Personal Finance

[UPDATE: DECLINED] Do I need/should I get a credit card? [mid-20s, live with parents, min wage job]

  • Last Updated:
  • Jan 11th, 2017 5:35 pm
[OP]
Deal Addict
Dec 11, 2007
2419 posts
174 upvotes

[UPDATE: DECLINED] Do I need/should I get a credit card? [mid-20s, live with parents, min wage job]

I'm a recent grad. I'm working min wage while I (slowly) look for my first real job.

I've been told getting a credit card and using it for small purchases is a good way to build credit.

Is that true no matter the amount? Because after groceries and helping out with bills I have little left. I have no savings at all. I also have a mountain of student loan debt (which I am not making payments on because I don't make enough).

I'm aware of the troubles people get into with credit cards so would it be a good idea for my situation?

Update: So I applied at CIBC, got declined, too much student loans that I haven't begun making payments on.

I was told I can apply once I begin making payments but finding a decent job is months away at minimum.

What are my options?
Last edited by umop on Dec 31st, 2016 8:55 pm, edited 1 time in total.
53 replies
Newbie
Oct 24, 2016
36 posts
21 upvotes
Ottawa
It's worthwhile if you can be disciplined enough to pay off every bill in full and not spend more than you have. It doesn't matter if it's small amounts, the point is to start building a reputation.

If, however, you'll be tempted to spend extra and buy consumer goods like a new TV you can't afford, then you're wise to put it off until you have more cash. If the reputation you'd be making is a bad one, better to wait until you can trust yourself first.
[OP]
Deal Addict
Dec 11, 2007
2419 posts
174 upvotes
Yarp, was thinking of $20/month on gas or something and paying it off right away.

Also, do you build credit faster by spending more? Not that I plan to, just curious.
Jr. Member
Nov 23, 2014
123 posts
41 upvotes
Just make sure you are paying off your bills by the due date and that should be sufficient to build your credit.
Newbie
Oct 24, 2016
36 posts
21 upvotes
Ottawa
umop wrote: Yarp, was thinking of $20/month on gas or something and paying it off right away.

Also, do you build credit faster by spending more? Not that I plan to, just curious.
Wait until your bill comes, then pay it off. Otherwise it won't show on your report that you're actually using the card.

Buying more won't help. It's more useful to use a small amount of a larger amount of available credit. Your score is hurt if you use too much of your available credit -- how much you use is called your credit utilization, and keeping it under 30% on each bill is a good threshold to aim for.
Deal Addict
User avatar
Dec 28, 2011
2560 posts
240 upvotes
Calgary
truthfunctional wrote: Wait until your bill comes, then pay it off. Otherwise it won't show on your report that you're actually using the card.
Not sure about that.
Deal Addict
Dec 22, 2008
2170 posts
969 upvotes
Victoria
umop wrote: I'm a recent grad. I'm working min wage while I (slowly) look for my first real job.

I've been told getting a credit card and using it for small purchases is a good way to build credit.

Is that true no matter the amount? Because after groceries and helping out with bills I have little left. I have no savings at all. I also have a mountain of student loan debt (which I am not making payments on because I don't make enough).

I'm aware of the troubles people get into with credit cards so would it be a good idea for my situation?
If you're even the slightest bit concerned it will encourage you to spend beyond your means, don't do it.
Sr. Member
Jun 5, 2016
593 posts
786 upvotes
truthfunctional wrote: That was my impression but I could easily be wrong. Perhaps someone can clarify.
Whether you use your available credit or not doesn't change your score. Utilization only has a negative effect, so 0% and the highest "good" amount of utilization (lets say 30% since it was mentioned earlier) have the same effect; higher will have a negative effect.

Really - utilization doesn't matter unless you are planning to apply for a mortgage or a large amount of credit in the next few months.

The only card type which is a bit different is a charge card and this is only because your highest ever balance is reported as your credit limit.
Deal Fanatic
User avatar
Apr 24, 2017
5444 posts
3981 upvotes
truthfunctional wrote: That was my impression but I could easily be wrong. Perhaps someone can clarify.
It depends on the bank. I haven't used my CIBC card for a long time but they report to the TU every month.
📱 Telus: $30/25GB Peace of Mind Plan + 1000 International minutes
💳 Credit card combo (2-7.5% return): AmEx + Scotiabank + CIBC + MBNA
Deal Fanatic
User avatar
Sep 23, 2009
5060 posts
2246 upvotes
MaxPower19 wrote: If you're even the slightest bit concerned it will encourage you to spend beyond your means, don't do it.
I disagree.

He already says that he is slowly looking for a real job.

If his parents are not willing to kick him into acting properly maybe debt will.

If he doesn't get a real job and start paying taxes than how can we pay those working for the government while receiving Defined Benefit Pensions and COLA (cost of living adjustments)?

Maybe getting into trouble with credit cards will make them take life seriously instead of depending on Mom and Dad.
Sr. Member
User avatar
Mar 9, 2012
738 posts
326 upvotes
You should build up some savings before thinking about building up your credit.
But If you really are all excited about have some credit, get one credit card, put your cellphone bill on it and pay it in full every month.
Deal Expert
Aug 2, 2001
16732 posts
6957 upvotes
You should always have a credit card available for emergency expenses. As someone in your mid 20's you may be out somewhere and not have enough cash for something you need - such as gas for your car. Having a credit card is an excellent strategy to being prepared for unforeseen circumstances. Things happen in life and you should do your best to be prepared.
Newbie
Jun 18, 2012
3 posts
1 upvote
COLLINGWOOD
If you get a cash back credit card you can even earn money off of it. Something like a Tangerine credit card gets you 2% cash back. Pay it off before its due and never pay interest. Might net you $50 - $200 bucks extra per year depending on what you spend. And you also build your credit rating. The cash back can also be put in a basic savings account getting you an extra 0.8% interest off of that $50 - $200 bucks.
Deal Addict
User avatar
Feb 25, 2014
2170 posts
340 upvotes
Mississauga
I don't know. Should you?
Oh sada kehra bapu karda black nee, Jehra tere shahir (Toronto), Le lawan flat nee
Deal Addict
User avatar
Oct 25, 2009
4328 posts
1338 upvotes
Moncton
Cheaper than the silly $30 all inclusive plans the banks offer that allow people "free" Interact payments. Or taking cash out of the wrong ATM and paying the $3 fee. Or paying the overdraft penalty. Or using a Payday loan service.

You will generally need a credit card to rent a car or book a hotel room, maybe even a fligh. If you have a visa or MasterCard debit, some of the online inconvenience of not having a credit card are mitigated, but not totally. Tow trucks are usually greatfull for cash, but you need to have it on you.

Just don't be overly optimistic about future salaries and spend accordingly. Sell the car ASAP. This is 2017!
Toronto is a very small part of Canada
Sr. Member
Feb 17, 2015
982 posts
360 upvotes
Windsor, ON
As mentioned get a cashback one and use it like a debit card keep track of your expenses on it so your not exceeding what you normally spend on your debit card as well, as for the limit on it my opinion is 30% of your income is optimal, if you are going to borrow from it make a plan to pay the debt back quickly within 3 to 6 months otherwise with the 20% interest on those cashback cards...the bank will "make that cash back"
Deal Fanatic
User avatar
Aug 24, 2016
8175 posts
8709 upvotes
The Prairies
truthfunctional wrote: Wait until your bill comes, then pay it off. Otherwise it won't show on your report that you're actually using the card.
This is a myth.
While I agree that you should wait until the bill comes in and pay in full, to reap the benefit of the grace period, paying it early doesn't do any harm.
Each trade line has an entry for date of last activity that would show the account is active.
Deal Expert
User avatar
Jan 27, 2004
45400 posts
8427 upvotes
T.O. Lotto Captain
Everyone should have at least 1 credit card... We're in a society where you can't really function without a good credit score.

What if you need a car to get to work? That is a reality most have to face in this economy... If you stick to only jobs in your area you'll get suck. You'll most likely have to commute... Not many people can plop down $20,000 off the bat... or even $10000 for a decent used car.

EVen renting an apartment requires a credit check.
Deal Fanatic
User avatar
Apr 16, 2006
6136 posts
588 upvotes
Now is the perfect time to start building your credit. Do it.

Top