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I recently moved from France to Canada, and am a bit lost regarding the way credit cards work in North America. Let me explain my understing to give some context to my question:

In France, one has basically a single bank account (in most cases), from which you can emit checks, do wires and that is attached to an optional credit card. Whenever you pay something with your credit card, the amount of money is just deduced directly from your bank account. If you have no money on the account, the payment is refused. This is for the common case (some banks allow for a negative amount on your account for instance). Checks are free. You can also opt-in to have all your payments automatically delayed until the end of the month which costs a static fee every year.

Now, as I understand, things behave a little different in Canada: I have a check account, with an attached Debit Card and another, different account with a (VISA) Credit Card. Using the former to buy something would directly decrease the balance of my check account or would be refused in case I'm lacking the money. Using the latter would just decrease the balance of my VISA account and I would have to make a wire in a period of 21 days to avoid paying interests.

People also told me that I would have to use my credit card more often than my debit card if I want to build a credit history (which is apparently a big deal here, but doesn't really exist in France, or I just never heard of it before).

Is my understanding okay ? If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt.

Another thing that bothers me is that the credit card apparently has a rather low credit limit. If I wanted to buy something that costs $2500 but only have a credit limit of $1500, can I make a preemptive wire from my check account to the VISA account to avoid facing the limit ? If so, what is the point for the customer of having two accounts (and two cards for that matter...) ?

Sorry if those questions seem dumb to some of you, but when it comes to money, I'd rather look dumb asking silly questions but make sure I get everything right.

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    What you have in France is not a credit card at all, but a debit card. Credit cards give you credit, which is to say that they let you spend money you don't have. But in general banking in North America is expensive and awful by European standards, so be prepared for a big disappointment. For example my UK bank lets me just set up a direct debit to automatically pay the full balance on my credit card each month (assuming I have enough money in my account), so I can't forget. – Mike Scott Sep 30 '14 at 18:30
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    Is it really called a "Credit Card", in English, in France? UK debit cards are all Visa cards, but they're debit cards not credit cards. – Mike Scott Sep 30 '14 at 18:33
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    @MikeScott: In France, people call that a "carte de crédit" which is indeed the litteral translation for "credit card". Youngsters can also have a "carte de retrait" which only allows you to get cash from an ATM but not pay in stores or on the Internet (which seems closer to the debit card). – ereOn Sep 30 '14 at 18:35
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    Sounds like a "false friend" in the translation, then. "Demander" translates as "ask", not "demand". "Preservatif" means "condom" not "preservative". And "carte de crédit" means "debit card" not "credit card". – Mike Scott Sep 30 '14 at 18:38
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    @Xrylite: In France this option is called "paiement différé" which I would translate as "deferred payment". – ereOn Sep 30 '14 at 18:59
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A credit card is a way to borrow money. That's all. Sometimes the loans are very small - $5 - and sometimes they are larger. You can have a credit card with a company (bank or whatever) that you have no other relationship with. They're not a property of a bank account, they are their own thing. The card you describe sounds exactly like a debit card here, and you can treat your Canadian debit card like your French credit card - you pay for things directly from your bank account, assuming the money is in there. In Canada, many small stores take debit but not credit, so do be sure to get a debit card and not only a credit card.

Now as to your specific concerns. You aren't going to "forget to make a wire." You're going to get a bill - perhaps a paper one, perhaps an email - and it will say "here is everything you charged on your credit card this month" along with a date, which will be perhaps 21 days from the statement date, not the date you used the card. Pay the entire balance (not just the minimum payment) by that date and you'll pay no interest. The bill date will be a specific date each month (eg the 23rd) so you can set yourself a reminder to check and pay your bill once a month.

Building a credit history has value if you want to borrow a larger amount of money to buy a car or a house, or to start a business. Unlike the US, it doesn't really have an impact on things like getting a job. If you use your card for groceries, you use it enough, no worries. In 5 years it is nice to look back and see "never paid late; mostly paid the entire amount each month; never went over limit; never went into collections" and so on. In my experience you can tell they like you because they keep raising your limit without you asking them to.

If you want to buy a $2500 item and your credit limit is $1500 you could prepay $1000 onto the credit card and then use it. Or you could tell the vendor you'd rather use your debit card. Or you could pay $1500 on the credit card and then rest with your debit card. Lots of options. In my experience once you get up to that kind of money they'd rather not use a credit card because of the merchant fees they pay.

  • Thanks for these answers. If I were to buy on the Internet, I assume using a debit card is a no-go right ? In this case, can I just, for a purchase of $5000, wire $5000 on the VISA account, pay online and forget about it ? (Like I would do in France ?) – ereOn Sep 30 '14 at 18:39
  • My son's wallet was lifted and his debit card was used online to buy something costing over $200. The thief did not need the PIN to do that. (And the bank reversed the fraudulent charge.) So yes, you can use your debit card online. Or you could prepay the credit card and use that. There's really no difference, unless your cards gives you some sort of points that you want more of. – Kate Gregory Sep 30 '14 at 18:41
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    As of 2011 the rules in Canada around limit increases have changed. Limit increases require authorization from the user. fcac-acfc.gc.ca/eng/forIndustry/publications/… – Myles Sep 30 '14 at 18:46
  • @Myles is that true in the U.S. now too? for years i kept getting unrequested limit increases to the point where I had a limit about 5x my monthly spending on the card. Then it just stopped for a few years, and now I have started getting, "Your credit limit is approved to be increased, just call us to have it done!" letters. – Michael Sep 30 '14 at 23:30
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    @ereOn You can typically set things up so it's automatically paid from your bank account. If you do that you also won't end up paying some insanely high interest. Always pay the entire amount on the due date. – Guy Sirton Oct 1 '14 at 4:00
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If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt.

I have my back account (i.e. chequing account) and VISA account at/from the same bank (which, in my case, is the Royal Bank of Canada).

I asked my bank to set up an automatic transfer, so that they automatically pay off my whole VISA balance every month, on time, by taking the money from my bank account. In that way I am never late paying the VISA so I never pay interest charges.

IOW I use the VISA like a debit card; the difference is that it's accepted at some places where a debit card isn't (e.g. online, and for car rentals), and that the money is deducted from my bank account at the end of the month instead of immediately.

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Is my understanding okay ? If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt.

Which is where the credit card company can add fees so you pay more and they make more money. Don't forget that in the credit case, you are borrowing money rather than using your own.

Another thing that bothers me is that the credit card apparently has a rather low credit limit. If I wanted to buy something that costs $2500 but only have a credit limit of $1500, can I make a preemptive wire from my check account to the VISA account to avoid facing the limit ? If so, what is the point for the customer of having two accounts (and two cards for that matter...) ?

If you were the credit card company, do you believe people should be given large limits first? There are prepaid credit cards where you could put a dollar amount on and it would reject if the balance gets low enough. Iridium Prepaid MasterCard would be an example here that I received one last year as I was involved in the floods in my area and needed access to government assistance which was given this way. Part of the point of building up a credit history is that this is part of how one can get the credit limits increased on cards so that one can have a higher limit after demonstrating that they will pay it back and otherwise the system could be abused.


There may be a risk that if you prepay onto a credit card and then want to take back the money that there may be fees involved in the transaction. Generally, with credit cards the company makes money on the fees involved for transactions which may come from merchants or yourself as a cash advance on a credit card will be charged interest right away while if you buy merchandise in a store there may not be the interest charged right away.

  • What about wiring some money from my check account preemptively (say to have a +$5000 balance on my VISA account). Is that a valid operation ? Is there any risk doing that ? – ereOn Sep 30 '14 at 18:33
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    There's a kind of nominal risk in pre-paying your credit card and building up a positive balance, which is that if the company goes into bankruptcy you might lose your money. But it's a pretty low risk with an established bank. – Mike Scott Sep 30 '14 at 18:36
  • @MikeScott Or perhaps the risk that you happened to pay at the wrong time (in the billing cycle?) and the credit card company's computer sees the positive balance and decides to issue you a check (by mail of course) which puts you out both the money (until the check arrives and you can deposit it) and the ability to do the transaction. – Michael Sep 30 '14 at 23:32
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I think it's worth pointing out explicitly that the biggest difference between a credit card (US/Canada) and a debit card (like your French carte de crédit) is that with a credit card, it's entirely possible to not pay the bill or to pay only the "minimum payment" when asked. This results in you owing significantly more money due to interest, which can snowball into higher and higher levels of debt, and end up getting rapidly out of control. This is the reason why you should ALWAYS pay off the ENTIRE balance every month, as attested to in the other answers; it's not uncommon to find people in the US with thousands of dollars of debt they can't pay off from misuse of credit cards.

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