A holiday credit saver

Watch out for annual fees: depending on your balance, the fee may end up costing you more than a card with a higher interest rate but no fee. (For instance, on an outstanding balance of $1,500, a card with an interest rate of 13.5 percent with a $60 annual fee ends up costing you the same as a no-fee card at 17.5 percent.)

Grace period — the time from statement date until they apply interest charges — is usually 21 days. You can carry a balance indefinitely as long as you make the minimum monthly payments and don't exceed your limit.

Charge cards such as American Express are for the financially responsible only, since they have no pre-set spending limit and require payment in full each month. Annual fees range from $55 to $350. The grace period is usually 30 days, but the late penalties are stiff: equal to 30 percent annually.

Value-added cards may be credit or charge cards, with extra features such as airline or merchandise points, buyer's insurance, travel insurance and more. Often they have an annual fee: make sure the extra features are worth it.

With debit cards, you can't spend what you don't have. The cards are used to withdraw funds directly from your account at the point of purchase. Transaction fees range from 20 cents to 50 cents, but may be waived depending on your account balance and type.

So what should you do? The simple fact is credit may not be for you right now. The smart thing would be to cancel the cards and pay off the debt with a line of credit or consolidation loan. Try (andhere's where the self-discipline comes in) switching to a debit card. If you insist on using a credit card, keep just one low-rate card or a charge card that you must pay off each month. One option for next year: start making monthly contributions to a Canada Savings Bond when they come around in October so that the following December, you can shop with cash.

If you generally pay off balances within a couple of months, then you're in the responsible-user realm. You can feel comfortable using most of the card options available, but if you consistently take a couple of months to pay off balances, low-rate cards are your best bet.

And then there's the person the rest of us strive to be: the credit puritan who pays off cards in full each month. You are safe with any of the options, but the value-added card is your best bet. That way, you finance your purchases for 21 days on the financial institution's dime, while also earning points for tin shovels and trips to Buffalo, N.Y.

The bottom line? Match proper credit options to your lifestyle and spending habits and it will go a long way toward ensuring the season is as it should be: merry.