Comments on the moneygardener: in defence of plastic

I use my Scotiabank Scene Visa for day-to-day purc...

2008-03-16T01:01:51.394-04:00

I use my Scotiabank Scene Visa for day-to-day purchases and pay off my balance every month for the same reasons as you've outlined, zero transaction costs but also every dollar I spend earns me one rewards point at Cineplex Entertainment and every 1000 points equals a free movie ticket. I'm approaching 8000 points (thanks largely due to generous bonus points when I signed up).

However, I should point out that zero transaction costs can be achieved if you don't mind banking only by telephone, online, at the ABM or POS terminals in stores. HSBC Bank Canada offers a Direct Savings Account (http://www.hsbcdirect.ca/) that offers all those features (including free banking at HSBC, BMO Bank of Montreal and credit union ABMs) plus a promotional interest rate of 4.25% until May 3rd (when it drops to 3.30%, tied with ING Direct's current offering) on your balance.

So, there are other options besides PC Financial and also the use of credit cards.

Cheers,
Doug Mehus

Disclosure: I work for HSBC Bank Canada.

Paying off the balance is critical. I am a firm b...

2008-03-12T20:23:47.070-04:00

Paying off the balance is critical. I am a firm believer that if you cannot pay your balance in full then you are in financial distress.

Don't forget another plus, especially for the youn...

2008-03-12T12:59:23.774-04:00

Don't forget another plus, especially for the younger people; using a credit card for purchases, and paying it off montly is a great way to build your credit rating which can be very useful when it comes to applying for mortgages or other types of financing in the future.

Just make sure you are paying it off every month! As you stated, zero balance in the key.

I agree MG but the truth is, for the folks on "Til...

2008-03-12T12:09:10.333-04:00

I agree MG but the truth is, for the folks on "Till Debt Do Us Part", a credit card usually is the Anti-Christ!!!

We also do most of our transactions by Visa as well but for the few that don't allow it (utility bills, taxes, mortgage, etc) we use our LOC which carries a positive balance so no expensive chequing account fees. We used to pay $25 / mth for our chequing account until we switched to this method!

BTW, do you know what's up with Financial Web Ring forum? I haven't been able to access it for days and even tried your link to the dividend increases thread.

MG i agree with you as well. I like using plastic ...

2008-03-12T10:20:46.077-04:00

MG i agree with you as well. I like using plastic for my day to day purchases. If i am strict on following my monthly spending plan, why shouldn't I get rewarded with a 1%-3% cash back bonus?
And I also like the idea of limited liability if someone steals my credit card. If s.o. stole my debit card, that would have been a major hassle..

MG,Couldn't agree more. We use our PC Mastercard f...

2008-03-12T07:54:04.731-04:00

MG,

Couldn't agree more. We use our PC Mastercard for everything and earn an instant 1% on all our purchases.

I have been using a credit card for day to day exp...

2008-03-12T01:41:07.850-04:00

I have been using a credit card for day to day expenses (groceries, gas, bills, etc) for years and have yet to pay a penny of interest. It makes it very easy to track at the end of each month and I just drop an appopriate amount on to the card as required to keep the interest charges to zero.

There is another huge benefit to using credit cards over debit cards: Cash flow. In any given month, I float about $100 in my chequing account max, the rest I move to various locations where the money goes to work for me (paying down debt, investments, etc). For the entire month, everything I purchase just goes on the credit card... and I get an interest free loan from Visa for the month. End of month arrives, I pay off the interest free loan and a new month starts fresh.

Doing some quick math off the top of my head... if I am able to produce 0.5% interest per month with funds that I am able to invest at the start of the month while I buy everything on a credit card, at an average monthly expenditure of $2,000, it will net me around $120 per year just by virtue of using my credit card instead of my debit card. Add to that the debit card fees and you are way ahead of the game.

One other benefit is points. I keep a high enough...

2008-03-11T22:39:17.845-04:00

One other benefit is points. I keep a high enough balance at the TD be waived of the highest package which includes a no fee gold travel card.

This is our first points card, and its already started to pay off in only 4 months of use.

But a key point is paying off the balance each month, the points aren't worth paying interest.