By Info FCNB–May 6, 2026–5 min read
Does it feel like everyone around you is spending more or living larger than you are? Many people experience fear of missing out (FOMO) — the feeling that others are enjoying better experiences or having more fun. Social media can amplify that feeling, and it can influence spending decisions. In fact, 50 per cent of adults aged 18 to 38 say they have spent money they didn’t have to keep up with their friends and avoid FOMO.1
Credit cards provide instant gratification of buying a product or service right away even if you don’t have the money saved. But if you’re not careful, the debt can pile up faster than you are able to pay off. According to a study by Equifax, Canadians aged 18 and 25 have an average of $8,333 in debt.
A credit card is a card issued by a financial institution or financial service company. It lets you buy items or services "on credit." Paying with a credit card means you get the item immediately without having to spend your money at that moment. The credit card provider pays the seller when you purchase the item, and you repay the credit card provider later.
If you don’t pay off your monthly bill on time or make only the minimum payments required, interest is charged on the balance you owe. Over time, that interest can significantly increase the total cost of what you bought, often costing far more than if you had paid using savings.
For example, imagine buying a $650 television using a credit card with a 19.99 per cent interest rate.
If you paid $50 per month, you would pay off the balance in 15 months. The interest paid over that time would equal an extra $89 above your purchase price. If you simply made the minimum payment each month, it would take eight years and three months to pay off the television. You’d pay $553 interest and your TV might not even work after eight years!
Using a credit card can help build a credit report. If you use your credit card to make purchases and pay off the balance in full each month, it shows lenders you are a responsible borrower and increases your credit rating. Lenders consider your credit report when you apply for other loans, like a mortgage or car loan.
Many credit cards offer bonuses or perks when you use them. These can include loyalty rewards, cash back options and points to purchase goods and services, like air travel and groceries. While these perks can be appealing, it’s important to factor in the true cost of the rewards. For example, if you use your credit card enough in one year to earn $500 worth of free products, but you are paying $1,000 in interest to earn the rewards, your rewards aren’t free after all.
Missing payments or carrying a growing balance can have consequences. Late fees may apply, interest rates can increase, and your credit report may be affected. Over time, this can make it harder to qualify for future borrowing.
Occasionally, your credit card company may offer to increase your credit limit. Just because you qualify to borrow a certain amount doesn’t mean you can afford it – or need it! Borrowing more than you can manage and making late payments can have long-lasting negative effects. Lenders may not be willing to approve a student loan for your education, a car loan or a mortgage if you don’t pay your credit card bill on time or often make late payments.
When choosing a credit card, pick the one that is right for you. Things to consider include:
Annual Fees: Some cards may charge a yearly fee. Ask if there is a fee, and what, if anything, it covers.
Interest rates: Many cards start with a low “introductory” interest rate that increases after the first few months.
Insurance and warranties: Credit cards may have extended warranties and insurance options on the products and services you buy with the credit card. Read the fine print and ask questions about what may or may not be covered.
Your interest rate may include additional fees, which is important when you are figuring out the true cost of credit. Ask questions and fully understand the total cost before committing to a credit purchase. In New Brunswick, the Cost of Credit Disclosure and Payday Loans Act requires the creditor to tell you up front about all the costs you will be charged when you apply for a credit card.
Give yourself a cooling off period: If you don’t have the money right now, pause and consider whether the purchase can wait.
Know your limits: Just because you qualify to borrow up to a certain amount doesn’t mean it fits your budget.
Have a plan to pay off your debt BEFORE you make a purchase: Know how much time it’ll take to pay off the credit amount and where that money will come from in your budget. Some credit companies offer options like no interest or no payments for a specific period. But if you don’t pay your balance in full within the predetermined time frame, you may have to pay ALL the interest charged, regardless of the balance left owing.
Think about how long the item will last: If an item will wear out in a year but takes two years to pay off, you may still be paying for it when it needs replacing.
Always read your contract: Make sure you understand:
What is the interest rate?
How long will it take to pay off the debt?
What is the total cost of credit? (The difference between paying in cash and paying on credit)
Is there a grace period? (The amount of time you have to pay off your bill without being charged interest)
What are the penalties for late or missed payments?
When are your payments due?
The Financial Consumer Agency of Canada (FCAC) has a Credit Card Payment Calculator you can use to see how much it will cost to borrow and how long it will take to pay off the debt.
1 https://www.creditkarma.ca/credit/i/fomo-spending-affects-half-young-canadians 2 https://www.consumer.equifax.ca/about-equifax/press-releases/-/blogs/total-consumer-debt-climbs-to-2-2-trillion-with-credit-card-spending-up-11/