Okay so, I just got my very first credit card in the mail and I'm pretty excited. Except I don't know how establishing credit works.

Let's say I buy something worth 50 bucks today. If I pay it off tomorrow, does that establish credit? Or do you have to wait till they actually bill you?

Someone told me that you only obtain credit when you pay off (or some of) the amount AFTER they charge interest on it (so aka, after you get billed).

If it's the latter... that's total bull.

Can someone clarify please?

Edit: I have the Student II Visa from RBC, if that helps.

Originally Posted by lawleypop

Okay so, I just got my very first credit card in the mail and I'm pretty excited. Except I don't know how establishing credit works.

Let's say I buy something worth 50 bucks today. If I pay it off tomorrow, does that establish credit? Or do you have to wait till they actually bill you?

Someone told me that you only obtain credit when you pay off (or some of) the amount AFTER they charge interest on it (so aka, after you get billed).

If it's the latter... that's total bull.

Can someone clarify please?

Edit: I have the Student II Visa from RBC, if that helps.

Just wait until they bill you your statement for the month and pay it off before the deadline. That's what establishing credit is. Basically saying that you are trustworthy when it comes to borrowing money, because it's really what you are doing.

I pay mine off right after. :\

I would also like to add: pay it off completely.

Originally Posted by jhan523

Just wait until they bill you your statement for the month and pay it off before the deadline. That's what establishing credit is. Basically saying that you are trustworthy when it comes to borrowing money, because it's really what you are doing.

I know that it says that you're trustworthy when it comes to borrowing money, but I just don't see why you have to wait till after they charge interest on it to establish that credit. Are you saying that if I paid it off 5 days later I wouldn't be establishing credit?

Also, I'm under the impression that the monthly statement comes with interest charged on it already. Or is interest accumulated after the grace period?

Originally Posted by lawleypop

Okay so, I just got my very first credit card in the mail and I'm pretty excited. Except I don't know how establishing credit works.

Let's say I buy something worth 50 bucks today. If I pay it off tomorrow, does that establish credit? Or do you have to wait till they actually bill you?

Someone told me that you only obtain credit when you pay off (or some of) the amount AFTER they charge interest on it (so aka, after you get billed).

If it's the latter... that's total bull.

Can someone clarify please?

Edit: I have the Student II Visa from RBC, if that helps.

It shouldn't matter if you pay it off with or without interest. Banks care that you pay them what you owe. If you pay it all in before interest, all the better.

Bottom line with credit, of any kind, is that you pay what you owe. If you do that, you'll build good credit. If not, prepare for the shitstorm known as rebuilding credit.

Originally Posted by lawleypop

Okay so, I just got my very first credit card in the mail and I'm pretty excited. Except I don't know how establishing credit works.

Let's say I buy something worth 50 bucks today. If I pay it off tomorrow, does that establish credit? Or do you have to wait till they actually bill you?

Someone told me that you only obtain credit when you pay off (or some of) the amount AFTER they charge interest on it (so aka, after you get billed).

If it's the latter... that's total bull.

Can someone clarify please?

Edit: I have the Student II Visa from RBC, if that helps.

I suggest CIBC, but we won't get into that. Now, to answer:
In order to build credit, you need to make sure the bank is using your SIN NUMBER for that. I just found this out at my branch.

To actually build it, you need to do the following(I just called VISA to confirm):
- Pay off any bills ASAP - this means if you pay off any purchases before the bill, IT COUNTS in your favour
- try not to run it out(max limit) and then not pay as that can get you screwed

Other than that I'm happy for you.
Have fun

PS: CAN I HAZ CHEEZBURGER

Originally Posted by lawleypop

I know that it says that you're trustworthy when it comes to borrowing money, but I just don't see why you have to wait till after they charge interest on it to establish that credit. Are you saying that if I paid it off 5 days later I wouldn't be establishing credit?

Also, I'm under the impression that the monthly statement comes with interest charged on it already. Or is interest accumulated after the grace period?

Interest is accumulated AFTER the grace period so if you pay it off in full before the end of the grace period, you don't have to pay any interest.

However, one caveat that most people don't know is that if you don't pay off your balance in full by the deadline, they will charge you interest from the moment you bought the item with your credit card (the interest-free grace period does not apply).

Originally Posted by lawleypop

I know that it says that you're trustworthy when it comes to borrowing money, but I just don't see why you have to wait till after they charge interest on it to establish that credit. Are you saying that if I paid it off 5 days later I wouldn't be establishing credit?

Also, I'm under the impression that the monthly statement comes with interest charged on it already. Or is interest accumulated after the grace period?

I never said to pay after interest. In fact I said to pay before interest. The statements don't have interest charged on them (unless you didn't fully pay off the previous statement). In the end, just pay off the total amount on the statement every month.

Originally Posted by adrian

I suggest CIBC, but we won't get into that. Now, to answer:
In order to build credit, you need to make sure the bank is using your SIN NUMBER for that. I just found this out at my branch.

To actually build it, you need to do the following(I just called VISA to confirm):
- Pay off any bills ASAP - this means if you pay off any purchases before the bill, IT COUNTS in your favour
- try not to run it out(max limit) and then not pay as that can get you screwed

Other than that I'm happy for you.
Have fun

PS: CAN I HAZ CHEEZBURGER

No cheeseburgerz for you! :( But thanks.

And no worries guys, I have every intention of paying it all every month. I'm no dummy

Thanks for the helpppppppp~

Originally Posted by jhan523

I never said to pay after interest. In fact I said to pay before interest. The statements don't have interest charged on them (unless you didn't fully pay off the previous statement). In the end, just pay off the total amount on the statement every month.

Like I said, I was under the impression that they charge interest on the first statement and not after the grace period, which is why I said what I said.

Originally Posted by lawleypop

No cheeseburgerz for you! :( But thanks.

And no worries guys, I have every intention of paying it all every month. I'm no dummy

Thanks for the helpppppppp~

What, why not? You got a credit card.
I NEEDS cheezburgerz
Oh well, if you come to that getogether, you can get me a cheezburger

Originally Posted by lawleypop

I have every intention of paying it all every month. I'm no dummy

I said that once upon a time too. But I came to realize credit cards are evil, and eat your soul.

Originally Posted by adrian

What, why not? You got a credit card.
I NEEDS cheezburgerz
Oh well, if you come to that getogether, you can get me a cheezburger

Buy me a drink and I'll buy you a cheezburger. Or two.

Originally Posted by reeves

I said that once upon a time too. But I came to realize credit cards are evil, and eat your soul.

The internet friend, it's your friend. Also, apparently it takes A VERY COMPLICATED PROCESS AND A HELL LONG TIME, but you can automate the payments to your chequing account so you don't have to keep transferring every time you use it. I haven't done this as I rarely use my CC.