When it comes to credit cards, many people don’t know about the difference between charging purchases on debit versus credit cards. One of the biggest misconceptions about charging your purchases on credit cards is that they only should be used for major purchases. While credit is essential for buying assets like a car or new home, understanding the advantages of using your credit card for everyday purchases, is essential to mastering your finances.
Using a debit card is essentially like an instant transfer of funds, from your bank account to the retailer you’re buying from. As soon as you swipe or tap your card, funds are taken from your account. With debit cards, you won’t receive a bill every month or pay interest on any purchases.
With credit cards, you will receive a credit limit or line of credit, which details how much you can spend before you ‘max-out.’ With Plastk, your credit limit depends on your security deposit. Unlike debit cards, your purchases are accumulated each payment period and are to be paid off every month. Although you’re only required to cover the minimum amount, failure to pay off your full balance by the due date will result in paying interest on the balance on your account. This also affects your credit score.
You’re probably wondering why you would use a credit card, if there is a risk you’ll have to pay more than you want to or be restricted by a credit limit?
Credit cards help to build a positive credit history.
Credit history is a record of your relationship with your credit card. This tracks how likely you are to pay money back, how reliable you are and your spending habits. When you pay back your balance each month, it helps to improve your credit score.
Credit scores help determine the loans and rates you pay, as well as can help you with car or home payments. Many landlords and banks look at credit scores to determine who is eligible to rent or buy a property. Credit scores are tools consumers can use to gain leverage on their purchases.
Applying for a secured credit card, like Plastk, allows you to easily build your credit score, by giving you a credit limit based on the amount you deposit. Paying your bills on time is essential to growing your credit score and lets the bank know you are a trustworthy client.
Get Rewarded for Buying
Plastk offers premium rewards for our members. This means your groceries, car payment and even new clothes, work for YOU. Every dollar you spend on your Plastk card = 1 point. These can be exchanged for gift cards, charitable donations, restaurants or even cash back!
Many other credit cards offer cash back or redeemable points for every purchase you make. However, Plastk is the only secured credit card in Canada that offers rewards for our members!
Protection Against Fraud
Unlike most debit cards, secured credit cards offer Zero Fraud Liability. This means your funds and information are protected in the instance your Plastk card is lost or stolen.
Curious about the other benefits of using a credit card? Check out some of our older blog posts or send a message to customer support! We’d love to tell you all about the Plastk advantage.
Disclaimer: The content provided on the Plastk Financial Inc. Blog is information to help Canadians become financially literate and learn about credit. Plastk is not responsible for building or ruining an individual's credit score or credit rating. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment, credit inquiries, and all other decisions should be made, as appropriate, only with guidance from a qualified professional.
