Credit card or credit line: which one should you choose?

I had a 4 years experience at dealing and using several credit cards and one credit line. I am Canadian, so the following article reflects my very own experience, from a Canadian point of view.

Benefit of having multiple credit cards

I own several credit cards. This year, I discover one of the benefits of having multiple credit cards: credit card free balance transfer. A credit card balance can be a good option when money is needed, and no money is available. So far, I use free balance transfer when I was in such position than only a credit card balance transfer at a low rate was the only solution left. I don’t like having debt, and I try to avoid them as much as I can. Interest rates are usually pretty low with credit card balance transfer. So far, with my own credit card balance transfer, I had experience the low interest rate of 3.99% and 4.99%. Those interest rates are pretty low compare to the usual 19% interest rate you can usually pay with regular credit cards.

Also, if you shop around for your credit card, you will certainly be able to find a credit card with a lower interest rate, other than the usual 19%. In Canada, Visa Desjardins offer the credit card Modulo Gold at the low interest rate of 9.9%. But this small interest rate come with a price, Modulo Gold credit card holders had to pay an annual fee of 50$.

Benefit of having a credit line

I own a credit line with TD Canada Trust since 2005 and among all of the financial facilities I have, I truly appreciate my TD credit line. I love my TD credit line for the rate: quite low to compare to some of the credit card. Even Desjardins credit line is higher than 8%. Desjardins credit line – the Desjardins Personal Line of Credit, as of September 12, 2009, is at the interest rate of 9.75%. Luckily, my TD credit line is at 8%. Financial products are like everything else: shopping around can help you to save big amount of cash.

As long as I remember, the rate for my TD credit line had been of 8% since I had opened the credit line, back in 2005. From my experience, the TD credit line interest rate is quite stable. At TD, my personal limit had been fix at 5 000$, which is reasonable. But of course, I would like to see my TD credit line increase, since I had been with TD since 2005. I once call to have it increase, but I was told that I needed to visit a TD bank.

About the credit line payment

At TD Canada Trust, the payment of the credit line is due on a fix day on every month. In my case, I have to make a payment on the 21 of each month. I usually proceed to the payment at the beginning of the month. And I usually pay more than the minimum require. Which help to keep a good credit score. Also, no need to use a credit line payment calculator: each month, the payment due is 3% of the overall loan that is on the credit line.

Because major part life is all about credit, credit card, credit line and… credit report

In Canada, the credit bureau Equifax Canada and TransUnion Canada offer to consumers a free credit report. Before opening extra credit, ask yourself: do you need more? As for myself, it’s seem like I never got enough, but among the way, I learn how to use my credit to my own benefit.

If you have any question regarding you credit score or the state of your credit score, you can consult Equifax consumer services or TransUnion Canada consumer services.

Conclusion

Financially speaking, a credit line can be better to hold than a credit card, because of the credit line small interest rate. My TD visa card had an interest rate of about 19%, which is more than the double of the interest rate of my TD credit line. Which one do you think I use the most: my TD credit line or my TD visa card? Of course, my TD credit line.

Holding a bank line of credit can represent a great asset. Both credit lines and credit cards are useful too have. The key is to use them efficiently and with prudence.