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How to Manage Your Expenses with Your Credit Card

By Belle Wong

Published August 18, 2022 • 4 Min Read

A credit card can give you access to the funds you need as you settle into your new life in Canada. But did you know you can also use your credit card as a financial management tool?

Whether you’re looking to manage expenses, or build a credit history, here’s how you can use your credit card for your new financial life in Canada.

Build credit by using your credit card

One obstacle many newcomers face when applying for a loan — or even renting a new home or getting a cell phone plan — is a lack of credit history in Canada.

A credit card can be an effective way for you to start building credit and improving your credit score. Your credit score is a rating based on your credit report that tells banks and other lenders how well you manage your credit.

  • Make a credit card payment on time every month. Even if you’re not able to pay the full balance due on your card, you should always make at least the minimum payment on time each month. Missed and late payments may have a negative effect on your credit rating.

  • Avoid carrying a high balance on your card. Having a high balance on your credit card is another thing that can have a negative impact on your credit report. If you have to carry a balance, aim for a balance that’s not more than 35% of your available credit.

Using your credit card for budgeting

As you begin settling in Canada, it’s helpful to prepare a budget to help you stay on top of your finances. And your credit card can be a useful tool for managing expenses and keeping within your budget:

  • Track your spending. Your monthly credit card statement lists every purchase you’ve made using your card. Using this to track where and how you spend your money.

  • Fund your purchases temporarily. As long as you pay off your balance in full each month, you won’t need to pay any interest, so your credit card can be a great way to stay within your budget by giving you access to short-term interest-free “loans” for your purchases.

  • Consolidate other credit card debt. Are you carrying balances on credit cards with higher interest rates–for example, gas cards or department store cards? By transferring those balances to a credit card with lower interest, your lower monthly payments will be easier to manage.

Reduce what you spend on interest

One of the main features of credit cards is the interest charged on any balances you carry. These tips can help you manage your budget better by lowering what you spend on interest:

  • Make more than the minimum payment. You’ll help reduce your overall balance faster if you pay more than just the minimum payment.

  • Switch to a card with lower interest. If you find yourself regularly carrying a balance on your credit card, consider switching over to a low-interest credit card.

  • Be mindful of cash advances.While it can be tempting to withdraw cash from your card, keep in mind that interest for cash advances begins accruing as soon as the advance is made.

  • Take advantage of convenient payment options. While you can always mail your payment, you can’t be 100% sure it will be received in time. Fortunately, there are other options for making your monthly payments. RBC, for example, offers onlinemobile, and telephone banking, as well as the option to set up automated monthly payments.

Credit cards give you access to the funds you may need as you settle into your new life in Canada. But when used wisely, your credit card can be a great financial management tool, too, helping you build your credit and manage your finances.

Are you ready to build your credit score? Choose a credit card that’s best suited for you by speaking to one of our Newcomer Advisors to get started.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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