How Should Newcomers Choose a Bank?
When choosing a bank or credit union for your routine banking needs, take some time to compare banks instead of walking into the first branch you find. Many banks and credit unions offer newcomer packages, often including a year of waived fees and a starter credit product. Be cautious and choose a bank regulated by the Financial Consumer Agency of Canada (FCAC). Federal credit unions are also regulated by the FCAC while regional ones are regulated by the provinces in which they operate. There are financial services providers that look like banks or credit unions, but they function quite differently than the financial institutions most Canadians use for their routine banking needs. The bank you pick now is likely the one you’ll use later for a car loan or a mortgage, so it pays to choose carefully.
FCAC Bank Account Comparison Tool
What Is the Best Credit Card for Newcomers to Canada?
A secured credit card is usually the best credit card for newcomers to Canada with no credit history yet. It uses a cash deposit as your credit limit, and that deposit is what removes the risk for the lender, so no credit history is required for approval. After you’ve got a few hundred dollars saved, you put it down and the bank holds it as security. From there, the card works like a regular one: you make purchases, get a monthly statement, and have a payment due date.
How Do You Use a Secured Card to Build Credit Fast?
The best way to use a secured credit card is to use the card to pay for something you’d buy anyway, like gas or a subscription, then pay it off in full every month. Carrying a balance month to month just costs interest; it does nothing extra for your credit score. A clean, repeated payment history is exactly what a thin credit file needs. Several banks may waive the security deposit for newcomers who can show a job offer or proof of employment, so it’s worth asking before you apply.
Does a Cell Phone Build Credit in Canada?
Yes, a cell phone can build credit in Canada, but it depends on how you got the phone. A phone bought through a carrier’s payment plan, spread over 24 months, is a real financing agreement. Providers usually report it to the credit bureaus the same way they’d report a loan. Pay it on time, and it works in your favour. Miss payments, and it counts against you very quickly, just like a missed loan payment would. A cell phone on contract is one of the quickest ways to build a credit rating – and the fastest way to ruin it.
Are There Disadvantages to Paying Off Debt?
Putting every spare dollar toward debt with nothing held back can create its own problems. It’s important to have an emergency fund: without one, an unexpected circumstance such as a needed car repair, a job loss, or a medical bill can send you right back to the credit card and erase the progress you’ve made. Most financial experts suggest eventually building toward three to six months of expenses in savings, but during an aggressive payoff period, even a smaller buffer of $1,000 to $2,000 can be enough to keep you off the credit card while you work toward that fuller cushion.
More Reasons Why Savings Is an Important Expense
It also helps to keep in mind that not all debt is equally urgent. The federal portion of student loans currently carries no interest at all (though a few provincial loans can still accrue interest), so a federal student loan doesn’t require the same urgency as a credit card sitting at 24.99%. Knowing which debts to tackle first is an important part of your debt repayment strategy and can save you hundreds if not thousands of dollars in interest over time.
Where to Find the Money to Save Each Month
Pay Down Debt or Invest? You Don’t Have to Figure This Out Alone
The right answer looks a little different for everyone. It depends on the type of debt you carry, your income, your benefits, and even how you’re feeling about your situation right now. If you’re overwhelmed and wondering what to do with your money – whether that’s increasing savings and building an emergency fund, repaying debts as quickly as possible, or yes, even investing responsibly for the future – if you’re carrying debt, talking it through with a neutral person who is on your side can help you see your full financial picture before you decide what to do next. At the Credit Counselling Society, our appointments are completely free, confidential, and unbiased. When it feels like debt is standing between you and your goals and you can’t get ahead, we’re here to help you figure out a balanced and realistic plan that works for you. You can contact us by phone, email, or chat.
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