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Credit Cards?

Forbe!Forbe! Registered User regular
edited October 2011 in Help / Advice Forum
So, I've graduated college, moved out of my parents house and relocated to a different state. I make enough money to comfortably live while saving money, as well as paying off my student loans.

I've never had a single credit card in my life. The only card I've had is a debit/checking card that directly links to my bank account. I would like to start building up my credit, I have no idea how to go about getting a credit card, or what a good credit card is.

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Forbe! on
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Posts

  • Skoal CatSkoal Cat Registered User
    Depending on your credit score, you may very well not get one. You can however get a secured credit card.
    I have one through my local credit union.

    ceres wrote: »
    Skoal Cat is correct.
  • MichaelLCMichaelLC In what furnace was thy brain? ChicagoRegistered User regular
    Assume you have a checking account? Check out the bank's site or go down to a branch to see what they offer.

    All cards are the same as long as you carry a zero balance. Just depends on what points or whatever you want will vary, but don't pay any annual fees.

    Check out http://www.annualcreditreport.com to see your report. Like Skoal Cat said, your score will determine what you can get.

    Jokerman wrote: »
    If sigs were still a thing this would be mine.
  • BoomShakeBoomShake Registered User regular
    Check out NerdWallet. You can filter cards and credit unions based on various criteria (APR, rewards, etc). The Chase Freedom card seems to be the best all-around card.

    Skoal is right though; your options will really depend on your credit score.

  • Skoal CatSkoal Cat Registered User
    But seriously... Chase.
    I'd kind of avoid them on moral grounds.

    ceres wrote: »
    Skoal Cat is correct.
  • DevoutlyApatheticDevoutlyApathetic Registered User regular
    As a course of action finding a card that you like from the above and applying is a good first step. If that works just pay it off each month and you'll be fine.

    If you don't get approved your options would be to try something like a store based card, like Target's Redcard. It won't be an actual credit card but will build credit. Failing that, and it is rather hard to fail that, you could try something like buying furniture/appliances/whatever with a store based line of credit.

    You sorta skipped the "typical" way to get a first card, being given one for practically nothing in college. I know cards are much easier to get for college students, you would think that'd extend to grads.....but who knows.

  • JHunzJHunz Registered User regular
    Your credit application will almost certainly be rejected, since you have no credit history (ridiculous, of course). However, what worked for me in the exact same situation a few years back was to call the customer service number listed on the rejection notice and calmly explain to them that the reason I'd never had a card before was that I didn't need one and that I wanted to start building credit now that I was making real money. The person I was talking to had the authority to override the rejection under certain circumstances, and apparently I was in that category.

    bunny.gif Gamertag: JHunz. R.I.P. Mygamercard.net bunny.gif
  • shyluneshylune Registered User
    Although it might have changed since the financial crisis, most banks will still be pretty eager to stick the credit card hook in 'ya. Just go to one of them, and avoid them if they're http://articles.moneycentral.msn.com/Investing/Extra/the-customer-service-hall-of-shame-2010.aspx there. I can attest to Wells Fargo's shitty customer service personally.

  • kaliyamakaliyama Left to find less-moderated fora Registered User regular
    I have an Amex Starwood Preferred Card, and I think it gets better reward mileage than the Freedom, but it's only good for hotels. So if that's not useful for you, go with the Freedom. If you are concerned about getting a card from someone non-evil I recommend a local credit union.

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  • bowenbowen How you doin'? Registered User regular
    He has a credit history if he has student loans, by the way.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • Forbe!Forbe! Registered User regular
    Thanks for the information. I currently bank with a really awesome credit union back in Illinois, but I am now in Oklahoma. My credit union has no shared branches down here. I will probably end up sticking with a credit union since I've had such great luck with them so far compared to other, larger banks.
    bowen wrote:
    He has a credit history if he has student loans, by the way.

    Will this have any effect of my credit score though, good or bad? My credit report states that all my loans are in good standing, which I already knew.

    I've never really had a reason to own a credit card. I have a very low overhead and don't spend money on much, so I've never really needed one. I would just like to have one for emergencies, and the occasional purchase to help improve my credit.



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  • BoomShakeBoomShake Registered User regular
    My situation is pretty similar. I'm 23, have been living away from home for 5 months, and have just gotten around to applying for a card. Decent living, debit card usually enough, etc. It's good to have the card, as you said, for emergencies or larger purchases, and the longer you have it the more it helps your score.

    As long as you've been paying off your monthy dues on the student loans, it'll help. If you had a card off of your parents' account and purchased things under your name, that (from what I'm told) should help too.

  • DraygoDraygo Registered User regular
    Get a card, it will help you later on in life. Even if all your doing is not using it or using it sparingly and always paying the full balance on time. I'm currently shopping around for a home and that includes talking to lenders, they like to see 3 credit related things on my credit report, cards previous loans (including student loans) that I have been paying responsibly.

    If you already have a debit card, get a rewards card from your bank, make sure you always pay the balance and use it like it was a debit card (never buy anything if you cant pay for it right now).

    If you can get two cards get two. If you are already living away from home having more than one card can help simplify your budget, its much easier to see if your coming in over/under if you are putting all your groceries/food on one card for example. When you get the statement you can see exactly how much you are spending on that budget item.

    Forbe! having loans that are constantly paid on time is good. If you ever plan on taking out a loan in the future for something like a house, I strongly recommend you get a credit card.

  • bowenbowen How you doin'? Registered User regular
    Forbe! wrote:
    Thanks for the information. I currently bank with a really awesome credit union back in Illinois, but I am now in Oklahoma. My credit union has no shared branches down here. I will probably end up sticking with a credit union since I've had such great luck with them so far compared to other, larger banks.
    bowen wrote:
    He has a credit history if he has student loans, by the way.

    Will this have any effect of my credit score though, good or bad? My credit report states that all my loans are in good standing, which I already knew.

    I've never really had a reason to own a credit card. I have a very low overhead and don't spend money on much, so I've never really needed one. I would just like to have one for emergencies, and the occasional purchase to help improve my credit.

    You can call and ask them about credit cards and explain you've moved out of the immediate area and ask if they can do it over the phone or via mail.

    It depends, how long have you been paying, have you been paying on time, how much are they, how much do you make? Assuming no late payments, they're not hurting, and may be going up slightly (total guess). Once you pay it off your credit rating will go way up though. All loans usually follow this rule.

    You're not going to run into any serious trouble in that department, it's all about how you handle the credit card once you get it that will be an issue. Your banks will usually be able to offer you one with 0 fees, Lower rated people have annual fees of like $50. You may have to take a fee based one, but I'm guessing you can get approved for one with 0 fees if I can, and my credit rating is terrible.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • Dr. FrenchensteinDr. Frenchenstein Registered User regular
    credit union is your best bet. They gave me an incredible rate when other big name cards wouldn't give me an account at all.

    If you get a fee card, often times they refuse to switch you over to a non-fee account once you've got established credit. This happened to me recently. So essentially to get away from the fee, i had to close my oldest credit card. Which makes your score take a hit. I don't really need any new credit at the moment, so it was the best time to pull the trigger, so my score can rebound eventually.

  • SejarkiSejarki Registered User regular
    edited October 2011
    Draygo wrote:
    Get a card, it will help you later on in life. Even if all your doing is not using it. . .

    Don't not use it. It may get closed, and that negatively affects your score.

    I had mine closed when I didn't use it after paying it off -- granted I hadn't used it for 1.5-2 years, but still be aware.

    Sejarki on
  • tinwhiskerstinwhiskers Registered User regular
    One easy way is to use it for auto-pay on something like your cable. You'll get a bill every month to keep the card active.

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  • punkpunk Registered User regular
    You could shoot for a secure card like Skoal Cat. When I was in college, I was able to get a credit card with a very low limit just by talking to someone at the bank and explaining the situation. She made some notations on an application that I re-filed with her and it went through. 'Course...my mom used to work there and we knew every employee at that branch...

    Honestly, though...do yourself a huge favor: avoid credit cards in every way that you can. If you do end up with one, do not use it unless you have to or unless you fully intend to pay each amount you spend back at month's end. If you're not very careful, they can and will get away from you and you'll be in a whole mess of shit.

    Aside from getting yourself an established credit history, you're better off saving your money for a rainy day.

  • EggyToastEggyToast Registered User regular
    Credit cards are insanely useful. I put basically everything on my credit cards.

    I also have never paid any credit card interest, and plan to remain that way. There's nothing wrong with using a credit card, but there is something wrong with paying credit card interest. They're not for buying things you otherwise couldn't afford, because it's all still your money. It's just a lot easier than paying cash and a lot faster than writing a check.

    You should watch for monthly or annual fees. As long as you don't pay interest, the interest rate is meaningless. Also, don't use it for getting cash from ATMs -- cash advances are probably the lamest thing ever.

    || Flickr — || PSN: EggyToast
  • NylonathetepNylonathetep Registered User regular
    edited October 2011
    Sejarki wrote:
    Draygo wrote:
    Get a card, it will help you later on in life. Even if all your doing is not using it. . .

    Don't not use it. It may get closed, and that negatively affects your score.

    I had mine closed when I didn't use it after paying it off -- granted I hadn't used it for 1.5-2 years, but still be aware.

    I'm not sure how it works in the states (assuming you are in the US) but technically it can work against or for your advantages. I'll elaborate.

    Basically everyone has a credit score. Your credit score is base on your borrowing and banking history. For example, you borrowed some student loans and after college you being to pay it off... if you miss a payment your credit score is lowered. It's the same with having an account or any financial instrument, and your credit score is lowered if your account balance is in the negatives and you refuse to bring the balance above zero. In Canada, credit record are wiped after seven years, meaning that your credit score is base on your score for the last seven years.

    Also your credit score can be negatively impacted if you have a credit card. Basically the idea is that bank want to lend their money to someone that has a habit of paying back money they owed.

    Having a credit card, using it at least once a month, and paying it promptly will positively impact your credit rating, and that's important when you want to buy a house, or other large purchases that you simply can't afford to pay off in one go. A person with a good credit rating will get a lower rate of interest in comparison to a person who has a less desirable credit rating, or their loan might not get approved at all. Not having a borrowing history can also leads to banks charging high interest rate... from their perspective there's more risk involved handing over cash to a guy that they know nothing about at all, verses some guy they know that has a history of paying back the loan for at least the last seven years.

    The whole process is call building up your credit and I think of it as a necessary evil in life and the lesser of two evils... as in the other choice is renting a place which is technically paying mortgage for your landlord for a place you'll never eventually own. As the poster above said, never cash advance, never go over your limit, never apply for more limit, and make your payment on time so you won't have to pay more interest then you have to.

    As for the credit building thing... I'll worry more about paying off the student loan first because you simply don't want any bad rating in your credit report. You should get a card with a small limit thou because just having a student loan isn't enough.

    Nylonathetep on
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  • ToxTox I kill threads he/himRegistered User regular
    You're building credit by paying off your student loans. If you truly feel compelled to get a credit card, try to get a secured one. Use it only to pay your student loans, and pay it off every month. Do this until your loans are paid off, and then use the credit card as an extra step in the process of paying a different bill.

  • WezoinWezoin Registered User regular
    Before looking at secured cards, you want to at least try for a normal card. Preferably $0 annual fee, unless there is a reward on the card you actually figure out worth it. (For example I pay a $70 fee on my RBC Westjet card, but I get 1.5% of my spend back as Westjet dollars, which works out to saving me about $350 a year - Canadian example but you get the point.)

  • Dr. FrenchensteinDr. Frenchenstein Registered User regular
    using it once a month or whatever doesn't matter i don't think. As long as you use it enough to not get the credit line closed. It's more about your debt/credit ratio, and credit history. So the more credit you have, and aren't using, and the longer you've had it are good things. However, too much credit is also bad.

    The only thing usage wise that will hurt you is if you miss payments or are late. Honestly, i've been late occasionally, and it's not showed up on my credit report that i've noticed. It's bad, because of fees etc, but being late one payment will not necessarily torpedo your score.

  • bowenbowen How you doin'? Registered User regular
    edited October 2011
    The only time late fees will come into play is if you start getting collection calls. If it's gone 3 months and they haven't gotten payment, it will hit your credit then. 2 weeks late? Not usually.

    Don't be late. Ever. If you have to be late, lock the card up and don't use it until your finances improve.

    bowen on
    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • ToxTox I kill threads he/himRegistered User regular
    Yeah I've always found the best way to use a credit card if you're only trying to improve your credit, is to use it as an extra step in the bill paying process. Instead of having your power bill, for instance, auto-draft from your bank account, have it automatically go on your credit card, and have the credit card bill auto-draft your bank account. And never actually use the card.

  • bowenbowen How you doin'? Registered User regular
    What tox said.

    I've been burned by bad financial planning (not really planning I guess, but just financial hardship in general) in the past and it is not a path you ever want to go down.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • StraygatsbyStraygatsby Registered User regular
    I've had 2 cards in the last 15-16 years and the 2 rules that I've lived by are 1) always pay your full balance every month and 2) always use it every month, usually on something automated (I put all my recurring utilities on it.

    I just treat my credit card like my debit card. Imaginary money is the root of all evil. Real money is ok.

  • Dr. FrenchensteinDr. Frenchenstein Registered User regular
    I have found that if you use BoA, and have a credit card through them, most places you cannot set up bill pay to hit your card. Whether you can do it the other way or not, i haven't looked into (give the utility your cc number, and let them bill it). I just maxed mine out on my stupid ass house so it's not an option anyways, but FYI.

  • ShawnaseeShawnasee Registered User regular
    edited October 2011
    I am confused as to why anyone, especially the op, needs a credit card.
    I am confused as to why someone suggested for you to get TWO credit cards.

    To build a credit history? For credit scores?

    As bowen pointed out: you have a credit history already.
    You don't need a CC to build a good credit score.
    Paying your student loan on time will do that.

    You already have a debit card so I'm pretty sure you get the same protections for purchases as you do with a credit card.

    Is there a reason you have to have a credit card?




    Shawnasee on
    Chanus wrote: »

    Your wang is a better man than you.
  • DjeetDjeet Registered User regular
    Maybe he wants to qualify for a mortgage to buy a house one day or borrow money to buy a car. While paying off student loans may give enough positive credit history, having a longterm positive history with a revolving credit instrument will also give you good credit. Also maybe he doesn't want to carry cash everywhere, or likes to pay for stuff online without connecting linking his bank account or using paypal. There are lots of good reasons to have a credit card.

  • ShawnaseeShawnasee Registered User regular
    You can qualify for a mortgage without ever having a credit card. Fact.

    If you have enough positive credit history from student loans why do you need an additional way to build positive credit history?

    He doesn't need to carry cash everywhere since he already has a debit card.

    If he likes to pay for stuff online, and he doesn't want to use his debit card, why would using a credit card protect him more?




    Chanus wrote: »

    Your wang is a better man than you.
  • DjeetDjeet Registered User regular
    What if he only had like $3K in student loans?

    My wife did not qualify for a mortgage with her sterling student loan payment history. Fact.

    Debit card transactions are ACH (electronic check bank draws), you have absolutely no protection should your card get skimmed or stolen or otherwise intercepted in on online transaction, while credit cards offer fraud protection and often credit back fraudulent charges to your account (they always have in my case).

    It's not like he's asking about elective surgery, it's a credit card. Jesus.

  • Forbe!Forbe! Registered User regular
    Shawnasee wrote:
    Is there a reason you have to have a credit card?
    Forbe! wrote:
    I would just like to have one for emergencies, and the occasional purchase to help improve my credit.

    To elaborate. I moved across country with about $1,500 in cash (my entire savings) and a 15 year old car. After apartment deposits, 1st and last month rent and initial utility deposits and all the other bullshit, I quickly drained what little I had left of the $1,500. While I've been able to slowly replenish some of my savings, I fear the coming winter be brutal on my already fragile car. As of right now, I cannot afford a random mechanic bill or to rent a car with the cash in my account.

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  • ToxTox I kill threads he/himRegistered User regular
    Shawnasee wrote:
    You can qualify for a mortgage without ever having a credit card. Fact.

    If you have enough positive credit history from student loans why do you need an additional way to build positive credit history?

    He doesn't need to carry cash everywhere since he already has a debit card.

    If he likes to pay for stuff online, and he doesn't want to use his debit card, why would using a credit card protect him more?/quote]

    This, then, is the crux of the matter.

    If you've borrowed yourself into a master's degree, yeah paying off all those loans is probably going to leave you with a somewhat decent credit history and score.

    There are number of other factors, however. Maybe only some of the money was borrowed, and the rest was paid out-of-pocket. This would drastically reduce the amount of positive history that would be generated by loan repayment, as would the tier of the degree obtained, as would the length of time the loan took to pay-off.

    These are all mitigating factors that can inhibit the quality of a credit score/history based solely off of student loan repayment.

    Adding one credit card into the mix that is used with care and consideration for the express purpose of further building credit is, on paper, never a bad idea, however useful it may ultimately be.

    I tend to fall into the camp that says anything you can do to raise your credit score is for the best, especially should the economy end up in a credit crunch where even people with good credit are having trouble borrowing money (kind of like...nowish).

  • ToxTox I kill threads he/himRegistered User regular
    edited October 2011
    Forbe! wrote:
    Shawnasee wrote:
    Is there a reason you have to have a credit card?
    Forbe! wrote:
    I would just like to have one for emergencies, and the occasional purchase to help improve my credit.

    To elaborate. I moved across country with about $1,500 in cash (my entire savings) and a 15 year old car. After apartment deposits, 1st and last month rent and initial utility deposits and all the other bullshit, I quickly drained what little I had left of the $1,500. While I've been able to slowly replenish some of my savings, I fear the coming winter be brutal on my already fragile car. As of right now, I cannot afford a random mechanic bill or to rent a car with the cash in my account.

    This, then is a different set of reasoning. It's no longer about just building credit, it's about having an emergency system in place to help mitigate the cost of entropy.

    I still don't think it's a bad idea to get a card, but you'll need to be very, very careful with it. You'll probably want to go secured in that situation, which means you'll essentially have to pay the maximum balance up front, as insurance in case you don't pay the bill. Make sure you get one that, even if you max it out, will have a minimum monthly payment that is smaller than the amount of money you regularly put into savings each month. This way, if an emergency happens and you have to max the card, you can pay eventually pay it off.

    Tox on
  • DraygoDraygo Registered User regular
    Shawnasee wrote:
    I am confused as to why anyone, especially the op, needs a credit card.
    I am confused as to why someone suggested for you to get TWO credit cards.

    To build a credit history? For credit scores?
    Yes, to build credit.
    As bowen pointed out: you have a credit history already.
    You don't need a CC to build a good credit score.
    Paying your student loan on time will do that.
    A student loan by itself is not enough to establish solid credit.
    You already have a debit card so I'm pretty sure you get the same protections for purchases as you do with a credit card.

    Is there a reason you have to have a credit card?

    For example for a mortgage where you only put 10% down my bank wants at minimum 3 lines on my credit report that are in good standing. Like 3 credit cards, or 2 credit cards and a student loan. Or a car payment, student loan, and a single credit card, etc. Having excellent credit can help get better interest rates on loans as well.

    If you plan on buying a house in the next 7 years, building your credit is never a bad idea. It only becomes a bad idea if you mismanage your finances and buy something you cannot pay for. If you are responsible it will not hurt you to have one or more pieces of plastic.

    Also if you already have a checking account getting a rewards card and using it as if it was a debit card can actually help you. And you avoid the 3-5$ a month fee for using your debit card in a retail transaction.

    Be very very careful with it, use it properly.

  • EsseeEssee The pinkest of hair. Victoria, BCRegistered User regular
    Really, just treat your card exactly like your debit card if you had to pay your debit card after you got a bill, and you should be fine. I think the common wisdom, from the credit threads I've seen around here, is to not pay it off the instant you use it, but pay it off right when you get the bill for it. Then it doesn't matter at all how much credit you have available to you; you can only spend money you actually have, just like a debit card, so you won't be dealing with debt at all. You can have multiple credit cards; makes no difference as long as you treat them as a replacement for cash or a debit card (unless yours has a fee, I guess, but that's nowhere near as bad as late fees and interest).

  • Phoenix-DPhoenix-D Registered User regular
    Credit cards generally have better fraud protection than debt cards. And in some situations (gas stations, hotels) using a debt card can mean having a large hold placed on your account, which can really, really suck.

    As long as you pay the balance in full each month, its fine. I use mine for all my bills, it essentially just kicks the due date back a month.

  • kaliyamakaliyama Left to find less-moderated fora Registered User regular
    Shawnasee wrote:
    You can qualify for a mortgage without ever having a credit card. Fact.

    If you have enough positive credit history from student loans why do you need an additional way to build positive credit history?

    He doesn't need to carry cash everywhere since he already has a debit card.

    If he likes to pay for stuff online, and he doesn't want to use his debit card, why would using a credit card protect him more?

    1) Regulations governing theft of credit cards are better than debit card regulations.
    2) Revolving credit accounts are treated differently than installment loans like student loan debt, and both are vital in building good credit history for instances where a lender scrutinizes you - auto loans and home loans.
    3) Credit cards have rewards. of course those rewards are designed to get us to over-use them, hence most of the good advice on the thread on being disciplined.

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  • bowenbowen How you doin'? Registered User regular
    CC will help with length of credit history. Student loans will help, so will car loans, but CC is almost the defacto method to get a great credit score.

    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
  • LadyMLadyM Registered User regular
    edited October 2011
    I'd hook up with a credit union and get a Visa or Mastercard from them. They've always given me great rates. And I'd specifically avoid Bank of America and Chase, they have godawful reputations.
    Forbe! wrote:
    To elaborate. I moved across country with about $1,500 in cash (my entire savings) and a 15 year old car. After apartment deposits, 1st and last month rent and initial utility deposits and all the other bullshit, I quickly drained what little I had left of the $1,500. While I've been able to slowly replenish some of my savings, I fear the coming winter be brutal on my already fragile car. As of right now, I cannot afford a random mechanic bill or to rent a car with the cash in my account.

    If you can't afford mechanic repairs, you may find yourself in an even worse hole if you use a credit card to pay the bill. Interest adds up far too fast. I mean, if you have to use it you have to use it, but study your public transportation or carpooling options very hard before you go that route.

    LadyM on
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