First Credit Card

SideAffects

Ok guys, I'm looking to acquire my first credit card (or two if recommended). I have a stable job, tons of money in the bank, and no debt. In the future I plan on buying a house so credit would be nice to have.

In advance, I know NOTHING about using credit cards. All I know is that I need to pay off my bill at the end of the month to avoid spending more than I'm actually purchasing items for. I can reliably do this, as I have always used a debit card from my bank to purchase things and have never overdrawn from my account. From what I understand, the APR percentage is what determines how much more you spend if you don't pay your bill on time. I believe that I can handle a high APR. I would prefer to see some excellent cash back rewards...I will be using this card to purchase everything...groceries, restaurants, gas, purchases online, books, video games, and hopefully to help out on the purchase of a motorcycle this summer. Not rent (they only accept checks/money orders). So I am pretty sure that in total I will spend around $10,000 on this card, or close to it. I travel by car usually, so frequent flyer miles aren't tempting. Cards through places like Target or Costco aren't very tempting because I don't shop there often enough. My bank card is a Mastercard and I've never had a problem using it at any location, but I have no idea how commonplace Amex/Visa/Discover are nowadays so I'm not sure which one to get. Thanks in advance!

BetelguesePDX

Visa and mastercard are accepted everywhere. Amex not so much and Discover even less so. SO I would stay away from the latter two.

Cashback credit cards sound like they would suit you well. The one I have is from HSBC (http://www.hsbccreditcard.com/ecare/cards?docId=Cards_Tab_data_cards_hs_p3_xml&WT.svl=400) which gives 1% cashback but I would recommend keeping an eye on credit card offers (through websites like www.creditcards.com) for a few weeks, get an idea of what is out there and then pick one that you like. One absolute I would not compromise on though: Get one with no annual fees. There is no reason to pay annual fees since there are so many good credit cards out there that cost no fees.

EggyToast

Actually, Discover is taken by many, many places -- just not some small shops.

I use my Discover card for everything except those Pay Here parking meters, where you get a receipt. Gas, groceries, pet food, etc. The place where I get my hair cut doesn't take Discover, though, so as a backup I have an Amazon credit card. I then also use the Amazon Visa for all Amazon purchases, as you get 3% back at Amazon (and 1% back through Amazon everywhere else).

Best way to think about credit cards is that they're a way to go negative in your normal account. So, your account starts at $0. Your paycheck makes it go positive. Credit cards make it go negative. If you pay attention to what you buy, and don't lose sight of the fact that it's all your money at the end of the month, then credit cards are incredibly convenient.

I've had credit cards for 10 years and I've never paid a penny to credit card interest. It's not hard -- avoid cash advances (usually lame) and pay the bill in full each month. Log onto their website a few times during the month to keep an eye on things, just like your normal checking account.


As for cards, Discover is nice because they give you 1% back on everything, no strings attached, and often give 5% back on common purchases -- clothes, gas, groceries -- throughout the year. My advice is to get a Discover card, use it around to get used to it (they typically have lower credit limits anyway). Then, once you're more comfortable with it, shop around for the best deals based on your purchases. If you hit up Amazon regularly, their Visa is through Chase and is pretty nice.

I like Discover because you simply earn cash, not points.

tsmvengy

If you have a bank account with a big national bank (HSBC, Bank of America) they probably have a bunch of credit cards with varying rewards/cash back that you can get. I would look into cards offered by your bank first. When you say you want to put $10,000 on the card do you mean every month? I would think not - if this is your first card you will have a hard time getting a card with that much credit.

Be careful when using a card to purchase everything as having it all on one bill can be a shock when you have to go pay it from your bank account at the end of the month. Just make sure you are only buying what you have money to spend on and pay your bill off every month and you will be fine.

EDIT: For the love of God, NEVER EVER EVER get a cash advance on a credit card.

T. J. Nutty Nub

i don't think this can be emphasized enough:Always pay it of at the end of the month

DragonPup

Actually, some cards have interest start at 25 days, so try to pay it off every 3 weeks in that case.

EggyToast

Granted, I have good credit so I don't have shitty cards, but I'm pretty sure that we're just discussing the "grace period" between the time the statement period ends and the time the bill is due. My Chase card is 3 weeks until the bill is due; my Discover is always due the day before the end of the next statement (which is another reason I like my Discover card).

Anyway, the point is, interest only accrues after you've passed a payment cycle. If you pay the Statement Balance each time it's due (and paying online helps, as things don't get lost in the mail), that should be enough. I usually simply pay when my paychecks come in, so a bill due on the 27th is paid on the 15th.

Gdiguy

EggyToast wrote: »

Actually, Discover is taken by many, many places -- just not some small shops....
I like Discover because you simply earn cash, not points.

I happen to have the HSBC mastercard that was linked above, and it gives points that are either redeemable for 1% cash back OR flights (I've always just used the 1% cash back, but it's there at least)... I happen to like it because they gave me a pretty high credit limit (possibly partially because my parents have a card with them), so it's worth keeping.

I also like Discover, because it's >1% depending on whether you can use the rewards (my bills are low enough that I can usually take rewards in the form of Gap/etc gift cards for yearly jeans/etc purchases, and for those you get the equivalent of like 1.5-2%), and it's basically accepted everywhere significant (i.e., maybe not the sandwitch shop in the basement of your building, but any major retailer will).

Otherwise, it depends heavily on what you buy. It made sense for me to get a JetBlue AmEx card, because they double rewards on jetblue flight purchases (along with making miles not expire), and I fly home from school often enough to make the $50/year card fee for an AmEx make sense. If you want a Costco membership, you can also get a free (non-yearly-fee) AmEx card. If you tend to buy all your gas at one station, then those cards can be a good deal (usually 3% on, say, all Shell purchases). If you buy a lot of stuff on Amazon, then their card would likewise be a good deal.

MrMonroe

If you shop around a bit you're sure to find somewhere offering a ludicrously good introductory rate. My Bank of America card (Visa) came with a 0% APR for the first twelve months, which is hard to argue with. They don't seem to have wised up, either, and my monthly payments continue to be identical at $15 if I have an outstanding balance even a year and a half after getting the card. Using it for everything and paying down the full balance at the end of the month is a pretty good way to earn credit, but I feel like paying down my car loan early has done more for me.