Financial-type adviceFollow

So, OOT, I'm looking into getting a credit card. I have never owned one before, and feel I need to get a better hold on getting some credit. What I am wondering is whether I should look into one of the big name companies (e.g. Capital One), or go with a bank here. I'm wary to go with my bank because I think the interest rate will be about 18%, but I honestly haven't looked much into other cards to see how much better they would be. Do I just need to do some research, or are there certain ones I should look at / things I should do first?

You can use a credit card without going into ludicrous debt, you know

Edited, Oct 11th 2010 8:52am by Sweetums

Yes but the majority of people don't. Its a good theory though.

In most cases it's getting harder and harder to get credit cards. If you do get one. Check out the intrest and penalities they charge. Most charge rates that are outragious. Try to get the lowest rate you can and still get the card. Then, do not charge things that you cannot afford to pay off each month. If you keep charging more and more you can get caught into the you can only pay the intrest rut and that get's you into big trouble down the road.

Edited, Oct 11th 2010 9:58am by Tailmon

Lucky :(

Mine doesn't, but I'm happy enough to have free checking that doesn't require Direct Deposit (even though I use Direct Deposit, anyway).

Why would anyone not want direct deposit?

Anyway, Vataro, duder, 18% actually isn't bad for your first card. Everyone wants you to fail, that's important to remember. The differences between some satanic global conglomerate like Capital One and your homey, backwoods credit union are going to be minimal. If you check out local lenders I'd just be extra-wary of "service" fees and annual fees and the like. On the flip-side, you can't abscond under cover of night and burn down Capital One when you finally realize that's the only way out, and sooner or later, that epiphany will hit you like that big dumb ************ in Back to the Future hit that truck full of ****. That was right after Michael J Fox invented skateboards, if you recall correctly, and the big dude's name was Biff, probably. He almost raped Shaky Mike right out of existence. Hope my advice has helped.

It is mainly for the purpose of building credit, yes. I would never buy anything I wouldn't have the money to pay for outright. That being said, it would be ideal for me sometimes to take 3-4 months to pay something off. I would only ever have 1 thing going at a time though if I were to make a big purchase, and pay it off before I bought something else. Which brings me to another question about credit - my understanding is that it is best to not pay something off at once but to show that you can make regular monthly payments on time. Anyone know what the ideal payment would be? 1.5x the minimum? Twice the minimum?

A little detail that most people overlook is how long it takes their credit card company to reimburse "holds" that are put on your credit card. The most frequent complaint i come across from people with Credit cards from, typically small, banks, is that if a pre-auth is used (such as at a hotel or car rental) it takes forever for their bank to release the hold (7-10 business days). Which means for the next 7-10 days, your credit limit is affected as if you had purchased whatever the hold amount was for.

As for which specific company/bank to go with, I can't recommend anything as I only have Canadian Institutions to choose from. Royal Bank and Bank of Montreal seem to be good typically, not sure if either has burrowed that far south though. Scotia Bank is bad for being a culprit of the above situation, so should they be in the south, avoid them.

Personally, I would recommend against credit cards altogether if you can avoid them. There are other ways to build credit that don't involve the possibility of disgusting amounts of debt or absurd interest rates. I've never had a credit card in my life, but I qualified for an auto loan based on nearly-invisible credit (I believe the only things on my credit record are cell phone bills and community college tuition, which I paid for myself.) My car will be paid off early, which should also help my credit score.

I was until recently in the exact same position. Here's what to do. Go to JC Penny, ask for a credit card application, buy a shirt.

Pay off that shirt at the end of the month. Each month, buy something. Socks, boxers, a jacket. Or do like I do, and just put your gas on that credit card. Groceries could work too. No big items! Pay it all off at the end of each month.

As long as the credit card does not have a monthly fee, the interest rate does NOT MATTER. You will never let the bill sit for more than a month. So you will build credit.

After you have good credit (not sure at what point this is...), apply for a good bank card - by "good" I mean something with perks. Yes, your JC Penny Card has perks, but it's something like... $10 gift certificate good for a month if you charge $200 in that month (in other words, it blows). Personally I'd go with something like... airline miles, or... hotel points. Use it for a vacation! The student union at UF has good credit card deals for staff, so I'm planning on opening an account and getting one of those. If that fails, I'll try for one from Bank of America (rejected before because I had no credit history).

You need to be disciplined to make sure you pay your bill each and every month, or you'll get slammed with the interest. But it's an easy way to build up credit.

Edit: And from what I have heard, it's not true that keeping a minimum balance is a good thing. Charging a monthly expense and paying it off, like with a cell phone or utilities, isn't a bad idea either. Just make sure you CAN pay it off each month with no problem.

Edited, Oct 11th 2010 12:51pm by LockeColeMA

That's total ********** Pay it off as soon as you can. By keeping a balance all you're doing it paying interest to the credit card company. The only thing you should be avoiding is maxing your credit line out and making late payments.

As someone stated there are other ways to increase credit without signing up for a credit card. If you live in a house or apartment that you are making payments on then that will help increase your credit. I'm not sure if the leasing company has to submit a report for you or if they are supposed to do that anyways. Paying off bills such as gas, electric, cable/internet will help increase your credit score as well.

Here is a little piece I found on how they calculate your credit score.



EDIT: link

Edited, Oct 11th 2010 2:19pm by Hyolith

Edited, Oct 11th 2010 2:20pm by Hyolith

This is not "ideal" in any meaning of the word. If you can pay something off in 3-4 months, then save the money for 3-4 months ahead of time and buy it outright. Why pay extra on something you can afford anyway?

As others have pointed out, you do not have to carry a balance to build credit. Just buy stuff you would normally buy anyway and pay it off every month. Don't change your spending patterns because you have a credit card. That's the mistake most people get into. They think that since they have this credit line that they can afford more. You can't. You can only really afford what your income allows you to afford. Don't ever forget that!



This x1000!

Here's what you look for. Check to see if there are any sorts of automatic fees (like a yearly premium or whatever). If there are, don't take that card. Get a card that wont cost you a penny just to have and then only put minor regular purchases on it, and pay them off every month. That way the interest rate on the card doesn't matter at all and you wont have to pay a dime while building up your credit.


Obviously, you can play the rewards game as well if you want. But just don't ever think that a credit cards gives you more money. Don't plan purchases around being able to get something now and then pay it back over time. If you can afford to pay X amount per month to pay it back, then you can afford to save X before buying. In the long run, it'll cost you much less money to do it that way. You'll be able to afford more nice things, become fabulously wealthy and retire to an island somewhere or something.