Tips on avoiding credit card debt

Use the right credit card, the right way, to save money and avoid credit card debt

OTTAWA, February 15, 2006 – The Financial Consumer Agency of Canada (FCAC) today issued a reminder to consumers about the importance of keeping credit card costs down by using credit cards that best suit their needs and financial situation. This coincides with FCAC’s release of its latest update of the powerful on-line Credit Card Interactive Tool, which helps consumers carry out detailed comparisons of credit cards.

“Many Canadians are looking at their finances and wondering where to cut costs,” said FCAC Commissioner Bill Knight. “No matter what your financial situation, it’s a good idea to make sure you’re using a credit card that suits your needs, and to avoid the ones that don’t work for you,” said Knight. “Our online tool can help you do this.”

FCAC’s on-line credit card comparison tool, updated with the latest information on the interest rates, rewards and features of nearly 200 credit cards available in Canada, is a useful resource for consumers trying to avoid excess credit card costs.

“Using a credit card that suits you, and using it wisely, can make a difference in your personal finances,” said Knight. “If you always pay your balance in full and have a reward program that gives you benefits, you can actually make money from your credit card."

Consumers who are unable to pay their balance in full can still take steps to minimize the amount of interest charged to them. "Many people don’t realize this, but if you think you will have trouble paying your whole balance by the due date, you should pay down whatever you can, as soon as you can,” said Knight. “Because of the way interest is calculated, reducing your daily balance earlier will save you interest charges.”

FCAC’s popular publication Credit Cards and You – which contains a wealth of information for consumers on how to use credit wisely – also contains the latest updates, along with tips on how to save money, how to protect yourself from credit card fraud and how to get the most from your credit card.

Here are some additional tips for saving money:

• If you can't pay off your entire balance every month, consider switching your balance to a low-rate credit card or a line of credit. These products usually carry a lower interest rate and save you money in the long run.

• Allow enough time for your payment to reach your credit card company. If you don't, you may end up making a late payment that could mean you will be paying more interest. This could also negatively affect your credit history.

• Take cash advances only when absolutely necessary.

• Check your statement and immediately report any discrepancy to your credit card company.

To access the Credit Card Interactive Tool and the online version of Credit Cards and You, visit the Agency’s Web site at: www.fcac.gc.ca. Print versions of all of FCAC’s publications and comparison tables are also available to the public, free of charge, by calling the FCAC Consumer Contact Centre, at: 1-866-461-3222 (toll-free).

FCAC ensures compliance with the consumer protection laws, codes of conduct and public commitments that apply to banks and federally incorporated trust, loan and insurance companies. FCAC also provides consumers with accurate and objective information about financial products and services, and informs Canadians of their rights when dealing with financial institutions.

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