Give Me Back My Five Bucks

Why do you use a credit card?

Note: this post was sponsored by Amex Bank of Canada. The views and opinions expressed in this blog, however, are purely my own.

Over the course of my twenties, I used different credit cards for different periods in my life. When I was in debt, I wanted a card with the lowest interest rate so that I could get myself out of debt as soon as possible. And after I got myself out of debt, I focused on finding the best credit card for my spending habits; one that would give me the ability to get rewarded for responsible spending.

I did a lot of research into different types of cards, and realized that there were essentially two different kinds of credit card users – the first category of users just wanted a credit card to make purchases they aren’t able to make in cash, and the other category of users wanted to be rewarded for spending. I definitely fell into the second category.

I knew I was mainly going to use my credit card for essentials – like gas and groceries and this kind of spending pattern is perfect for a cash back card. As you know, travel is my passion, so travel rewards credit cards are also a good option (and certainly one that I’ve explored over the years), but I knew it wasn’t my only option. Many travel rewards cards came with restrictions when it came to redeeming points and I wanted to really feel the benefits and rewards in my hand from using my credit card, something a cash back card can do for you annually.

For example, these days I typically charge between $750 and $1,200 on my credit card each month. With that kind of spending on a cash back card that offers 1.25% on purchases, your annual rewards can add up pretty fast. Take a look at these examples:

Monthly Spending Cashback
$750 $112.50
$1,000 $150
$1,250 $187.50

The new Amex SimplyCash card offers 5% cash back on all eligible purchases at gas stations, grocery stores, and restaurants in the first six months (up to $250) and 1.25% after, so if half my spending went to those kinds of purchases, my first year using the card would earn me a lot more cash back. Also, most cash back cards offer perks for travelers too – such as travel assistance, car rental and theft damage insurance, among other benefits.

I remember whenever I used to receive cash back from my credit card, I’d save half of it, and put the other half towards something fun – maybe dinner out with friends in the city or even Paris? I think it’s this type of flexible earning that has helped me become successful in managing my money now, 8 years after getting my first cash back card.

How did you determine what kind of credit card you’ll use?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


Comments

  1. Jordan Smith says:

    I’ve surrendered all my credit cards except one. This is because I need one to maintain my credit rating and for emergency purposes.

  2. Ema Matts says:

    Great share crystal … As Jordan says, he need one to maintain credit rating. My question is what is credit rating. Is it affects on my bank account profile ???

    • Jordan Smith says:

      Hey Emma,

      As per Wikipedia, A credit rating is an evaluation of the credit worthiness of a debtor, especially a business (company) or a government, but not individual consumers. The evaluation is made by a credit rating agency of the debtor’s ability to pay back the debt and the likelihood of default.[3] Evaluations of individuals’ credit worthiness are known as credit reporting and done by credit bureaus, or consumer credit reporting agencies, which issue credit scores.
      Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency’s evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies’ analysts.
      The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations.
      A poor credit rating indicates a credit rating agency’s opinion that the company or government has a high risk of defaulting, based on the agency’s analysis of the entity’s history and analysis of long term economic prospects.

      Jordan

  3. Ema Matts says:

    Thank you so much Jordan for your reply. Can i get that Wikipedia link to know more about my doubt ???

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