10 Credit Card Objections ‒ Overruled

10 Credit Card Objections – Overruled

When's the last time you saw a positive representation of credit cards?

They're often associated with crippling debt and overspending, right? A teenager goes on a shopping spree with their parents' credit card, or Gail Vaz-Oxlade has to save yet another overspender from their credit card debt.

Even Canadian best selling personal finance book Wealthing Like Rabbits has nothing but negative things to say about credit cards, likening them to cigarettes being pushed on our children.

While overspending can happen (and should be avoided at all costs), there's a lot of good things to say about credit cards too.

There's only one real antidote to all the bad that credit cards can do – responsible spending. If you have this skill, then you've successfully defused the credit card debt bomb.

So let's look at 10 credit card myths, fears, and concerns and see if they hold any water.

And we also check out:

Common credit card objections

First, let's look at 10 common fears and criticisms about credit cards.

1. Credit card use promotes irresponsible spending habits

Because credit cards let you borrow money, you'll spend beyond your means and go into debt.

Our answer

Only if you look at a credit card as free money – which it isn't.

As long as you realize you're spending YOUR money, credit cards actually help you track spending habits better by:

  • emphasizing how much you spend within a category,
  • adding an extra step to the purchase process (paying it off), and
  • having a baked-in spending limit.

2. You should only have one credit card

Opening new credit cards negatively affects your credit score, plus it makes it harder to track your spending.

Our answer

Opening a new credit card only affects your credit score a little bit, it really isn't something to worry about. And it has an easy fix – time and responsible use.

Plus having more than one credit card opens up great stacking opportunities.

Take the for example, which lets you choose up to 3 different spending categories to earn 2% cash back in.

Since you'll only be earning 0.5% cash back on every other purchase you make, pair your Tangerine card with the – which gives you 1.25% cash back on ALL purchases.

Then all you have to do is use your Tangerine card on your spending categories and your SimplyCash on everything else. You'll never go below 1.25% cash back.

Both cards have no annual fee or income requirements, so they're perfect for everyone.

Get more info here:

3. Credit cards put you more at risk for fraud

Because you only need a credit card number, expiry date, and CVV to make purchases online, credit cards are common victims of fraudulent purchases.

Our answer

Though credit cards are more at risk online than debit cards, this isn't as big of a danger as you may think.

Because all your purchases have the extra step of being paid off, you're more aware of your spending.

Plus, the money isn't immediately taken from your account, giving you a window to catch any unauthorized purchases and alert your credit card company (though this won't work as well if you set up automatic payments).

This will give you breathing room before the fraud actually goes through, as well as giving you more of a chance to realize the fraud is happening.

After that, if it does happen (which isn't likely), it's just a matter of calling your credit card company and letting them know what's going on. And most of the time, they'll catch it before you do.

Related: Don't Gamble With Online Shopping: How To Get It Right The First Time

4. The annual fees are a waste of money

Credit cards have annual fees which can easily cost you hundreds of dollars per year, just to spend your own money.

Our answer

There are plenty of no fee credit cards available that give you great rewards, insurance, and perks.

But more than that, credit card rewards more than offset the fees most of the time. You just need to put enough purchases on them.

You were going to spend that money anyway, why not get rewards while you're at it?

For example, with the , you only need to spend $400 a month to offset the annual fee, assuming a typical spend breakdown without maximizing any categories.

Related: Best No Fee Cash Back Credit Cards In Canada

$400 is easy to achieve, even in just gas, groceries, and online purchases – the 3 categories you earn 1.5% cash back on. Every other purchase earns you 1%.

All for a super-low annual fee of $30.

Get more details here:

Even cards with annual fees exceeding $100 require only reasonable spending amounts to offset the annual fee.

Take for example the . It has a $120 annual fee, but you only need to spend $1,105 a month before you start to offset the cost.

Plus you can get a welcome bonus worth $400 and the first year is free.

Get more details here:

5. Credit score is hard to earn, easy to lose

It's easy to ruin your credit score and then you'll never be able to recover it.

Our answer

As long as you pay your balance on time every month, you have absolutely nothing to worry about.

Adopt a schedule where you pay off any balance on your card every night. Nothing will slip through the cracks and you'll have a better idea of your spending.

And there's no other way to build your credit score, which you need for a variety of things like:

  • loans,
  • cell phone plans, and sometimes even
  • renting an apartment.

6. You should never get a secured credit card

Secured credit cards look bad on your credit history.

Our answer

The #1 worse thing you can do to your credit score is not repaying your balance. If you've been less than responsible in the past, it can be hard to be accepted for any credit card. And if you can't get a new credit card, you can't start rebuilding your credit score.

This is where secured cards come in.

They're more lenient with acceptance because they require you to make an upfront payment that matches your credit limit. If you don't pay back what you borrow, they'll use this against what you owe.

If you're approved for this card and make your repayments on time, your credit score will improve. It's one of your only options for repairing your credit score.

Related: 12 Easy Ways To Increase Your Credit Score

So if you have a good credit score, there's no real reason to get this card since the rewards are significantly less or non-existent. But it'll be one of your only options with a poor credit score.

7. American Express cards can't be used anywhere

American Express isn't accepted at a lot of places, especially small local stores, so you shouldn't consider getting them.

Our answer

While it's true that Amex is accepted at fewer places than Mastercard and Visa, this has been improving recently.

Not to mention their perks and rewards can't be ignored. In fact, the took 1st place in 6 categories in our 2019 credit card rankings:

  • best travel credit card,
  • best rewards,
  • best flexible,
  • best overall,
  • best grocery, and
  • best American Express.

Get more info here:

Pro tip: for your favourite places that don't accept Amex, simply pair your Cobalt with a no fee Mastercard (if you love Costco) or Visa.

8. Carrying a balance helps your credit score

You should carry a balance and only pay off the minimum due every month.

Our answer

No, no, no, no!

This will not help your credit score. You should always pay off what you owe every month, or even as soon as you owe it.

This myth probably stems from the reality that you need to actually use your credit card in order to build your score. Just having a credit card and never charging anything to it won't help.

But please, pay off your credit card. As soon as you can.

9. You should only get credit cards from the bank you're with

It's best to be loyal to your bank.

Our answer

The only real benefit of staying with your bank is credit card payments will be more streamlined.

Other than that, you should consider all cards from all issuers in order to get one that'll work best for you and give you the most rewards.

Interested in what the best card for you is? Take our Rate Your Wallet quiz and find out in 3 minutes or less.

10. The best cards for an airline are the ones affiliated with it

An airline-affiliated card will always get the most points for their airline.

Our answer

This is the case in some instances, but not in others.

For example, we consider the to be the best Air Miles card – not only does it earn you 1 point for every $10 you spend, but you also get 15% discount off Air Miles flights in North America.

You can get more info here:

How To Earn And Redeem More Air Miles

But the story for Aeroplan is a bit different.

Our favourite Aeroplan card is the even though it isn't an Aeroplan-branded credit card. You'll earn Membership Rewards, which you're able to transfer to Aeroplan at a 1:1 ratio.

With this card, you'll get:

  • 3 points per dollar spent on americanexpress.ca/travel,
  • 2 points per dollar spent on gas, groceries, drugstores, and other travel, and
  • 1 point per dollar spent everywhere else.

This gives you 0.5 to 1.5 more points per dollar than the , the best Aeroplan-branded credit card on the market right now.

Related: Air Canada's Aeroplan Rewards: How To Earn Faster And Redeem Better

See for yourself:

The oft-overlooked credit card advantages

Believe it or not, credit cards do have their upsides.

Insurance packages

Unlike debit, credit cards more often than not come with a suite of purchase insurance, including things like:

  • extended warranty,
  • purchase protection, and
  • price protection.

And they can often include insurance to protect you while travelling too, such as

  • trip cancellation or interruption,
  • flight delay,
  • lost or stolen baggage, and
  • travel accident.

All you need to do is charge the purchase to your card and it'll qualify for the protection (assuming your card has it).

Related: A Comparison Of Canada's Biggest Health Insurance Companies

Easier online shopping

When I shopped online before I had a credit card, I would always run into sites that only accepted credit for payment. It was a frustrating experience that was somewhat improved by Paypal, but the payment giant is still not available on every site.

Having a credit card will make it so you can always get what you want, no matter what site it's on.

Building credit history

The only real way to build your credit score is by having and using your credit card.

If you want to be able to take out any type of loan in the future, it'll help to display responsible spending habits by having a paid-off credit card for a couple years beforehand.

Credit card perks and rewards

If you have a rewards credit card, you'll be getting a little something back for all the stuff you have to buy anyway. After all, it's quite hard to get by without spending money.

As long as you don't overspend in order to get more rewards, credit cards can be a great way to earn something back for every dollar you spend.

And what about the perks?

Some premium credit cards can make you feel like a VIP with things like:

  • concierge service,
  • roadside assistance, and
  • lounge access.

This isn't something your debit card can offer you, period.

And some disadvantages that shouldn't be overlooked

All this being said, credit cards are certainly not perfect. There are some major downsides that you should be aware of.

Absurdly high interest rates

Credit card interest rates are almost criminally high – the average of all cards in our database is 18.89%.

Keep in mind this is expressed as an Annual Percentage Rate (APR), so you'll be paying about 0.05% interest every day your payment is late after your grace period.

But this adds up – and fast. It's part of the reason why people who get stuck in credit card debt feel like they can't get out.

Balance transfers

If you ever find yourself in this situation, you do have options.

Maybe one of the best is to take advantage of a balance transfer offer – this will allow you to transfer your balance to a new card for a temporary low interest rate (sometimes even 0%).

This way you can focus on paying off your debt without gaining interest. Just make sure to have a plan to have it paid off before the promo interest rate ends, or you might be stuck paying a higher rate than before.

Revolving debt

Credit card debt is called "revolving" because it's not the same from month to month. Every month, you're expected to pay a minimum payment that's based on the amount you owe.

If you paid off some of your balance last month, your minimum payment will be less. If you failed to pay anything off and made more purchases, your minimum will be more.

This makes it hard to create a budget around your credit card repayments since it's not consistent. In contrast, paying back your car loan is always the same monthly price.

Revolving debt is confusing and therefore dangerous. Avoid it by not getting into debt on your credit card.

Do I need a credit card?

You certainly don't need one, but you might want one.

There are plenty of advantages to having a credit card or two (or three…) in your wallet. You just have to be careful and remember it isn't free money.

Pay off your credit card every night – this will give you a chance to reflect on your daily spending while also ensuring your cards stay paid off.

So what about you? How many credit cards do you have?

Have we debunked any credit card myths you believed were true?

Let us know in the comments.

Disclosure: Some links in this article may be affiliate links. We're letting you know because it's the right thing to do. Here’s a more detailed disclosure on how HTS makes money.

Editorial Disclaimer: The content here reflects the author's opinion alone, and is not endorsed or sponsored by a bank, credit card issuer, rewards program or other entity.

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