Question about credit/opening new credit card, and accounts with diff banks

[Typical_Chinese]

I'm a university student and have had a single credit card for almost 4 years now, as well as three years of student loans. In terms of credit card payments, I use it for almost everything possible (including paying for tuition before they removed that option), and pay it off usually at the end of the week when the charge shows up because I am super forgetful and think I've done things when all I really do is file it in the back of my head and think I actually did something.

In terms of credit score, I'm thinking of paying for a report through TransUnion or something relatively soon, since I want to see how I'm doing and maybe plan for the future a bit.

I was thinking of closing my credit card because it offers literally no perks, and was thinking of maybe opening a TD credit card that gives Cash Back. I spoke with them briefly last week and it seems like the $99 annual fee is waived if I have a certain amount of money in the bank, which I plan on doing.

However, I've heard about problems with "closing credit cards with a balance" as well as closing a credit card that has a long history. In my case, my credit card is roughly 4 years old and is my only history basically, other than my student loans (which I don't know if they count towards my credit or not). I'm not sure what a credit card with a balance means, but I think my balance is basically $0 at the end of every week since I pay it off, right?

So, I was wondering if it's better to keep my current credit card and not use it at all, so I have a long history, or close it, take the 4 year hit, and open a new credit card with TD Bank, which I'll use as often as my current credit card anyways, but with cash back (or travel if I choose that, or whatever).

Also, I am banking with BMO right now. Should I move all my money to TD if I open a credit card with them? Are there any benefits of having two accounts with different banks?

Also, are there any downsides of paying off my CC balance every week instead of end of the month? I'm basically using my CC as debit card at this point.

Finally, what are some ways a student like me can raise my credit score? I pay rent regularly and on time (6 month post-dated cheques), but the landlord isn't a company or anything.

Thank you so, so much!

[KPHMPH]

A good portion of having high credit is having credit for a longer period of time. Aka keeping your longest standing credit card forever. If you cancel it you start again with another new credit card. My advice is try to change it to a 0$ / year card and just never use it.

[Typical_Chinese]

Sweet that's what I was thinking. It's currently a 0$ card as well, it's just that they don't give me any perks, but I guess I could change my card to a cash back one, but it'll basically be the same as changing over to a TD one right? I have my TFSA with TD bank so I thought it'd be more convenient to have my credit card and chequing/savings over there too.

If I do just keep my current credit card and never use it, should I still keep some money in my BMO account so the bank doesn't automatically close my card, assuming I have no money to pay it off?

Thanks!

[ExtraSlow]

For someone starting out, as you are, it makes sense to do what you can to keep the oldest credit card active, even if you aren't using it. Once you have a decade or more of credit history, then it's not nearly as big of a deal.

[Typical_Chinese]

I've read on random sites that banks can close your card through inactivity, is that true? If so, I guess I can put my Netflix subscription and other cheap stuff on there haha.

Also, are there any problems with paying off any purchases I make immediately?

Thanks!

[wintonyk]

Originally posted by Typical_Chinese
I've read on random sites that banks can close your card through inactivity, is that true? If so, I guess I can put my Netflix subscription and other cheap stuff on there haha.

Also, are there any problems with paying off any purchases I make immediately?

Thanks!

I have a mastercard that I haven't touched in 2 years... will let you know when and if they cancel it. I opened it solely for the purpose of a backup incase of identity theft or a chip stops working. When I opened it the bank didn't indicate that would be an issue.

In terms of paying off immediately, I asked the bank about this after university too and they said there is no harm in your credit rating. Just make sure you are paying off the minimum payments and not late.

The thing that hurt me when I went to get a car loan was not having enough credit experience. I intentionally kept my credit limit at 1000 through university and it didn't help me prove that I can have open credit and not use it.

Hope that helps.

[ExtraSlow]

Biggest thing to help your credit rating is to just get older.

[Typical_Chinese]

Sweet, guess I don't have to do anything really.

Are there any benefits to keeping two separate accounts with two different banks? My chequing and savings with BMO don't have a monthly or yearly fee, but if I get a new credit card with TD should I move everything to TD and just keep my credit card with BMO?

Thanks!

[Feruk]

As previously stated, don't cancel current card, just don't use it often.

As for paying it off immediately, that's kinda a waste of time. Set a day a month and pay it off that day every month. Note this only works if you are in control of your spending.

As for which credit card to get, you'll have to do some research instead of just going with TD! I'm not sure how the annual fee waiving works on TD, but I do know on their bank account you get charged fees for the whole month even if you're below the minimum for a day. I'd hate to see you pay $99 because for 1 out of 365 days you didn't meet the minimum. Bank cards usually suck.

Do some Google research. There are cash back and point cards (really only travel ones worth looking at in terms of points). Put together a summary of your last 12 months of spending, find a few good cards online (google something like best credit cards Canada), and see what sort of reward you would've gotten with those cards if you'd been using them for the last 12 months of spending. The one that gives you the best rate of return (ROR = rewards/total spending) is the one you want. I'd only look at Visa and MasterCard. That's how you pick a credit card.

As for moving bank accounts, I think you'll find a far better card outside of a bank (with Capital One or something like that). Switching all your banking is pointless unless it benefits you IMO.

[01RedDX]

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