Managing Credit

Credit is a financial tool that can help you reach your goals and provides financial flexibility. Explore our tips set out below for managing credit to learn how you can manage it responsibly, and find out how to control your credit so it doesn’t control you.

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Expand How can I manage my credit responsibly?

A good first step is to manage your money responsibly. Here are some practical tips you can follow:

  • Create a budget

    budget

    A budget is an itemized summary of estimated income and expenses for a given period.

    to manage your expenses and stick to it
  • Be realistic with your spending
  • Keep track of where you spend your money; saving copies of your receipts will help
  • Save up over time for large purchases
  • Try to pay off your balance

    Balance

    The total amount owed on a credit card account at a given time.

    in full by your next due date
Expand How do I borrow responsibly?

Borrowing responsibly means not taking on more debt than you can manage. Here are a few practical tips:

  • Use the 20/10 rule - Never borrow more than 20% of your annual income after taxes and make sure that your monthly payments never exceed 10% of your monthly net income.
  • Use your credit for planned purchases that fit into your monthly budget, and avoid making impulse buys for bargain-priced items. Monthly interest charges on outstanding credit card balances created from impulse buys should be taken into consideration.
  • It is not wise to finance purchases longer than the lifespan of the product you are buying. Financing a car over a long period is fine but everyday purchases should only be financed for short periods.
  • Avoid approaching or reaching your credit limit if you are unable to pay your outstanding balance in full each month. Not only will you save on monthly interest charges

    Monthly interest charge

    The monthly interest charge is the cost of borrowing money for the transactions charged to your credit card account in a given month.

    , you will be keeping credit available for when you need it the most (i.e., for an emergency repair or medical bill)
Expand Is there a responsible way to use credit to pay bills?

Paying responsibly means paying your bills consistently and on time. It is an essential part of building good credit. Here are a few practical tips when paying your CHOICE REWARDS® credit card account statement:

  • You can make payments by mail or electronic funds transfer (EFT)

    Electronic funds transfer (EFT)

    An electronic funds transfer is the process of transferring money electronically from one bank account directly to another bank account.

    . If you choose the mail, please allow 10 days for delivery. If you use EFT, you will need to set up a preauthorized debit payment from your bank account. In either case, please make sure you have sufficient funds in your bank account to cover your payments.
  • You can greatly reduce the amount of interest you pay simply by paying more than the total minimum monthly payment due. You can avoid interest altogether on purchases by paying your balance in full and on time each month.

Learn more about paying responsibly at Billing and Payments.

Expand What are the warning signs of financial stress?

Here are some warning signs of financial stress. If any of these apply to you, it may be time to take a fresh look at your financial situation or seek professional assistance:

  • You're consistently paying your bills late and making only the total minimum payment due each month
  • You find yourself surprised by the number of new purchases/transactions on your credit card account statement each month
  • You have reached or exceeded the credit limit on one or more of your credit card accounts
  • You need to work overtime, or even take on a second job, just to make your monthly debt payments
Expand How can I protect both my credit and myself?
Financial stress is often the result of the unexpected. Unpredictable events can be expensive and usually happen when you can least afford it. That is why credit card companies offer optional insurance protection, like CUETS Financial Balance Protection Insurance and Credit Alert ® Plus, to protect you should the unexpected occur.

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Expand How can I minimize credit card interest charges?
You can avoid paying interest on new purchases by paying the new balance

Balance

The total amount owed on a credit card account at a given time.

total by the total minimum payment due date. If you can not pay your new balance total in full, then paying more than the total minimum monthly payment can help reduce your interest costs. A credit card is a loan, so the lower your balance, the less interest you will pay. For cash advances

Cash advances

A transaction to access available cash from your credit card account. Cash advances can be made using your PIN at an ATM, over the counter at a bank or at a Western Union.

or balance transfers

Balance transfer

The transfer of available credit from your credit card account to pay off (or down) debt from another creditor. This is typically done between credit card accounts to take advantage of a lower annual interest rate offer or to consolidate debt to potentially lower monthly payments.

(which includes deposits to a chequing account) interest will accrue from the first day of the transaction.
Expand How can I minimize credit card over-limit fees?
Keeping track of your credit card account balance is critical to avoiding over-limit fees.

Over-limit fees

A fee that is charged whenever a balance goes over the credit limit for any reason.


Keep in mind that:
  • You can easily monitor your balance by reviewing your credit card account statement

    Account statement

    A printed or online description of all the activity on an account for a given period of time, including transactions, fees, interest charges, payments and credits.

    in Online Card Services or by phone.
  • In addition to your transactions, fees and interest can also add to your balance and can put you over your credit limit.
Expand How can I minimize credit card transaction fees?
Transaction fees

Transaction fees

A fee that may be charged for making certain types of transactions with your credit card account. For example, a transaction fee is often charged when you take a cash advance with your credit card account.

are usually based on the amount of the transaction. You may not be able to avoid them, but if you understand how they work, you can often pay less. Here are some basics:
  • Balance transfer fees—Occasionally, a credit card issuer may offer a promotional annual interest rate to transfer a balance to a creditor or make a deposit to a chequing account. However, a fee may apply to such transactions. Consider both the annual interest rate and the potential fee before you decide whether a balance transfer

    Balance transfer

    The transfer of available credit from your credit card account to pay off (or down) debt from another creditor. This is typically done between credit card accounts to take advantage of a lower annual interest rate offer or to consolidate debt to potentially lower monthly payments.

    and/or deposit

    Deposits

    The transfer of available credit from your credit card account to your personal chequing account.

    offer is right for you.
  • Cash advance fees—most credit card issuers charge a fee for cash advances

    Cash advances

    A transaction to access available cash from your credit card account. Cash advances can be made using your PIN at an ATM, over the counter at a bank or at a Western Union.

    , which can be accessed through an ATM, over the counter at a bank, or a Western Union® office. If your credit card issuer has a cap on the amount of cash advance fee that they will charge for cash advance transactions, you could save money by taking one large cash advance, rather than several small ones. Before taking a cash advance, factor in the amount of the fee to help you decide if the convenience is worth the cost. Also check to make sure you have the available credit as some credit card issuers including CUETS Financial not only have credit limits but also cash advance limits that restrict the amount of cash available.
  • Cash equivalent fees—"cash equivalents" are items that can be used as or changed into cash, like money orders, casino gaming chips, foreign currency and wire transfers. If you need to buy them, you will have to accept the fee, but be sure to account for the fee amount so you do not go over your credit limit. Cash equivalents are treated the same as cash advances.
Expand Are there ways to avoid all credit card fees?

Yes it is possible if you manage your credit card account properly. Using a credit card will always include the potential to pay fees. However, there are still ways to enjoy the convenience of your credit card account while minimizing your costs. Here are a few examples:

  • Annual fee—this can be avoided by simply choosing a credit card account with no annual fee. However, bear in mind that the annual interest rate may be higher for these types of credit cards accounts.
  • Balance inactive fee—if you do not plan on using your credit card account for more than a year, simply contact the credit card issuer and close the credit card account.
  • Statement copy fee—while your monthly credit card account statement is free, you will be charged for additional paper copy requests. This can be avoided by retaining copies of your historic account statements. You are also probably able to sign up for online banking and download copies of historical credit card account statements for free.
  • Returned payment fee—this can be easily avoided by making sure that you have enough money in your chequing account to cover your payments before you send them out.

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Expand What is a balance transfer?
The transfer of available credit from your credit card account to pay off (or down) debt from another creditor. This is typically done between credit card accounts to take advantage of a lower annual interest rate offer or to consolidate debt to potentially lower monthly payments.
Expand What are the benefits of balance transfers?
  • Reduce your borrowing costs by transferring debt that is subject to a higher annual interest rate to a lower annual interest rate which should reduce the amount of interest that you will pay
  • Potentially reduce the amount of time it will take to pay off your debt—by transferring higher annual interest rate balances to a lower annual interest rate

    Lower annual interest rate

    An annual interest rate that is lower than your standard annual interest rate and is valid only for certain transactions, for a limited period of time, also known as "Promotional Annual Interest Rate".

    , more of each payment you make will go towards reducing your debt rather than paying off interest.
  • Potentially make your finances easier to manage—by transferring all your balances to one account, you can keep your finances organized with everything you owe in one place. You also get the added benefit of one monthly payment.
Expand Is there a fee for balance transfers?

There is often a fee for transferring balances from one creditor to another. Check the specific terms and conditions of your credit card account.

Expand Can I transfer balances from more than one creditor?

Yes.

Expand How do I make a balance transfer?
Each credit card issuer generally has its own method of completing a balance transfer. Contact your credit card issuer to determine what their process is for balance transfers. At CUETS Financial, balance transfers can be requested online, by telephone and on most credit card account applications. Learn how at Balance transfers, deposits and cash advances.
Expand Is there a limit on the balance amount I can transfer?
Yes. The balance transfer cannot exceed the amount of available credit on your credit card account taking into account the balance transfer fee that will apply to the balance transfer transaction.

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Expand Why should I learn about credit card annual interest rates?
Understanding the annual interest rate(s) ("AIR(s)") on your credit card account can help improve your financial decisions. Understanding this critical feature of your credit card account can help you save money in the long run. You could save by assessing the current AIR(s) applicable to your credit card account and comparing them to AIR(s) for new offers and by avoiding actions that might trigger a default rate

Default rate

The AIR(s) which may be applied to your credit card account under certain circumstances, such as if you pay late, miss a payment, pay less than the full amount due by your payment due date, or allow your balance to exceed your credit limit. Also known as "Default AIR".

.
Expand Are there different AIRs for different transactions?
Yes. It is not unusual to have one AIR for purchases and another for cash transactions. Credit card issuers may also encourage card usage by offering promotional AIRs that give you a lower AIR on certain types of transactions for a set period of time. When the time is up, the AIR goes back to the standard AIR. Used wisely, these low promotional AIRs can save you money.
Expand How is monthly interest calculated?

The method for calculating monthly interest may vary by credit card issuer and will be disclosed in the account agreement

Account agreement

Terms and conditions for the use of a credit card and the repayment of debt between the borrower and the lending institution.

for the credit card account.

For some credit card issuers, monthly interest on a credit card account balance is determined using a daily compounded interest calculation. Using such method, each portion of the daily balance that is subject to an AIR is multiplied by the daily interest rate (annual interest rate divided by 365) that is applicable to such portion. The following day's interest calculation will be based on that day's balance plus accrued interest. This calculation is performed for each day of a credit card account's statement period.

Statement period

The number of days between the last statement date and the current statement date as determined by the credit card issuer. The number of days in the statement period may vary for several reasons (such as holidays, weekends and different number of days in each month) but it will typically be between 28 and 33 days.

Expand How is my monthly balance calculated?

The method for calculating the monthly balance on a credit card account may vary by credit card issuer and will be disclosed in the account agreement for the credit card account.

Typically, the balance will be comprised of the transaction amounts charged to your credit card account during the statement period, accrued interest, fees and past due amounts.