How Not to Choose and Manage Credit Cards

I have a weird history with credit cards.

I remember in university, being soooo offended that I couldn’t get approved for a student credit card in my first year of university. I mean yes, to be fair, I had no steady income, so I probably shouldn’t have had one in the first place, but you hear all of these rumours that anyone with a pulse can get a credit card in university.

Myth, busted: it turns out people really do get turned down for student credit cards, and I was one of them. Maybe they just didn’t like the looks of me.

In any case, after that crushing (not very crushing) defeat, I pretty much wiped my hands of credit cards for five years.

I relied entirely on debit for all of my student purchases, thanks in large part to a free, unlimited-transactions student chequing account with a Big Bank. When I graduated and got my first monthly statement, including the $50 in transaction fees, I knew it was Time.

Credit Card Time.

I’m not kidding when I say that transaction fees were the single driver of why I finally got a credit card. If I had been smarter and made the switch to Tangerine earlier, I might still be a person with no credit history.

(I guess if nothing else, bank fees are indirectly the reason someone will approve me for a mortgage one day, which is nice. Kind of.)

Anyways, in the absence of making the Big Mistakes with credit cards – carrying a balance, maxing them out, etc – I still managed to make some decent ones along the way.

Let’s discuss, because if I’ve learned anything from my How-Not-To-Make-My-Mistakes posts, it’s that my god you should all use me as a cautionary tale.

How Not To Choose a Credit Card

If there’s one piece of advice that I would give to literally anyone about literally any financial decision, it’s this:

Do.

Your.

Own.

Research.

Hell, if I was going to rename the blog, it would be to that. DoYourOwnResearch.ca.

So when it came time to finally add a credit card to my life, you would assume that I would have done some research about which card to get, right? About the different types of rewards and programs and fees and interest rates?

Ahahahahahaha yeah no I didn’t do that.

What I did do was go straight to the bank and ask for the credit card I had seen advertised at the movie theatre.

I wish I was joking right now.

They approved me, gave me a credit limit, and I was the owner of a shiny new rewards card. I lucked into the fact that it was a no-fee card, and that the interest rate never mattered because I never carried a balance, but come on, Past Des. You just got lucky.

How Not to Choose a Rewards Program

So, that rewards program. You would hope that I at least chose a program that would give me good perks that I valued, right?

Well, it kind of did – in the end.

The rewards were mainly free movie tickets (yes, everyone in Canada now knows which credit card I had) and as I built up more and more points without using them, I started to get some interesting emails from the credit card company.

Desirae, you can go see a movie!

Desirae, you have 17 free movies available!

Desirae, my god, make a friend and go to the freaking movies already.

Desirae, now we’re just sad for you.

Desirae, have you died?

Desirae, WHY DO YOU HATE MOVIES.

It turns out that if you don’t have a car, are single, and live within walking distance of approximately no theatres that participate in the program, you don’t go to see many movies.

Who knew?

(This story has an eventual happy ending, in that when I met The Boyfriend, I had a grand total of 27 free movies saved up. Thanks to this program, and my new suburban lifestyle near multiple movie theatres, we haven’t paid for a movie in almost three years, and we’re not even out of points yet.)

How Not To Choose a Credit Limit

Since this was my first credit card, I knew that I had to be hyper-vigilant about using it properly.

Every time the bank would call me to offer to increase my credit limit, I steadfastly (and let’s be honest, self-righteously) turned down their offers of a higher credit limit.

Why? Because I (fully mistakenly) thought that having a higher credit limit was a bad thing. I figured it was the first step on the slippery slope towards mountains of credit card debt.

I know.

To think that – after a year and a bit of successfully managing a credit card and paying it off in full every month – accepting a higher credit limit is the one thing that will trigger my descent into financial ruin is a pretty misguided thing to think. It’s also patently untrue.

But based on that, and that alone, I kept declining the increased credit limits I was being offered.

Until. (Of course there’s an “until.” This would be a boring story otherwise.)

I had just declined a credit limit increase from $2000CAD to $5000CAD, and thought I was sooooo wise. Then I boarded a plane to a big work trade show in Las Vegas, and found out upon arrival that our company policy is to charge our hotel to our personal cards, and expense it when we get home.

Let me tell you about how credible you sound, calling your credit card company and explaining to them that you’re in Vegas and you need to accept that credit card limit increase they offered you last week.

It’s not very credible.

They were (shockingly) happy to give me the increase, and my work trip went off without a hitch. Turns out, the increased credit limit didn’t turn me into a financial mess, and I kept on living my life and paying off my card every month.

Who knew.

How Not To Choose Cash-Back Categories

After all of those lessons, I finally felt like I had found my footing with this whole credit card business, so I started branching out. This was around the time that I started to take my money more seriously, and I did some research into the different cards that I might want to add to my wallet.

I took advantage of two different travel rewards cards and their sign-up bonus miles, which together covered a big chunk of my travel expenses for two destination weddings this summer – yay!

By the end of 2015, that was where I stood – three credit cards, two of them with travel rewards, one of them with movie rewards.

And then I heard about the Tangerine credit card.

I’m not going to lie, I’m a bit of a Tangerine superfan, so of course I signed up for the preview as soon as I could possibly access it on their website. It took about a month, but I was added to the preview and had the opportunity to choose my three cash-back categories, which would get me 2% cashback (and 1% on everything else.)

Now it’s important to remember at this point that I had two other credit cards (the third was cancelled in preparation for getting the new Tangerine one, haha.) When I went to choose my cash back categories, I did do one thing right: I compared how the rewards on my other cards would supplement the cash-back on my Tangerine card.

But you know what I didn’t really factor into things?

How much I missed having most of my financial life in one place.

Over the past year, I went from having all of my chequing, saving and credit cards with a single bank, to chequing with Tangerine, investing with Wealthsimple, an Amex credit card (for the travel points) and recently, some savings accounts with EQ Bank.

When I took my other credit cards into account in choosing my Tangerine cash back categories, I hugely underestimated how much I’d like having my chequing and my credit card in the same place. I also way overestimated my willingness to use my other credit cards for just about anything beyond business travel, once I had this system all together in one place.

So let’s be real: I didn’t choose the most optimal categories. But, in contrast with my previous “Oh my god Desirae how did you even let that happen” credit card decisions, this one didn’t turn out so badly – especially since if I really wanted to, Tangerine would let me adjust my categories.

So friends, spill – have you ever made any mistakes in your credit card journey, beyond what people usually consider as “big credit card mistakes”? Did you manage to dodge all of these by being super-informed and responsible? (Am I the ONLY ONE who didn’t get approved for a student credit card? This is a genuine concern of mine, haha.)