6 Reasons Why Credit Cards Should Be Part of Your Personal Finance Strategy

reasons to use a credit card as part of personal finance strategy featured image

We often preach about the value that credit cards can bring to your life on Frugal Flyer, whether it is through new travel experiences, unique benefits, or even simply working on your personal finance goals. When used responsibly, credit cards are an excellent tool to improve your lifestyle in a variety of different ways.

However, we do recognize that there is an aversion to credit card use by many Canadians. Perhaps you have had some trouble with them in the past, or have known someone who hasn’t used them as responsibly as they should. That being said, through responsible use, credit cards have huge benefits and should be incorporated as part of your personal finance strategy.

Let’s take a look at 6 reasons why you should incorporate credit cards as part of your personal finance strategy.

Credit Cards are a Great Way to Build a Credit Score

Responsible use of a credit card is a great way to build and improve your credit score. Through regular usage, keeping your utilization low, and ensuring you pay the balance down, using a credit card is the easiest way to build a strong credit report to give yourself a better approval chance on any future credit application, including for car loans or mortgages.

There are a lot of different aspects that go into building a good credit score, but responsible credit card usage will get you on the right path. If you want to learn more or get into the details of credit scores, check out our article on everything you need to know about credit scores.

Additionally, if you are curious about where your credit score and credit report currently stand, Clearscore and Borrowell are the two best free services to use in Canada:

  • Check your Transunion credit report with Clearscore here.
  • Check your Equifax credit report with Borrowell here.

On the other hand, if you are just starting out or are recovering from some personal finance mistakes in the past, you might see greater value in signing up for a secured credit card instead of a traditional credit card to slowly build or recover your credit score. 

If this sounds like you, the Neo Secured Credit Card is a great option as it requires only a $50 minimum deposit and guarantees approval.

Apply Now Learn More Earn $25 in FlyerFunds upon approval.
Neo Secured Credit

The Neo Financial Secured credit card earns up to 5% cashback at partner retailers, a minimum of 0.5% across all purchases, has no annual fees, and is guaranteed approval with only a $50 minimum deposit. In 2024, we selected this card as the Best Secured Credit Card.

Check out our Neo Secured Credit Card review for more details.

$25 cash back

Ultimately, using your credit cards regularly and responsibly will improve your credit score and report over the long term.

You Don’t HAVE to Pay Interest on a Credit Card

All credit cards charge various interest rates, and oftentimes I’ve found that Canadians are confused about interest on credit cards. Interest is charged on a credit card for any previous balance remaining after the payment due has passed. This is the biggest difference between credit cards and debit cards and is often the reason people shy away from using a credit card.

Let’s just get it out of the way: there is no benefit to paying interest on a credit card. You don’t need to pay interest to have a good credit score and you don’t need to pay interest to increase your credit limit. There is no benefit to you as a consumer to pay interest, only the financial institution benefits in the form of increased fees.

You should always be paying your credit card balance down on time. You should understand the terms of your credit card, and should always be on top of when your statement closes and when the payment is due. While financial institutions would love for you to pay interest, responsible credit card use is a huge benefit for you as a consumer at zero cost.

I use credit cards for all of my purchases and haven’t paid interest in over 10 years of credit card usage. That moves me onto our next point…

You Can Use a Credit Card Just Like a Debit Card

I view credit cards the same as debit cards just with additional rewards, perks, and benefits  Simply put, if you use a credit card the same as you would a debit card, meaning that you aren’t spending any money that isn’t already in your chequing account, you can reap the benefits that come with credit cards with no additional cost outside of the odd annual fee or two.

canadian debit cards in wallet

Using a credit card properly boils down to being responsible and having a good grasp of your financial situation. It shouldn’t matter if you have a $5,000 credit limit available to you or a $200,000 credit limit available, your spending habits shouldn’t change.

Using a credit card instead of a debit card is worth it for the rewards, benefits, perks, and protection it provides if you can use it responsibly. I cannot understate the importance of responsible credit card usage, else you will end up far worse off than just using a debit card and only physically spending the money you already have.

Credit Card Rewards Are a Massive Benefit

If you have read any other articles on Frugal Flyer, you would know that we love credit card rewards and consistently speak to the benefits they bring from both a travel and personal finance perspective. Credit card rewards, whether miles, points, or cash back, are a great way to be rewarded for your spending and in turn, add some value back into your wallet on every purchase.

Many credit cards offer rewards that are up to an equivalent of 5% back on many spending categories, making using a credit card in place of a debit card an easy way to reward yourself as opposed to earning no rewards. After all, if you are going to be spending a large amount of money on groceries, restaurants, or travel purchases, you might as well get something back from that spend.

Depending on your lifestyle, we’ve comprised a few “best of” lists for Canadians who are interested in utilizing credit cards for various means and goals when it comes to maximizing rewards:

While many Canadians prefer cash back credit cards for the easy-to-understand earning and redemption, using a credit card that earns miles and points instead can unlock a whole world of previously unobtainable travel experiences and ultimately help you save money on your next vacation. If you are new to the idea of miles and points, check out our miles and points beginners guide for more details.

Credit Cards Have Excellent Benefits & Perks

Most credit cards, ranging from those with no annual fees to those with very high annual fees, offer various benefits or perks to cardholders. 

Things like travel credits, airport lounge access, no foreign transaction fees on purchases in other currencies, and free night certificates for hotel stays are all benefits that are currently available on Canadian credit cards. Oftentimes, these benefits also include insurance coverages such as travel insurance, rental car insurance, and insurance for day-to-day life such as extended warranty and mobile device insurance.

For example, let’s take a look at the Scotiabank Passport Visa Infinite card which is a great card with strong all-around benefits.

Apply Now Learn More Earn $60 in FlyerFunds upon approval.
Scotiabank Passport Visa Infinite Card

The Scotiabank Passport Visa Infinite card earns Scene+ Rewards points and offers cardholders benefits such as no foreign transaction fees and six complimentary airport lounge access passes annually.

Check out our Scotiabank Passport Visa Infinite card review for more details.

In 2024, we awarded this card as the Best Foreign Transaction Credit Card.

40,000 Scene+
$150 (FYF)
Jul 1, 2024

While it has an annual fee of $150, it does offer no foreign transaction fees (saving 2.5% on all purchases in other currencies) and six airport lounge passes. It also has a number of travel-related and personal lifestyle insurance coverages. While it is up to the cardholder to determine the value they place on these benefits, it’s very easy to receive more than $150 worth of value (without even taking into consideration the welcome bonus on the card).

The above is just one example of many of the cards available to Canadians with various perks. We’ve comprised a few “best of” lists for some of the most desired benefits offered by credit cards, including:

Ultimately, adding a credit card to your wallet that offers desirable and useful benefits can add value to both your day-to-day life and travels in the future.

Credit Cards Have Excellent Fraud Protection

Life happens, and from time to time, you might run into a charge on your credit card that you don’t recognize because you didn’t make it. Maybe your card was skimmed or your data was compromised; either way, these situations can be stressful.

Credit cards shine when dealing with these situations as they all have excellent fraud protection. Oftentimes these situations can be resolved simply by calling your financial institution and they will reimburse the charge and investigate further on their end.

laptop computer on desk wth cell phone

Plus, you aren’t actually out any money, as the credit limit on a credit card isn’t your money, whereas if your debit card was compromised you would be out money from your chequing account while the bank looks into the situation and resolves it. If anything, the financial institution tends to be more motivated to resolve the situation as they are the ones who can be on the hook when this occurs on a credit card.

Ultimately, this is one of the most underappreciated benefits that credit cards offer simply because it isn’t used often, but when needed, it’s hugely beneficial. While I would recommend always using a credit card when traveling for this reason alone, this is one of the main reasons I only use credit cards for all of my purchases.


Holding a good credit card or two is an easy way to boost your personal finance habits when they are used properly and responsibly. While we do advocate for the benefits of credit cards in many of our articles, ensure you do your due diligence in determining if a credit card is right for you and your goals before applying.

Josh Bandura

Josh Bandura

Co-Founder at Frugal Flyer
Josh has been involved in the miles and points game since 2015 but has scaled up his knowledge and points earning potential in recent years. With a consistent attitude of "min-maxing" in many aspects of his life, Josh has transferred this mindset over to the miles and points game. Always looking for the next big opportunity, he aims to share content on a variety of topics including his travels, miles and points, and most importantly, how to get the most out of your credit cards


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