Daily Education - Application of Credit Cards

Are you a young adult looking to get your first credit card? Do you already have a credit card and looking into getting more? Or are you a teenager who thinks credit cards are not something to worry about right now? Well, today I will share some of my personal experiences and my speculations for people to get credit cards approved.

First, before even getting a credit card, you must need to learn to be responsible. I don't want to help you get your first credit card only to see you put yourself in a major debt for the years to come. Being responsible means only spend money when you have them or you see money coming in before your credit card bill is due. Having a good credit rating will help you in the long run to get approved for more credit cards and higher debit and credit card limits. I will talk more about this later in this blog.

Okay, so you want your first credit card? If you are a teenager, it is almost impossible to get a credit card approved for you by your name. Teenagers will need help from parents for a credit card. When I was a teenager, my parents see me as a responsible teenager. My aunt is a CFP (Certified Financial Planner) and she told my dad to help me build my credit rating. My dad got a Scotia Gold Visa card when he bought the house back in 2001. He simply asked the bank to get an additional card for his Visa account and have that card assigned to me. Because the card is attached to the main card, so it shared the same credit limit of $5000. Having a $5000 limit credit card at an age of 17 was a huge deal for me, and I don't think every parent would trust their kids enough to do that. My dad encouraged me to spend it responsibly and on things that I need, just to build my credit rating. At the time, we were doing renovation in our basement and I would go with him to Home Depot or Canadian Tire to buy paint, nails, dry walls, and etc. He would then get me to use my card to pay for these renovation items, and these purchases ranged from $10 to $2000. By doing so, it registered as purchase from me. As long as my dad pays the bill on time, which he always does, my credit rating would be improving. It is almost like building a credit rating from scratch. (On a side note: My dad was flipping houses back then and he flipped 3 houses in total. It was near the best times for housing markets. (2003 - 2007) Besides earning loads of money ($50,000 per year from flipping houses, excluding rent), he was able to drive his credit limit on his Canadian Tire Master Card up to $10,000 per month. We literally watch the credit limit increase every month, because my dad would max out his credit card every month. So we see it jumps from $2,000 to $3,500, in increments of $1,500 each month. So, if you want a high credit limit, you gonna have to make the purchases. Or if you have enough money in the bank, just ask for it.)

When I got accepted to University of Waterloo, my dad took me to the exact Scotia Bank Salesperson who opened his bank account back in 1997. The salesperson knows that my dad is very supportive and if I cannot pay for my credit card, he would be able pay for me. So I got my Scotia Bank L'earn Visa, which is designed for students. This is technically my first credit card, since I am solely responsible for it. My limit was $500, and I gave back the Scotia Gold Visa to my dad. I was managing my own credit card and I was happy. I didn't want to cook while in university so I always buy food with credit cards. Monthly bill were around $200-$300 and I always pay before bill due date. This will never hurt my credit rating.

If you are a young adult and you want your first credit card, it seems that you would need a stable job to get approved for one. If you just graduated from high school and heading to university or college, or you have studied in university or college for a period already, you probably can approved for a credit card just by having a summer job and apply while you are employed. Take your pay stub to a local bank and make sure you tell them you want to apply for a student credit card. There are several options available and each bank has a slightly different options. I share some of my experiences later in the blog.

Got your first credit card already and looking into getting another one? Different credit cards have different options that certainly could appeal to you. You should always manage your credit card well and not miss the bill due dates. Occasionally, you may miss one or two due dates by a few days. As long as you pay up and maintain a good credit rating overall, a few screw ups won't hurt you. Since I was enrolled in coop at University of Waterloo, I choose to apply for my next credit card during my coop work term, when I will be earning money. While I have my L'earn Visa, I wanted to get the Canadian Tire OPTIONS Master card for the Canadian Tire money. I applied for the credit card online, during my second coop term. The application was declined. I guess it was declined on the grounds that I don't have a stable income and I was still a student. A year later, I tried to apply for a CitiBank Petro Canada Master Card. It was approved with initial credit limit of $1,800. It seemed that Citi Bank was having a hard time during the initial credit crunch (2007) and they would accept anyone. After purchasing two laptops separately with each costing just over $1,000 with my new Master Card, Citi Bank informed me that my credit limit was increase to $3,600 and then to $5,300.

My next Master Card was the Bank of Montreal SPC MasterCard with Air Miles awards. I applied for it online and specifically asked for the University of Waterloo background to be on the card. (They offer this for most of the major university in Canada) About 3 days after my online application, I was at the BMO for another reason. While I was there, I asked about my credit card application with one of the salesperson. She then called the Credit card branch and I was asked to verify some information such as driver's license and previous addresses. They then proceed to approve my credit card. About 2 days later, I received a letter in the mail from BMO that rejected my application. Turned out, they decided to reject the application. But my visit to the BMO branch allow them to further clarify some things. Since I was on co-op and I live in Toronto for 4 months and then Waterloo for 4 months, they thought I don't have a consistent location that I would suit the "credit card fraud" scenario.

After getting so many credit cards, it is best to read all the fine-prints of all the credit cards. Some credit cards have better benifits than others. For example, my new BMO SPC Mastercard with Air Miles, as card name suggests, can collect air miles. It is also eligible for SPC discounts (Student Price Card Discounts). Many stores have 5% to 10% SPC discounts on both regular and discount priced items. So if there is a nice pair of shoes in Aldo that my girlfriend wants and it is heavily discounted, top that off with an additional 10% discount from my BMO SPC Mastercard and we would be even happier. (Aldo, Aldo outlets, and Aldo accessories offer 10% discount to regular and discount priced items) Another good benefit on the BMO MasterCard is the extended warranty. If an item is purchased with this MasterCard and the original manufacturer had a warranty on the product, MasterCard would double the warranty length up to an additional 1 year. If I purchased another new laptop with BMO MasterCard with 1 year original manufacturer warranty, MasterCard will provide another 1 year warranty after the manufacturer warranty expired. This would be very convenient for technology items such as laptops, desktop computers, monitors, cellphones, and etc. My original L'earn VISA offered 1% cash back on anything I spend after $1,000, which is better than what they offer to adults. The standard ScotiaMoneyback Visa offers 1% cash back on anything you spend after $3,000. Finally, my Citi Bank Petro Canada credit card gives petro points for any gas I put into my car from Petro Canada. My entire family uses the same account (I got sub cards for my parents) and I racked up 200,000 petro points so far. That would translate into 20 car washes that worth $10 each, totaling to a value of $200. It also can be used at www.itravel2000.com to redeem for $10 for every 10,000 points (also totaling to a value of $200) toward my next vacation.