A credit card is a financial tool that lets you borrow money from a lender (usually a bank) to make purchases, up to a set limit. You agree to pay back what you spend, and if you don’t pay it in full by the due date, you’ll be charged interest.
Unlike a debit card, a credit card doesn’t draw from your bank account directly, it uses borrowed money that belongs to the bank or financial institution that issues the card.
Here’s what happens when you use a credit card:
Pros
Cons
Q: What happens if I only pay the minimum?
A: You’ll be charged interest on the remaining balance, and it’ll take much longer to pay off your debt.
Q: Can I use a credit card to build credit?
A: Yes — regular, on-time payments and low utilization help improve your credit score.
Q: What’s a typical interest rate?
A: Most Canadian credit cards charge 19–22% APR on unpaid balances. Some cards offer lower rates or 0% promotions.
Credit card interest is the cost of borrowing money when you don’t pay off your full balance by the due date. It’s typically expressed as an Annual Percentage Rate (APR) and can vary by card type, issuer, or transaction.
Learn MoreA minimum payment is the smallest amount you must pay on your credit card by the due date to keep your account in good standing. It prevents late fees and credit damage, but leaves interest charges on the rest of your balance.
Learn MoreKnowing how to use credit cards wisely can save you money, boost your financial health, and make the banks work for you, instead of the other way around.
Learn MoreCredit utilization is the percentage of your available credit that you're currently using. It’s a key factor in your credit score, and one of the easiest things you can improve quickly in order to increase your credit score.
Learn MoreA credit score is a three-digit number that represents your creditworthiness, or how likely you are to repay borrowed money. In Canada, credit scores typically range from 300 to 900. The higher your score, the better your credit profile looks to lenders.
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