Give yourself a little credit

by Gail Vaz-Oxlade

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Gail Vaz-Oxlade has written ten books on personal finance, published a financial magazine for women, hosted and co-produced a prime-time personal financial television show, and worked with Canada’s leading financial services companies to help educate employees and clients. She writes for Chatelaine, IE: Money’ magazine, Today’s Parent, The Globe and Mail, The Winnipeg Free Press and Investment Executive. Gail gets up early to write.

Once upon a time, long ago, in a far away galaxy, I had no credit. I couldn’t borrow money since no one had yet seen fit to lend me money. And no one would lend me money since I had never borrowed. My old Uncle Otts told me to apply for a credit card. He was a lone voice back then. Almost everyone else in my life had taken the position that credit was baaad and that a credit card would, ultimately, be my downfall.

Slowly, over time, by charging items and paying off my credit card every month, I built myself a stellar credit rating - one good enough to get me a whopper of a mortgage years later when I bought my first house all on my own. So all those months of recording my credit card charges in my cheque-book register and then diligently checking them off and paying my balance in full had paid off. I’d proven I was trustworthy as a user of revolving - or ever-accessible - credit. Ha! So much for the naysayers.

Course, for every story like mine, there’s a Suzi-story. Suzi is a girlfriend of mine who never paid her credit cards off. She was always late with payments, racked up tons of interest and ultimately had to suffer the humiliation of having her card taken away by some teeny-bopper in a retail store who smiled apologetically while she chopped up Suzi’s card. My poor girlfriend had more to cry over than her lost card and her bruised dignity; there was also that really nasty credit history she had created and the litany of "no"s she would face in the future when she tried to get new credit.

Aside from being the easiest and most convenient way to build a credit history, my credit card proved itself invaluable in a variety of other ways. There was the time I lost my brand new cell-phone while on a business trip in Vancouver. I was furious with myself until I remembered my card’s "purchase protection" - a plan that offered to replace my purchase if it was lost, stolen or broken, within 90 days of purchase. In no time flat I had myself a new phone courtesy of my credit card company, saving me over $300 for a replacement phone.

And those business trips would have been virtually impossible without a credit card. You need one to guarantee a room so that when you arrive at midnight there’s still a bed available to fall into. And you need one to rent a car.

Speaking of renting a car, your credit card can also save you money. Use the right card and you can watch as charges you would normally have to pay disappear. Take the car rental agency’s collision damage coverage, which costs about fifteen bucks a day. With the right credit card you can opt out and over a week-long vacation save yourself more than $100. Nice.

Purchase protection also doubles the original manufacturer’s warranty on stuff you buy with the card so you can say, "No thanks" to all those pesky salesmen offering expensive extended warranty plans.

Perhaps the biggest trick to being a successful credit card user is to be honest with yourself so you can choose the credit card that’s right for you. There are the people who will carry a balance, and those who don’t. For the balance-carriers, choosing a card with the lowest interest rate makes the most sense. For those who have the discipline to charge only what they can afford to pay off, the field of options is open and they can choose a card with all the bells and whistles.

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