Having a credit card in your name can be a very exciting milestone for any Canadian, but ensuring you know how to use it wisely is crucial. If you’re new to credit cards, there’s a lot you’ll want to know before you sign any paperwork and some tips you can use to borrow responsibly once you’ve made it past that point. While many financial experts agree that building credit from a young age is smart, not all beginners are the same. No matter what age you are or what phase of life you’re currently in, it’s wise to take a look at these tips for first-time credit card users to ensure you use credit wisely so it can work in your favour later on in life.

Only Use Credit For Things You Can Afford

Don’t be afraid to use your credit card as keeping a $0 balance won’t do anything to help you build credit. But do make sure you use it wisely, so lenders can see that you’re a responsible borrower and not someone who charges things on a card to avoid paying for them for as long as possible. This may seem like a simple concept, but a lot of people ignore this advice and end up going on a swiping spree that can only end badly. Credit cards are designed to be convenient but that very perk can make temptations difficult to resist, whether you’re out shopping at the mall or surfing the internet at home. Remember not to see your credit card as “free money” and instead treat it like another debit card. Before you swipe, tell yourself that if you don’t have the money to afford this purchase in the short term, you shouldn’t be making it.

Make Payments On Time

Making payments on time is critical. Lenders will expect you to make credit card payments diligently for months/years. Paying on time not only protects you from unwanted penalties and interest, but it also protects your credit score from being damaged in the process. Maintaining a good repayment history is crucial for keeping your credit score high (credit history accounts for 35% of your score) and will only help you in the future should you require additional loans or funding. If you’re notorious for forgetting or worried it may slip your mind occasionally, consider setting up automatic payments or reminders through your online banking provider.

This doesn’t mean new credit card holders need to stress constantly about missing deadlines. If you miss a payment (it happens, we’re all human!), you’ll definitely encounter late payment fees/interest, but it won’t have a big impact on your credit score as long as you’re only a few days late. Being 30+ days late means your payment is delinquent and that the fact you missed it will end up on your credit report.

Pay More Than The Minimum Payments

When you look at your credit card statement you’ll notice a section that mentions what amount is due in total for the month and what the required minimum payment is. Don’t be deceived into thinking making minimum payments is acceptable practice. If you want to avoid paying high amounts of interest each month on top of your monthly charges, it’s vital that you pay more than the minimum payment. In fact, paying your bill in full is always advised. This helps you avoid penalties, high interest rates and damaging your credit score in the process. New card users who charge first and budget later, may find themselves drowning in interest charges and debt right off the bat so be very cautious when it comes to the slippery slope of minimum payments.

Monitor Your Statements For Inaccuracies

It’s wise to keep on top of your credit card statements. This not only helps limit the likelihood of fraud, but helps you better understand how the process of posting charges works and how things are calculated. Each month, take a look at your credit card and banking statements and make note of any unusual charges or things you’re unsure about. This way, if you don’t know what a specific charge is, you can look up the information online and verify that anything showing up on your statements is supposed to be there. You should make it a habit to do this regularly so you can get better acquainted with how a credit card bill breaks down charges and as a result, notice anything out of the ordinary in the future.

Use Very Little Of Your Credit Limit

While you may have just been approved for your first credit card and are basking in your $5,000 limit, that doesn’t mean you should be using anywhere near the maximum credit. In fact, how much available credit you’re using (credit utilization) makes up 30% of your credit score. As a rule of thumb, try to use less than 30% of your available credit as it’s always better to have a high credit limit and use less of it each month. If you tend to use up a lot of your available credit, lenders may see you as a risk, even if you pay your balance in full when it’s due. To calculate your ideal credit usage each month, add up the credit limits for all your credit products (loans, credit cards etc.) and then calculate what 30% of that total equals so you know the max credit you should be using each month overall.

Be Selective When Choosing Your Card

Not all credit cards are created equal, so do your homework when it comes to finding one that’s the best fit for YOU. As a first-time credit card user you’ll definitely be limited in terms of which cards are available to you, but being aware of all your options and how they compare means you can still choose wisely.

Be Cautious Of Fees

While you may be aware of annual fees and interest fees, you’ll also want to be aware of what fees are charged for late payments, returned payments, balance transfers, cash advances and more. When comparing your card options make sure you factor in all of these fees so you can ensure you’re choosing the best card for your personal needs.


There are many different kinds of credit cards available that offer a variety of rewards, perks and cash-back options so you can earn something in return each time you use it to pay in-store or online.

Cash Back Cards

Some brands offer cards that reward you with a certain percentage of cash back for each purchase you make on the card. Some of these cards are purchase-specific so they always provide 3% cash back at the gas pump or 5% back on groceries, while some offer a blanket 2% cash back on every purchase and every location.

Store Branded Cards

These cards typically carry no annual fee and can only be used for purchases at one particular store or on their corresponding website. If you do a lot of shopping in one place on a regular basis, opening a store credit card there may provide huge benefits that add up quickly. Do keep in mind though, store branded cards typically have very high interest rates.

Annual Fee Cards

Sometimes access to specific rewards makes it worth paying an annual fee for the credit card. Most of the brands offering annual fee cards with bigger rewards are travel based so if you tend to stay at the same hotel properties, fly the same airlines, or just want discounts for frequent travelling, these cards may be a great fit. It’s wise to take note of which benefits you’ll use and make sure they add up to more value than the annual fee you’d be paying to use the card.

Learning the ins and outs of credit cards is an important part of the credit-building process. Armed with the right knowledge, you can go from credit newbie to a professional credit builder and set the foundation for a lifetime of good credit habits right from the start. Building credit is a long-term game so be patient with yourself as you build up your score and create new spending/saving habits. Want to learn more about how your credit impacts your ability to qualify for a mortgage? Curious about other personal lending options? Reach out to our team at Rocket Mortgage™!