In Canada, there is widespread credit card use. Canadians apparently find it very convenient to pull out their credit cards to pay for purchases instead of sifting through cash and change. It has been this way for some time, however, in the wake of the pandemic, credit card usage has increased. Contactless or tap payments make completing transactions both quicker and safer than ever. But what other things draw Canadians to use credit cards?
Credit cards offer mini loans.
With a debit card, you make payments using the money that is currently in your bank account. With a credit card, you don’t actually have to have the money you’re spending. The purchase is paid for by the credit card provider and that company is paid by the cardholder at a later date. In effect, a mini loan is provided to the cardholder. As long as a full payment is made prior to the bill’s due date, no interest accrues on the balance.
“If you pay the entire bill in full each month, you won’t pay interest on what you borrow,” informs Clément Deffrenne on Hardbacon.ca, “In fact, 70% of Canadians pay off their entire credit card balance every month. For these people, the interest rate is therefore zero. Those who don’t pay their bill in full have to pay relatively high interest rates, and if they don’t make the minimum payment, they risk damage to their credit rating.”
Some credit cards offer rewards.
For many spenders, credit cards are ideal payment methods because they provide more than just the actual purchases. With rewards cards, shoppers accumulate points that can be redeemed later for special perks and prizes. Travel rewards are especially popular. Many credit card users throughout Canada collect points that help them to get free airline tickets, car rentals and hotel stays.
“If you have a good credit score (generally thought of as 660 and above), rewards credit cards may be appealing as you’ll get something back for every purchase you make,” note Barry Choi and Shannon Terrell on NerdWallet.com, “However, make sure the rewards you earn outweigh any costs you pay for the card, like an annual fee.”
Credit cards can help you to save money.
As we just noted, some credit cards have annual fees. Several others do not. For Canadians who wish to save on such fees, they opt for no annual fee credit cards. Pat Foran of CTV News reported on this occurrence one year ago. He pointed out that the pandemic encouraged many consumers to switch to credit cards that were free of charge.
“Canadians love to use credit cards and collect rewards for free flights, groceries or to get cashback,” Foran explains, “A new survey by J.D.Power found that during the pandemic many have decided to ditch their annual fee credit cards in favour of cards that don’t charge a fee. Over the past year, 22 per cent of credit card customers switched to a no-annual-fee card to save money.”
Do you accept credit cards at your place of business?
At Canadian POS, we believe there is no easier way to do so than with the revolutionary Poynt Smart Terminal. This Android-based terminal has a suite of business management tools that allow you to keep track of all your orders, reports and inventory in one place. For more information, please don’t hesitate to call us at 1-877-748-2884 or send us a message on our Contact Us page!