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Credit Card Recommendations?
SniperGuy
SniperGuyGamingRegistered User regular
SniperGuyGamingRegistered User regular
I am in need of a credit card! Unsure of what to get. I'll be moving in July and switching banks, but it'd be nice to go ahead and get one now, so tying to my local bank right now is a bad idea. Looking at stuff like:
https://www.salliemae.com/landing/WorldCreditCard/
That sallie mae card looks tempting. But I also have a loathing for Sallie Mae. I do have many loans through them and need a first credit card. Is that probably going to be my best bet? Just need one to start building credit, have for emergencies, and not taking advantage of cash back for gas and stuff seems like a waste.
Any recommendations? The 5% cash back on gas and groceries for sallie mae looks really nice, since I have to get those anyway. May as well get freebies out of it. What should I be looking for?
https://www.salliemae.com/landing/WorldCreditCard/
That sallie mae card looks tempting. But I also have a loathing for Sallie Mae. I do have many loans through them and need a first credit card. Is that probably going to be my best bet? Just need one to start building credit, have for emergencies, and not taking advantage of cash back for gas and stuff seems like a waste.
Any recommendations? The 5% cash back on gas and groceries for sallie mae looks really nice, since I have to get those anyway. May as well get freebies out of it. What should I be looking for?
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2. If you do this, then you do not need to pay attention to the APR. If you do not do this, then no one cares what kind of credit card you get because they all have an APR of "You're so screwed", a finance charge of "Haha what a sucker", an overage charge of "Do you like my new probe? It's large and shiny!", and a late fee of "Now tell me where you want it!"
(Seriously, getting a 1% cash back return on all purchases but paying a 20% interest on all your balances is George W. Bush-level decision-making.)
With those two things out of the way, then your best bet is to look for a credit card that doesn't make you pay money when you don't have a monthly balance. Avoid cards that have a $5 monthly fee or something like that. You never want those cards. Ever. Capital One seems to have some nice starter cards now that actually give you cash back.
Personally, I always go for the cards that give you cash back because I like liquidity. If you travel a lot, Starwood has a good card for hotel deals and the like. Airline cards seem to have nice rewards and everyone uses them, but I find their limits to be kind of ridiculous and I have no faith that the miles (or the airline itself) won't expire. If you shop at Amazon a lot, they also have a card.
Basically, just think about how you spend money today, and see if there's a card available that rewards you for not doing anything special and just being your own individual snowflake. Otherwise, just focus on getting the card, paying off the balance, and building your credit.
Without a long credit history, you are going to be very limited in terms of the types of credit cards you can get, anyway - particularly the more lucrative rewards ones. My first few years of credit were spent getting a newer, better card every year until I finally upgraded to the high-end cash-back cards. I treated it like my own little real-life RPG.
Hey, that's an awesome analogy! Right now you're at white items. After a couple of years, you'll get to greens and maybe a blue. After that, it's all purples all the time, baby.
There are no legendaries. A legendary is like, a great mortgage rate or something.
That Sallie Mae card has no annual fee, and the only fees it does have are for international transactions (I rarely if ever travel, especially not outside the country right now) and "balance transfers" and cash advance extra interest rate stuff.
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Yes and no. A lot of times credit company's like to see that you've paid something consistently. Doesn't have to a credit card, car loan works great too, but credit cards are fine. That being said, if you get a card they want to see you use it. Having a card sit at $0 spent will actually decrease your score a little bit. It's best to spend a decent amount each month and pay it off in full at the end of the month. You accrue no interest, and prove that you can handle a monthly payment consistently.
To be totally clear, from my experience some of the big factors on your credit are:
1) Have you succesfully paid off a large debt at some point?
2) Have you paid something consistently and on time for at least 5 yrs?
3) Do you frequently miss payments?
Getting a credit card, using it, and paying it off completely every month will really help with 2 and 3.
edit- as for the OP's question, if you've never had a card before chances are you going to have to just go with whoever will actually give you one. Your bank is a good bet.
A car loan will do more to help your credit because it is a longer-term loan (credit cards are treated as revolving short-term credit) with a much higher value. But that does not mean that credit cards don't build your credit. Credit cards are a great way to build your credit, especially as you obtain more of them for longer periods of time and continue to pay them on time. And they're pretty much the only way to get credit if you can't afford or don't want a car loan to begin with.
Try not to let the perfect get in the way of the good here. The OP needs a credit card. Saying, "Go get a car loan credit cards suck" is not only inaccurate but not really helpful.
That's not quite true. This is one of those things that gets factored into your "utilization rate", but this number is honestly not all that important right now, because if you have one credit card this figure is going to look ridiculous anyway. Basically, credit scores are partially determined by the amount of your credit you actually use in a given period. By default, not using any of your credit is almost equivalent to not having any credit, because for you they are functionally the same (and it doesn't prove that you can actually handle credit, it just proves that you won't use it). But if you have a balance sometimes and just pay it off at the end of the month, that's fine. Utilization is one of those things that is calculated on the fly, so you have almost no control over this in the short-term anyway - and with a single line of credit this number is going to bounce around like crazy because it is highly dependent on how close you are to the monthly balance due date (i.e., if it's right after you paid everything off you are at 0 but if it's right before then you are almost maxed out).
Over the long term this number stabilizes because you'll have multiple cards/loans that you are constantly using and paying off at different times. At that point, your utilization (whenever it gets pulled) will essentially reflect the amount of money you spend held against the amount of money you could potentially obtain on credit.
And think about it this way, the only reason credit companies would want this to be as high as possible is if they are looking to find some sucker who can't manage their money and constantly has to dip into credit above and beyond what they can actually afford to pay. Someone who only pays their minimum each month but not the full balance? Fantastic utilization score, because that person is basically maximizing the amount of credit they are using at any given point.
Responsible lenders looking for responsible borrowers don't want to see this too high or too low (if it's too low, then they won't make any money off of you). In addition, they will also want to see that you can handle a large amount of credit without going crazy on the utilization, so having more credit available but not using most of it (a la the previous point) is not a bad thing either, because it proves you don't spend money just because it's available.
Honestly a lot of this stuff is just noise. Trying to game the system for a tiny bump in your credit score at this point in your credit life is not worth the trouble. The credit companies can change their algorithms at whim, and there is almost no regulation to control how or what they do with that information, unfortunately.
Just find a card that doesn't screw you with charges and pay off your balances every month. If you can't do that, then no amount of financial engineering is going to save you from the lifetime of indentured servitude that will be coming your way.
Anecdotal but all my loans are 7-8%. My last one was 9.something because I missed a damn student loan payment. The point is that you will get much better interest rates from a CU than you will a big bank.
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It depends. Credit Cards can contribute, I believe, about 50 points toward your credit limit. You want to have a high average limit (this shows that companies think you reliable and responsible for large quantities of money) but a low balance (which shows you actually are responsible with said money). If the credit card you close is the lower of your two credit cards and you keep it paid off, then it has the potential to help you, as your average credit limit will increase while your balance won't be affected. Meanwhile, if you are keeping a balance on it (lets say 25% of the card's limit) than closing the other card will hurt you, because the percentage of your total limit used will increase. Its a balancing act.
I have two cards, one I carry around with me and one I keep at home and use for online payments. That way if I lose my wallet, I'm not cardless until the replacement comes in.
You get 5 points/dollar spent at any restaurant, theater or bookstore. The best part is that "bookstores" include things like Amazon. It gives you ThankYou points, which I consider to be one of the best non-travel point reward systems. You can use ThankYou points as actual currency at some retailers, again including Amazon. For someone like me, whose spending is mostly restaurants/groceries/Amazon shit, it's a great card.
1) 40,000 points bonus if you spend more than $3,000 in the initial three months of the card.
2) Able to transfer point balances from existing cards.
3) No international fees.
4) Ultimate Rewards (the program) allows you to book flights at cheaper fares than you usually see on Expedia or Kayak.
5) Double points on Food / Travel; Triple on stuff booked through Ultimate Rewards
No annual fee for the first year, $79 every year after. Even with all of these benefits if it's not worth it you just cancel the card, you'll still net two round trip tickets for free in the continental U.s. via the 40,000 bonus points.
The good is: effective 1% amazon fun bucks on all purchases, 2% on gas, pharmacy (and i think groceries?) and 3% on amazon purchases (cyclic!)
The way I use it, is I do it with most of my purchases, and come Christmas time, I have enough amazon points to buy presents for most/all of the people I gift to, and don't see a dime out of my pocket.
The other downside is of course this is not as good as just plain cash. I am ok with that, as honestly, Amazon sells most everything as far as I am concerned.
If you do/want to travel alot, consider exploring a "sky miles" kind of card instead.
The take home is: Find a card, as everyone says, pay it off promptly. Try and find something that gives you something in return for using the card. Points/ cash/ something.
Unless you knew you were going to spend that money regardless. In which case, it's a great idea.
Let 'em eat fucking pineapples!
This was my first card as well, love it still, although I think the chase sapphire card listed above may be worth looking into, I've heard other people mention it. As long as you set up your account so it automatically pays the full balance every month you'll never have to worry about interest, you don't need to immediately pay it right after using or anything. I also agree with Inquisitor77 above with regard to using a credit card to improve your credit score. Not carrying a balance month to month isn't going to hurt you although if your current utilization is at 0% it isn't favorable, but that is taken at the time, and if you use the card regularly will very rarely actually be 0. Establishing a history of on-time payments and bumping up your available credit are pretty great.
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The only situation I can think of where closing lines of credit in good standing with no or low balances are if you have too much credit.
So generally a store/gas card or phone/utility/cable would be less stringent than an auto loan which would be less stringent than a home loan.
I don't know the ratios, but be aware this is a minor influencer of credit scoring. Much more important would be delinquencies, charge-offs, and debt to income ratio. So if you don't have problems carrying balances I wouldn't worry about it until my credit went over about 50% of income. At which point I would seek counsel from someone who would know more (maybe my credit union rep) as to whether it would be good to close an account if I needed to borrow (buy a car or a house).
Getting a card with an annual fee is not necessarily a bad idea and I'm not sure why people here are so opposed to it. It's pretty simplistic to look at your past spending and figure out if you can recover the fee through the extra you would receive.
Hey it's not for everyone, but the numerous benefits I've gotten with all of the bonuses greatly outweighs the annual fee - especially since I used it for some large planned purchases and snagged two round trip tickets to Hawaii for me and the good woman.
Also, you should really take a look at the Chase Sapphire Preferred list of benefits - it's a lot. Especially for international travel.
It depends on your credit, obviously, but in general if you're paying it off monthly you should be getting AT LEAST 1% on all purchases, and you can do better in specific instances - Amazon card gives 3% on Amazon, the AmEx Blue (which has no fee) has 3% back on groceries (which is nice), there are some others that people have mentioned that have 3-5% on other areas (or 5% on rotating groups of purchases like Discover does). If you shop often at a store, then their card (as long as it has no fee) is also pretty good - for example, you can definitely save a lot of money with a Macy's card if you shop there, and similar with a Gap/etc card (those places will often send you special deals / coupons if you have the card, which as long as it's free you might as well take advantage of).
They will eventually close them with no activity - depends on the company. I think Lowes' closed one on me after only 2 or 3 years, and Macy's I think was actually similar (maybe 4 years)... whereas Capital One has been happy to keep a card open for me for like a decade with no purchases. It's not a bad idea to have it if it's your oldest line of credit and you don't have many others, but if those two aren't true then it's probably not worth the minor benefit to keeping it open to risk someone fraudulently buying something and you not checking the statement for months.
This is wrong. Revolving credit goes a looooooong way toward building credit, especially if you control balances and have a long (read: 5+ years) of on-time payments.
You don't "need" credit cards, but they help. A lot.
My recommendation: secured-line credit cards are nice for obvious reasons, but I sense the OP doesn't have enough in the bank.
So, for what it's worth, Orchard Bank has been very good to me and of all my "got em when I was broke and creditless" cards, they had the lowest interest rate.
I also have a couple of Capital Ones that are decent.
Blue from AMEX is probably my best card though. But you can't use it everywhere and you need at least a sliver of credit to get it
depends entirely upon how much money you make
i don't know what the magic number is but I'd say as a rule you want to make at least three times as much as your revolving credit limit or more
this is with regards to "potential debt", and it has to be pretty damn excessive to offset the value of having active long-length credit accounts in good standing
2) Get a card with no yearly fees.
3) If it's feasible, look for a card with at least an acceptable rewards system. Most baseline cards should have a system where $1 spent on the card translates to roughly $.01 in rewards points. If you pay your bills on time, you should be able to score a $100 credit every once in a while.
4) In tandem with #3, put your consistent monthly expenses on your credit card as much as is feasible. Since you're paying off every month anyway, there's no reason not to earn rewards points.
4) A good route to pursue is to acquire a credit card through your bank. Since you are already a customer of theirs, and keep your money with them, they are more likely to approve you for a card. This is good, as being rejected for a card can actually result in a modest ding to your credit score.
5) As long as you won't be tempted to spend like a madman, you want your credit limit to be as high as possible. One of the major contributing factors to your credit score is your "utilization rate," which is the % of your credit that you use each month. You want this number to be as low as possible. This is also typically the reason that people recommend not closing out unused credit cards you still have. Note that with most cards, you can call them up to request a credit limit increase roughly every six months, and bump your max up by a few thousand dollars at a clip, which will drive your utilization rate down.
6) There's a site I subscribe to called CreditKarma, which is free, and allows you to track your credit score pretty closely. It's not the same as actually pulling your credit reports (which you should do yearly, and is also free), but it's a good tool.
7) Set up automatic payments for the full balance on your card.
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The thing is, you have to take the annual fee off of any benefits you get, so it becomes difficult to get so many benefits that you are actually getting more back than if you just went with a lower cash back card and no annual fee. Like, if you spend $5000 a year on a card, 3% cash back gets you $150 bucks, 1% gets you $50, but if your annual fee is a $100 then you come out even. So if you spend above $5000 the higher card is worth it, below and the non annual fee card is better. You just have to be careful. I should also mention that most cards have a cap on the amount of high percentage cash back you can get. Like 3% cash back for the first $3000 spent, and then it's back to 1% cash back.
For reference, I don't spend a whole lot, but I try to take advantage of the 5% back from my discover as often as possible. After 5 years or so I have built up about $250 bucks. Which is great because if I had spent cash that would have been nothing, but it certainly isn't a huge kickback. I also have a Costco Amex because it's costco, which does cost $50/year, but that also covers my costco membership. Buying at least 50-60% of the groceries for me and my wife there, plus anything else that doesn't get 5% on the discover, nets about $50-$80/year.