The new forums will be named Coin Return (based on the most recent vote)! You can check on the status and timeline of the transition to the new forums here.
The Guiding Principles and New Rules document is now in effect.
Student Loan + Credit Card = Credit Building Magic?
meatflower
Registered User regular
Registered User regular
So I've got a student loan now (first of 3-4 most likely), an unsubsidized Stafford. I've elected to pay the interest that accrues while I'm in school as opposed to having it add to the principal. Regardless, there will be a minimum monthly payment to be made (about $80/month).
I'm 20 years old, never had a credit card in my life and thus probably have an abysmal credit score if any. Not looking to make a big purchase in the near future, but I'd like to have some credit built when I do need it after I graduate in a few years. The student loan is with Wells Fargo so I was thinking of opening up a checkings/saving account with them, then getting a credit card with them. My plan is to set up the monthly minimal loan payment on the credit card, and then pay the balance each month. Not going to use it for anything else.
Is this a good way to build credit, without getting myself into a ton of debt, or will it accomplish little to nothing?
I'm 20 years old, never had a credit card in my life and thus probably have an abysmal credit score if any. Not looking to make a big purchase in the near future, but I'd like to have some credit built when I do need it after I graduate in a few years. The student loan is with Wells Fargo so I was thinking of opening up a checkings/saving account with them, then getting a credit card with them. My plan is to set up the monthly minimal loan payment on the credit card, and then pay the balance each month. Not going to use it for anything else.
Is this a good way to build credit, without getting myself into a ton of debt, or will it accomplish little to nothing?
meatflower on
0
Posts
$50 in my checking account
$150 credit line on my credit card
I HAVE $200 YAY!!
And then there are people that say:
$50 in my checking account
$150 credit line on my credit card
I have $50, yay!
If you are the latter, then you'll have no troubles with a card. I've had several credit cards and credit lines and have never had any trouble at all. The card in fact pays the full balance to $0.00 automatically from my checking account every month.
If you're the former style (you may not even know it) credit cards are basically something you should never own, lol.
So basically, if you can be responsible with a card and see it just as a payment instrument not actual cash then you're gold, this is a good plan, get one.
Also, Wells Fargo is a shitty, shitty bank. If you have other options in your area (Chase, WaMu, a credit union, even BofA), I'd use them.
Even though I don't make much money a year (< $5000 a year [i am an RA so my housing is paid for by school and not counted as income]) my credit card went from my initial limit of $200 to $2000 in almost a year - I'm guessing this most certainly reflects my credit rating and the fact that I kept almost maxing it out but could still pay it.
I don't have any loans or any other lines of credit, so I'm sure that with your loan and a credit card that you use for everything you will see your score go up quite fast.
Really, it is so convenient just to charge things, no holding lines up by writing checks, no fumbling about with change, etc. Also everything is posted online and with wireless statements everything is a breeze.
Why are they shitty? Only reason I would go with them is because I already have the student loan with them (didn't really care at the time since the terms on the unsub. Stafford are the same no matter what bank you use).
There is a .25% deduction on the 6.8% or whatever I'm paying on the loan if it's paid for with a Wells Fargo account. I realize this is almost nothing but still.
No offense but this seems like exactly the kind of dribble the credit card companies spew in their commercials. Like I'm supposed to feel socially irresponsible for "holding up" a line by paying cash? Either way, I have a debit card which I like using because when it runs out of money I don't have to worry about a bill I can't afford to pay.
Thanatos - Can you elaborate on the banks?
So you can get a credit card and not use it - that won't build credit.
Or you can use it the same way you use your debit card already - and build some credit with it. You are already spending the money anyway so as long as you don't rely on your debit cards auto anti-overdraft feature or whatever-the-fuck (mine didn't have that so it was just like using a credit card in that I could accidentally spend too much), you'll be fine. Spending money is spending money, the means doesn't matter. If you want to build credit you need to well, use credit.
But as far as credit cards, just use it for gas, and pay it off.
we also talk about other random shit and clown upon each other
Anyway, they probably won't let you pay the loan down with a credit card. Now, I'm not telling you to get a credit card because you're "holding up the world" or whatever by paying with cash. The issue is that by using cash, you're not building credit, whereas if you were using a credit card, you would be. This is going to affect you after you get out of college, if you need a loan to by a car, or down the line if you need one to buy a house, or for any other reason. Credit history is important, and by using a credit card and paying it down in full every month, you're basically building a credit history completely free of charge.
The reason people are acting like "why wouldn't you do this, what are you, stupid," is that avoiding credit cards just because they're credit cards is fairly irrational. I mean, you've got every right to do it, but really, all you're going to be doing by avoiding them entirely is hurting yourself in the long run.
I'm wary about using a credit card because I don't have my own source of income currently, and will be relying on a stipend (probably like $200 a month) from my parents for miscellaneous costs. Any credit card I get is probably not going to have a limit much above that so I can't get myself into too much trouble. I guess I'll just use it for food/gas as suggested, not really going to be buying much else anyhow, while budgeting myself under whatever the amount of money I'll be receiving from my parents. If that makes sense.
I was more freaked out about this before because I didn't do my part and read up on credit cards, in that if it's paid off before the end of the month I'm not paying lolinterest on small purchases.