Credit Card 101 - A Complete Guide For Beginners - CIBC

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Credit card basics

Your credit card guide

Learn the ins and outs of credit cards — how they work, why you might need one and how to manage your spending.

What's a credit card and how does it work?

A credit card lets you borrow money from the bank to spend on your everyday purchases.

At the end of each monthly billing cycle, you’ll get a credit card statement (your bill) with the amount you owe (your balance).

Each credit card has a limit — the maximum you can charge to the card.

For the full details to understand how your credit card works, refer to your CIBC Cardholder Agreement.

Your statement has your minimum payment amount and the payment due date.

To maintain good credit, you need to make the minimum payment on your balance each month.

If you don’t pay off your full balance before the payment date, you’ll be subject to interest charges. For some transactions, including cash advances, convenience cheques and balance transfers, interest is always charged.

Let’s say you spend $250 on textbooks and your phone bill — that will be your statement balance.

If your minimum payment is $10, that’s the lowest amount you need to pay by the due date.

If you only pay $10 — or any amount less than the full $250 owing on your card by the due date — you’ll be subject to interest charges. For the full details about how interest is calculated and payments are applied, refer to your CIBC Cardholder Agreement.

Why do I need a credit card?

A credit card helps you build your credit history. When you want to rent an apartment or make a major purchase down the road, a good credit report will help your application.

As long as you use your card responsibly and make regular payments, a credit card is a helpful first step to building your history of good credit.

Understanding your card and statement

Credit card breakdown

1. Security chip

2. Credit card number

3. Expiry date

4. Cardholder name

5. Cardholder signature

6. Security code (CVV/CVC)

Get to know your statement

Statement balance:

How much you owe at the end of your monthly billing cycle.

If you don’t pay the full Amount Due by the due date, you’ll be subject to interest charges. For some transactions, including cash advances, convenience cheques and balance transfers, interest is always charged.

Credit available:

How much is available to spend on your credit card.

If your limit is $3,000 and you’ve made $200 in purchases, your available credit is $2,800 until you pay back the $200.

Minimum payment:

Each month, you need to pay at least this amount towards your outstanding balance.

If you can, pay more than the minimum payment to keep your credit score healthy.

Credit limit:

The maximum amount you can charge to your credit card.

Make sure to regularly review your transactions. If you see any transactions you don’t recognize on your CIBC credit card, call 1-800-465-4653 Opens your phone app..

Managing your credit card

Use your credit card responsibly to help you maintain good credit. Don’t spend more than you can pay off each month and always pay your bill on time. Try these tricks to help you stay on track:

Track and manage your spending with CIBC CreditSmart®

All purchases on your CIBC credit card are automatically sorted into spending categories like Restaurants and Transportation. Plus, you can create your own. To help manage your spending for each category, you can set up monthly budgets.

Set up alerts

Staying on top of your credit card spending is easy with Alerts. You can receive alerts through push notification, text message, and email. Choose from alerts for upcoming payment due dates, exceeding your monthly spending budgets, approaching your credit limit, and new credit card eStatements.

Make regular payments

You can pay your credit card bill using CIBC Online or Mobile Banking®, at a CIBC Banking Centre, or through telephone banking. To avoid missing payments, you can schedule recurring bill payments.

Learn more about managing your credit card

How do I choose the right card?

Here are 3 things to consider when choosing a credit card:

Annual fee

Some cards let you earn rewards at a faster rate, but you have to pay an annual fee. Look for cards with no annual fee that still offer rewards.

Interest rate

The interest rate is what you'll be charged if you don't pay off your full balance each month. If you carry a balance, you'll want to choose a card with a low interest rate.

Rewards

You can earn rewards, like travel points and cash back, on all your everyday purchases.

Learn more about CIBC student credit cards

For more information, talk to an advisor at a CIBC Banking centre Opens a new window.

Your credit card questions answered

How long does it take to get a credit card?

From the moment you apply for a CIBC credit card, it takes about 2 to 3 weeks to receive and process your application. We’ll notify you, by mail, about the status of your application.

Can I withdraw money from a credit card?

Yes, you can withdraw money from your credit card in the form of a cash advance. Cash advances can help in emergencies but they’re expensive.

Withdrawing money from your card comes with a higher interest rate, and you may have to pay an extra fee too. Plus, there’s no grace period for cash advances — you’ll be charged from the day you withdraw cash until the day a payment is made to cover the amount of the cash advance, plus interest.

When does my credit card expire?

Your credit card usually expires every 3 to 4 years. The expiration date is printed on your card — it's found below the credit card number in a month and year format.

Before your card expires, we’ll send you a new one in the mail.

What can I use my credit card for?

You can use your credit card to pay for almost anything. If you use it responsibly, you can use your card to earn rewards, pay off debt and build a strong credit history.

Here are some tips to help you make the most of your credit card:

Pay on time

A late credit card payment can hurt your payment history and credit rating, especially if it’s a pattern. Plus, you’ll have to pay interest on the balance and other late fees.

Schedule your payments

If you have trouble remembering to pay your credit card bill, set up a scheduled payment from your chequing account to your credit card every month. Make sure you have enough funds in your account to cover the amount due.

Pay in full

Paying just the minimum balance will keep your account in good standing but it won’t save you on interest fees. Plus, carrying a balance each month means you’ll be in debt longer. Try not to spend more than you can afford to repay, and stick to a budget.

Don’t go over your limit

Going over your credit limit can lower your credit score. Try not to use all of your available credit at once.

Assess your financial situation

If you don’t have a regular source of income or enough money in the bank to cover your credit card bills, a credit card may not be right for you — consider a debit or a prepaid card instead.

How do I check if my credit card is active?

If you’re the primary card holder, you can check if your credit card is active through CIBC Online Banking®, CIBC Mobile Banking® or CIBC Telephone Banking. The easiest way to review your credit card information is through our digital services.

Keep reading for more money tips

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A crash course on credit

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Getting smart with budgeting

Create a budget and stick to it so it pays off in the long run. Find out where to start.

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