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TORONTO, September 21, 2009 – A credit card is more than just a charge card. While it's great for emergencies, it also represents the first step towards building a good credit history. But it's important to be realistic about your needs and your ability to manage credit responsibly so that your credit serves as an effective and flexible payment tool rather than a pathway to debt.

Nancy Marescotti, Director, Card Marketing, BMO Bank of Montreal, offers the following advice to give you the credit card smart you'll need before applying for your card.

Know your limit
A credit card isn't a blank cheque and shouldn't be treated like one. The limit on your card helps protect you from overspending. If you worry about the urge to splurge, ask to have your credit card set with a low limit so that you won't spend more than your budget will allow.

Not all cards are created equal
Cards come with a variety of rewards, features, fee structures and interest rates. Take the time to shop around and choose a card that suits your circumstances and needs.

Don't be fooled by introductory ‘teaser' rates
If you're likely to carry a balance, pick a card with a low annual interest rate as it will make a significant difference in what you pay. But don't be fooled by ‘teaser' rates that entice you with a short-lived low introductory rate. Once the introductory period is up, your interest rate could skyrocket.

Pay it off
Always try to pay your balance in full every month by the statement due date. Otherwise, you will be charged interest. At the very least, make the minimum monthly payment and if you can, try to pay more than the minimum balance due since the faster you pay off the balance, the less interest you will pay.

Build a good history
Ok, now that you've got it, use it responsibly so that you don't damage your credit rating. A bad credit rating can have a negative impact when you want to get a loan, buy a car or condo or even get the job you want. Build and protect your good credit rating by paying your balance or making the minimum monthly payment on time.

Be loan smart
The ability to take a cash advance on your card can be a life-saver in an emergency, but remember, you'll be charged interest from the moment the cash is in your hands. Try to avoid cash advances if at all possible.

Protect your identity

Identity theft occurs when someone steals your personal information, such as your name, Social Insurance Number, or credit card number to commit fraud.

Protect yourself by protecting your personal information. If you make online purchases, ensure the website has security features that prevent your information from falling into criminal hands. If you are providing your credit card information to a merchant over the phone, ensure the merchant is reputable. Lastly, do not share your credit card with friends – any slip up can put your credit at risk.

“Financial institutions are well equipped to help you make appropriate, informed choices,” said Ms. Marescotti. “Simply visit your bank's local branch or its website, and you can be well on your way to making that choice. This is one instance where we'd be delighted to help you with your homework!”

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