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Credit Cards
Jinn
Registered User regular
Registered User regular
Ok, I think I need Credit Card 101. I'm a 20 year old college student and I feel like its time I got a credit card to establish a line of credit and such. I intend to pay the bill in full each month. I'm generally pretty responsible with my money, so I'm confident that I can wield the card responsibly and pay it off each month. Beyond this I am pretty clueless. I've just been browsing the Visa, Mastercard, and American Express websites and it all seems rather daunting. Ideally, I think I'd like a card that would earn me travel shit. Like the Delta SkyMiles AmEx card. Although, something like the Amazon.com card that earns me Amazon.com rewards would be cool too if that type of card ends up being the smarter option.
So, school me on credit cards dudes. This is a rather serious step I believe and I want to go in to it fully informed. Thanks.
So, school me on credit cards dudes. This is a rather serious step I believe and I want to go in to it fully informed. Thanks.
Jinn on
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Any cards that you look at, make sure you read the agreements for them FULLY. Otherwise you see the pretty "1% APR" and don't see "for a year and then we jack it up to 10%".
If you do decide to get a regular credit card, you might try looking into whatever bank that you have. Also, it's easier to pay for everything with the credit card, then pay it off at the end of the month (instead of using a debit card). It protects your assets better than using a debit card (which instantly comes out of your bank account) and you build credit at the same time.
One thing I will say is to make sure whatever credit card you use has a free online payment system. Not only does the payment apply to your account faster (making it less likely that you'll miss a payment, which is a major no-no) but you will get oh-so-tired of writing out checks, and it's way easier to simply pay electronically with your bank account - after you've set it up, it's literally just a few clicks, once a month.
You've already mentioned that you'll pay it off every month, and I just want to nod approvingly and say that's definitely the way to go, particularly at your age. You don't want to start borrowing against your future until you're more settled career-wise and are absolutely sure you can handle it.
Alternately, if you're sure that you'll be paying it off in full every month (like you'll be using it for small on-line purchases and whatnot), don't worry too much about the interest. Just use it and then pay it off immediately. Higher-interest cards often have lower annual fees.
If you're not sure that you'll be able to pay off your balance every month, look for something with lower interest rates and just stomach the fee.
Consider a bank-issued card. I got mine through my bank, and it was a cinch to set up online payment -- it's near-instant, too, which can be a godsend if you suddenly realize that you're too near the limit for comfort.
Finally, don't worry about having a high credit limit at this point. Until you start buying appliances and vacations and whatnot on it, you shouldn't really need more than a few hundred dollars -- especially if you're essentially paying as-you-go. Having a low limit also makes you less-susceptible to credit card theft & fraud, although you shouldn't get a card that doesn't have a zero-liability policy anyway (I think all Mastercards, Visas, and Amexes have them, but you might want to check).
Shogun Streams Vidya
Get a no-annual-fee card through your bank.
I've had my Sony Visa card for years now; got significant $$ off Sony crap usingh the points. No fees.
Also have a American Airlines MC, which does charge $75 a year.
Check out Visa Rewards too. It gives you points for using a debit card as a CC (pretty much how it always works now).
Yeah, go with a card through your bank. Easier to organize bills when all are on one site.
Depends which bank you go with. I know Wellsfargo and Chase do. However, I recently closed my Wellsfargo card as the interest on it was through the roof.
My chase card is my lowest interest card that I have, which my discover a very close second.
Discover isn't a bad choice either as most places take them nowadays and they have the cashback system instead of points.
I was always under the impression that this looks -bad- on your credit report (having an open, but inactive account), whereas carrying a balance, even a small one, can look somewhat good.
https://steamcommunity.com/profiles/76561197970666737/
I think I'm gonna go with one through Superstore (a Canadian grocery store - sells a lot of stuff like video games too) next because they give you points that can be redeemed for stuff in store.
Having no balance will not hurt your credit if I remember correctly. It just won't help as much as having a balance and making payments on time every month.
I think it's not so much the zero balance that they look at, it's your outstanding balance compared to your total revolving credit.
I can't remember what the ratio is, but let's say that it's good to never go above 50% of your total credit limit.
For example:
Credit Card #1: $500 limit $100 Balance
Credit Card #2: $1000 limit $750 Balance
Total: $1500 Revolving Credit
$850 Total Balance
850/1500 = ~57% of your total revolving credit being used. If the general guidelines were that you should keep it under 50%, then you should either: A) pay off some of your debt or
Hint: It'd be smarter to pay off one card then opening another.
Someone correct me if I'm wrong, it's been a while since I've had a credit finance class.
Yeah, that's about right. They look at your balance-to-limit ratio. So as you said, it's not bad to have another low balance card, but would be better to pay off all current balences.