The credit card is the preferred payment method for Canadians, with debit card transactions coming in a close second.
In 2023, Canadians charged more than $840 billion to credit cards, whereas debit card transactions amounted to just over $300 billion, according to Payments Canada.
But why is credit card the best option?
Building your credit score is crucial, as it significantly impacts your financial opportunities. A strong credit score can assist you in securing a rental, obtaining favorable loan rates for a car, and achieving better mortgage terms when purchasing a condo or home.
Security is another reason credit cards are a superior payment solution. If your debit card is compromised, both the card and your bank account may be frozen during the investigation, causing significant inconvenience.
With a credit card, your account may be frozen until the replacement card arrives, and reversing fraudulent charges is typically faster compared to a debit card. You will still have access to your bank account and debit card, ensuring that not everything is uncertain until the bank investigation concludes.
Lastly, most credit cards come with various perks. These may include cash back, free extended warranty, travel insurance or even points programs that can be redeemed for travel, or product rewards. In contrast, debit cards typically do not offer such benefits.
We will take a dive into various credit cards in a future article.