Explain to me why, when I stand in line at the grocery store, I still see customers presenting their debit card to pay for purchases.

Because if you’re one of those people who pays the full amount of their statement every month, then you never pay interest, and you can access credit, you are a good candidate to use a credit card and get the rewards associated with it in the process.

Also, if you are able to settle for buying only what you need, you have the right profile.

Would you like cash back to reduce your expenses? Hotel nights? Airline tickets? But why use a debit card, when it’s not giving you any benefit?

In the credit cards world, most lending banks offer generous bonuses to attract good customers. Points and miles or cash back. Then they give you some on your daily expenses.

Yes, the ones from the grocery store too. I’ll give you an example. Some credit cards offer 5% in rewards per dollar spent at the grocery store, such as the American Express Cobalt™ Card. That is, on a $100 bill, you get $5 in rewards.

So why settle for a debit card that offers nothing? And depending on the credit card chosen, discounts can be as high as 10% for the first three months after joining.

Do you see? It’s worth it.

Except for a few bills such as electricity, my snow removal contract and at my favourite small merchants who do not accept credit, I charge everything to my credit card. Groceries, restaurants, telephone charges, insurance, school and municipal taxes, gasoline and so on. And at the end of the month, I pay the entire balance.

For a middle-class family of four, a single credit card equals at least $1,000 in annual earnings. If you push the envelope with two or three great credit cards and their bonuses, which you optimize on the right spending, you’ll easily double the value of your rewards.

I took my first business class flight to South Africa that way. A value of $5,000, earned in eighteen months.

Credit cards offer several advantages that debit cards do not.

In addition to the membership rewards, here are a few:

• Protection against fraud. Zero liability for the user. A no-fault situation in that you report the loss of your credit card or fraudulent transactions on it. The issuing bank will reimburse you.
• Chargeback if the service is not rendered as promised by the seller. You will understand that in 2020, several travel claims were processed through this service. Impossible with a debit card!
• No conversion fees with certain credit cards when dealing with foreign currencies. Because many people don’t know this, but in addition to the exchange rate, you always pay a 2.5% conversion fee with a debit card. Purchase warranty (stolen, damaged or undelivered item) which lasts between 90 and 180 days depending on the credit card. Do you know of a debit card that will pay you back in this situation?
• From insurance for a trip interruption or cancellation, health, flight cancellation or delay, luggage loss or delay, car rental, mobile devices, etc. Radio silence here again with the debit card.
• And finally, access to airport lounges, “buddy” tickets that allow you to invite a friend to fly with you, priority boarding, upgrades, checked bags included, $100 off airport parking etc.

Let’s say you’re willing to give up your debit card and use a credit card. Be aware that from the start, even cards with no annual fee will earn you reward points. You will receive a bonus on joining and point multipliers on your spending.

In addition, depending on the credit cards, I’m thinking of the AIR MILES line, you can participate in promotional events that will increase your earnings in points at participating businesses. Have you heard of the Shop the Block promo?

So why pay a credit card fee? The big difference between free credit cards and credit cards with an annual fee is that they are more “generous” when it comes to:

• the bonus received upon joining,
• point multipliers when spending,
• more comprehensive insurance,
• benefits such as buddy tickets or airport lounges access that do not come with free credit cards.

Take the time to calculate your needs, your shopping habits and your plans: groceries, gas, restaurants for example. Would the $120 fee be worth it?

Compare what a 1% or 2% difference between a free credit card and one with an annual fee would do to your annual budget.

I use the example of my last acquisition which had a bonus offer worth over $600 and the annual fee is $149 per year.

This card, which offers excellent insurance in all respects, also absorbs the 2.5% conversion fee and provides $100 in travel credit year after year, reducing the cost to $49.

Since I often make purchases in U.S. currency and this credit card has an earning rate of 3% on travel purchases and 1.5% on other purchases, it’s a good idea to keep it year after year.

In short, if you can and your credit report allows it, I invite you to take the plunge and keep your debit card only for the above-mentioned examples. The rest, opt for a credit card and its many advantages.

However, like 70% of Canadians who have credit cards,

• you must have a good habit of resetting all your bill balances to zero each month and never pay interest.
• You must be likely to restrain yourself in the face of discounts and buy only what you need.

Bye Bye debit card!