In the vast landscape of personal finance, a credit card is a dual-edged sword. It offers the flexibility of buying now and paying later, coupled with the potential for rewards. Conversely, incorrect use can lead to significant debt. With an understanding of the core principles, you can use these powerful financial tools to your advantage.

Understanding Credit Cards

Credit cards, essentially, are lines of credit extended by financial institutions. Upon approval, the issuer sets a limit that reflects your creditworthiness, offering an agreed amount for borrowing. However, the potential for credit card dangers lies in their misuse.

Credit cards offer convenience and security to consumers, especially those who don’t want to carry a lot of cash around. A typical consumer in the US is not usually satisfied with having just one credit card. A 2018 Experian report says that Americans tend to have an average of 3 credit cards.

I currently have 10+ active credit cards, Signing up for credit cards for rewards and churning them is my hobby. I like reward travel. I travel at a nominal cost. Even after applying for and canceling cards frequently, I have an 800+ credit score.

This post is towards Canadian readers. All of us want to improve our credit scores to borrow money at a lower interest rate when we buy a home, refinance the home or buy our cars. One way to improve the score is by having credit cards and using them well. But to have a credit card you need to have a good credit score. It’s a vicious cycle, how to get approved for a credit card with bad credit?

Each financial decision you make has an impact on your credit score. In general, your credit score is a reflection of how well or how poor you manage your finances. In recent times I applied for 3 different credit cards, total 4 in this year alone. I got approved for all of them. I apply for cards in a bunch of 3-4 every 6 months. This ensures I get sign-up rewards and bonus constantly, they are free money.