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Getting First credit card
SuperSockNinja
Registered User regular
Registered User regular
Hey, I'm looking into getting a credit card, mostly just to build up credit, and I have pretty much zero knowledge on the subject except to respect the power of debt :P .
I'm 20 and as of now shouldn't really have anything on my credit record. I was just wondering what are some things I should look for in terms of different cards, and specifically if someone could explain how different rates work and stuff like that.
EDIT: I live in New York if that helps
I'm 20 and as of now shouldn't really have anything on my credit record. I was just wondering what are some things I should look for in terms of different cards, and specifically if someone could explain how different rates work and stuff like that.
EDIT: I live in New York if that helps
SuperSockNinja on
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Just make sure you pay the balance every month.
You don't have to pay the full balance but thats part of the reason why people get into trouble. Doing the minimum payment, charging more crap, minimum payment, charge more, accrue loads of interesting...well you get the idea.
A lot of cards you'll see in the mail say "0% APR!!!" which actually means we offer 0% APR for 3 months and then own your soul and charge 28% APR afterward. Your bank is the best bet as they can offer you a locked APR card, which is also backed by bank as well.
You've got a job right? Like solid income?
Shogun Streams Vidya
My girlfriend has a credit card that has 0% up to something like $250, which is nothing, I know. But she was able to set her limit to $250... so basically she got a free $250. She has a minimum $30 payment every month... but she can just charge 30 bucks when she pays it off.
Anyways, it's a good deal, and I haven't been able to find something like that. Maybe if you looked around you could find a similar deal.
and for the love of god, please do not buy stuff with the card that you do not have the money for.
I was turned down when I applied for a CC, something about not enough accounts open for long enough, I forget the exact reason. But getting a secure credit card is a good route to build up some more credit initially right?
As long as you manage it properly. A cell phone will also create starter credit as long as you pay your bill on time and whatnot. Keep in mind once you get that first card they will mail bomb you with card offers. I get them from every company under the son. Just shitcan them regardless of whatever their offer is. One card is more than enough.
Shogun Streams Vidya
Yeah I have solid income, but unfortunately I just closed my checking account (long story) and am about to open a new one with a new bank. I guess I'll have to wait a little while to get a card from them?
Once again, all these replies are greatly appreciated.
EDIT: being authorized on a parent's card builds your credit? wow I never knew that.. too bad my Dad wouldn't do that if he had a gun to his head.
1. Get one with my bank.
2. Have my pay check on automatic deposit.
3. Have my credit card bill on automatic bill pay.
4. Never miss a payment.
5. Have perfect credit.
Obviously I'd have to not buy shit out of my means, which I *plan* on doing.
Good on paper.
Key phrase being "on paper." I support what you're doing but I never let anyone automatically draft my bank account. I prefer to handle things myself simply because when they decide they want their money and when I have the money to pay them could be different times. I might have the money to pay them two weeks before the bill is due and so I do. Or I wait and something happens and my bank account gets drained and they bill me. Not only is the bill not paid you now have overdrafts.
This is of course not an ideal and somewhat of an extreme situation. No one ever plans for their account to be completely empty ideally you'd still have savings but, I digress. Shit happens to everybody usually at the most inopportune time. It isn't that I don't trust the companies, its more that I'd rather leave myself with the responsibility of paying my debts. Building good habits for life and whatnot.
Note: I'm usually so paranoid about paying my bills I pay them as soon as I receive them.
Shogun Streams Vidya
AFAIK Renting does not affect your credit score...
Actually you get penalized, so to speak, for paying of your credit cards balance every month. Yes, for anyone listening you should be paying off your credit card(s) every month on time and be mindful how you use it. BUT... Credit scores are ratings assigned to you from lending institution. They want you to pay them money and on time. But they would much rather you carry a balance so they can generate more money, free money at that.
:!: They are in it for themselves, not for charity and a heart felt sense of generosity.:!:
So the person that pays on time every time but not all of the balance at once will have a higher credit score than the person who takes care of the entire balance every month (assuming the two people are identical in every other way). This also why mortgages and student loans are a great sources of credit score elevation.
Holy shit, if you changed that to "Arizona," you would be me.
I was even thinking of making this thread!
The brand name matters little after that.
Ohhh yeah thats one thing I forgot about the Amex. Annual fee. I think mine is $55 but so far this year I've yet to pay it. I'm not counting on that though I'm sure they always get their money in the end.
Shogun Streams Vidya
Being a new customer, go to the bank you're opening an account with and ask right away, if you can, ask when you are opening the account. Although they won't move mountains for you, they do still see you as a new customer that could go elsewhere if displeased. Explain that you weren't happy with your old bank, and you're looking for a place to open a chequing account, and have a credit card. They should do it just to secure you as their customer. Even if it's a pitiful limit, showing that you can manage it will do wonders for your credit.
If you *do* find someone to co-sign, ask about getting your own credit account, and how long you should wait before reapplying. My sister got my dad to co-sign and found out 2 years later that she actually hadn't created a credit record for herself, meaning the whole thing was pointless, the bank told her they would have put the account in her name after 6 months of timely payments.
Do you work in the credit industry, or have you simply heard this through the grapevine?
The only people I've heard that from are people, not banks or lenders. But you can look here and here
from one of 'em:
It's definitely WORSE to carry a balance, because that's the amount of debt that you regularly carry. They also don't care about the amount. So if you're worried about a good credit score, it's worthwhile to charge at least something each month. It's also defintely in your best interest to pay off the balance. Otherwise you're just throwing money away and not gaining anything.
The Amex Blue has no annual fee and a pretty good money back system (spend money, get points, get cash credited back to your card based on the points at the end of the year). On balance, I'd say it's probably one of the best cards on the market. It's so good that when I tell telemarketers that I have an Amex Blue they just give up trying to sell me their own cards.
If you're paying your bills on time each month, it makes great sense.
RE: Setting up a direct debit for paying your bills. I'm not sure if you can set them up to pay off the whole bill, but companies like Amex have a system where they have a minimum payment, so you can set the DD to cover that and then if you do forget to pay the bill for whatever reason (on holiday when it arrives, get hit by a bus etc.) you at least only get charged interest and not late-payment penalties.
There are usually two types of interest.
1) Grace period, you buy something and have X days (usually 30 or 60) to pay it off, these have a higher interest and yearly fee.
2) Interest from day one, you buy something the next day you start paying interest the nest day. These usually have no annual fee and a lower interest rate.
Also don't just take the credit offer. Cause banks are dicks like that. I used to date a girl who was earning 23k and was offered something stupid like 7k limit. Decide your limit before you go in. I only have a thousand because realistically that's all I decided I would need.
One of my friends had a bad experience with AMEX. He tried to supercharge his card (putting extra money on it) To go shopping. AMEX read that as paying off his debt and put a hold on his card for a month. Basically they want you to hit the credit payback day (usually 30) so you start paying interest. Basically you pay interest or you can't use the card anymore. This to me does not sound like an ideal situation.
Satans..... hints.....
I'm not sure I completely understand what you're saying there but...one of the things I like about my Amex is that I can make online payments whenever I choose. So if I go buy something big on my Amex I can come home that night and pay it off immediately. They've never stopped me using the card for this behavior.
It seems more likely that they would have put a freeze on the card for suspicious behavior or something.
Starting to build a history when you're around 20 is a good idea. Also, wanted to add that once credit card companies know you're looking, they'll send you all sorts of offers. Don't just rip them up, make sure you check them out first - you may get one that makes more sense APR wise than your current card.
I have a ton of credit card debt because of job problems in the last few years (that I am finally digging out of), and I ended up late on some payments, so now they are all at max interest rate until at least sept. It's really putting a pinch on my finances and will for a long time.
I wish I hadn't done it but it was either that or starve.
The harder the rain, honey, the sweeter the sun.
It's a bit annoying to have to add a new card to Amazon/Paypal for that bi-monthly shopping I do with it though, so I'm going to get a real one soon.
Your argument itself seems to be based on hearsay.
First: I am a Finance and Information Systems graduate.
Second: My parents were told this when they had their credit rating assessed by a professional at Equifax.
The credit score institutions will not say that they will penalize you for it because of the practical reasons of it making good PR sense and good legal sense (in a sense you are not getting penalized; you will have a good rating, just not as good as a more profitable customer). They owe you no explanation legally on every nuance of how they calculate one's score. They are only legally obliged by legislation to give on free credit report per year.
It stands to reason, regardless of what I have said above, that the lending institutions who calculate the score will not only want to evaluate the borrower on the likelihood of being able to repay the loan but generate a profit for themselves. They are taking a loss in the sense of time value of money factor if they lend to someone who will provide little to no profit. These institutions have investors themselves which demand require rates of return. They own the game you are playing, they make the rules, and they are out for their own interests.
That all being said, DO pay off your credit cards and avoid getting sucker punched with the interest rates credit cards carry.