Credit Card

Next step is to establish your credit. The easiest way to do this is to apply for a credit card. When you apply for one, they will usually investigate your credit history. You may be wondering, "How can I get a credit history when I just got here?" or "How do I establish a credit history if you won't even give me a credit card?" Those were the same questions we asked ourselves. Fortunately, I have found ways on how you can establish your credit.

The easiest way to get a credit card is to put up a security deposit with the bank, say $1,000 to $2,000. The money is usually placed in a 1 year term deposit and will be used somewhat like a collateral. You earn interest on the deposit of course and in turn the bank will issue you a credit card with a credit limit equal to your security deposit. After 1 year, you would have built up a credit history and you can withdraw your security deposit if you want.

Banks are very selective on how they give credit to new immigrants, but they have since been more relaxed on their guidelines than when we first landed in Canada.

Normally, banks require a security deposit if you don't have a lot of money deposited with them. But some people I know who deposited more then $10,000 were not required to put up a security deposit and were able to get a credit card with a $2,500 credit limit. It pays to have money.

It is important that you get a credit card since you won't be able to pay cash all the time. Example is if you were buying appliances, you probably won't be carrying over $1,000 in cash around. And some establishments don't accept $100 bills for security reasons.

The important thing to remember with having a credit card to is make sure you guard your credit history. Pay the balance in full and on time, the better your credit history, the better interest rates you can get. Your credit history also determines the interest rate on your mortgage and whether you qualify for one or not.

The interest rates on credit cards issued by the banks are somewhere around 16% to 19% per annum. Some credit cards charge fees, some don't. I suggest you get a credit card without fees in the beginning. Credit card with fees offer a lower interest rates and some offer points or air miles. But if you pay your balance in full all the time, the interest rates won't matter.

Other kinds of credit cards that are available are those issued by department stores and other specialty stores like Sears, Home Depot and Canadian Tire. These store offer discounts and other priviledges with their store credit cards but generally charge over 20%. Some even as high as 29%. Again, if you pay off your balance in full, they are great to have. But if you are keeping a balance, they can be a pain to pay off. Most of the time, I suggest you stay away from these store cards.

Once you get a credit card, you'll be getting offers left and right to apply for new credit cards. I suggest you be prudent and have no more than 3 different credit cards. One for daily expenses and the others for emergency.

If you are married, you should each get a credit card. A credit history is based on an individual and not a family.