP: Most fraudulent purchases are made in the hours immediately after a theft. While most phone and online sales are legitimate, some are not.

Familiarize yourself with some common scams:

  • Prizes and awards that require a deposit are occasionally a front for scams.
    TIP: Avoid prizes that require up-front credit card payments, or those that are available only by phone or online and can't be confirmed with a local store or well-known and reputable company.
  • Direct mail that asks you to dial a "900" number to win may set you up for a series of unauthorized payments.
    TIP: If you are given a prize and then offered an upgrade for a small charge, do not provide your credit card number unless you are completely certain with whom you're dealing. Often such unauthorized charges cannot be traced.
  • Charitable organizations usually represent a worthwhile cause or individuals needing assistance. Sadly, a few are scams.
    TIP: Do not provide donations by phone until you have verified that the charity is legitimate. If you would like to make a donation, request written material by mail, ask for a written guarantee, or simply educate yourself about the charity by doing some research.

It's easy to learn more about an organization:

  • Check their Web site for a feedback page where customers can offer complaints or praise
  • Check with the Canadian Council of Better Business Bureaus at http://www.bbb.org/canada/
  • Or, simply ask friends about online merchants and other organizations that they've dealt with in the past

If you're a MasterCard® credit card cardholder, you'll receive the benefit of Zero Liability in the event of the unauthorized use of your Canadian-issued MasterCard card. Zero Liability is provided under the following conditions:

Zero Liability does not apply to MasterCard cards issued: to an entity other than a natural person; primarily for business, commercial, or agricultural purposes; outside of Canada.