They serve as a form of security that you can use to do everything from rent a car to check into a hotel. And they can be invaluable if you run into an emergecney that requires fast access to cash like having your car break down far from home. What's more, as long as you pay your balance off in full every month, you can buy goods and services today, and not pay for them until the due date on your next statement.

This means you can use them for an interest-free loan for as long as seven weeks or so.

What's more, there is a wide range of cards to choose from, from no-frills low-interest-rate cards to premium cards that let you earn rewards or discounts on travel.

Canadians have a vast array of choices when it comes to selecting a credit card that's right for them. More than 600 institutions (mostly banks, credit unions and caisses populaires) issue credit cards and offer a wide variety of benefits, interest rates and fees. In 2005, there were more than 56 million Bank-issued credit cards in use across Canada.

Types of cards
Broadly speaking, there are three types of credit card accounts. They are: bank cards (such as Visa and MasterCard), store/priority cards (such as the Bay and Sears) and travel/entertainment cards, also called charge cards (such as American Express or Diner's Club).

Bank cards:
These types of cards offer consumers a wide range of choice in terms of the annual fee associated with the card, reward and rebate programs, extra benefits such as travel insurance, as well as the interest rate charged on outstanding balances. Credit cards issued by Canadian financial institutions carry interest rates that can range from as low as 8.4% to over 20%. with annual fees of anywhere from $0 to $150 or more.

Some credit cards feature a rewards program that allows you to earn points with your purchases that can be spent on goods and services, particularly travel. However, they usually come with higher interest rates. Similarly, affinity cards allocate a specified percentage of revenues the card earns to a favourite charity or other association, like a beloved alma mater.

Store cards:
These types of cards are usually only accepted at outlets run by the associated retailer or service company, and often have interest rates on unpaid balances from 24 to almost 30 %. Store cards don't typically have any annual fee. The benefit of this type of card is that they are often associated with discounts or reward programs offered by a specific store or retailer.

Travel/entertainment (charge) cards:
These cards offer unlimited credit limits, which means that cardholders must pay the entire balance off each month. Charge cards typically have high annual fees, and a high penalty interest rate for late payments (usually around 30%). These cards however, often have longer grace periods than other cards and have reward programs associated with them.

The Financial Consumer Agency of Canada's website is a great resource and includes interactive tools designed to help answer questions about credit cards.