Thursday, 02 July 2009
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Need Tips For Our First Credit Card
So, my husband and I have been thinking about getting our first credit card--we're 23, married, living on our own, and have stable jobs. Oh, and our only debt is student loans (which we're paying on).
That being said, I'm sure many of you already have credit cards--what's your best advice for first-timers? What should we accept/avoid? Is it better to go with a company (i.e. Visa, Mastercard) or through your bank?
Any and all advice is appreciated!
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- From: arenfro@xanga
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Comments (17)
Is it better to go with a company (i.e. Visa, Mastercard) or through your bank?
I believe Visa and MC are always administered by a financial institution, even if you get one that's branded (i.e. British Airways Visa is a Citibank card, but Citibank also issues plain Visa cards). I'd stick with Visa or MC rather than Amex or Discover. Amex charges you an annual fee (not sure about their Blue card) and it's not accepted as widely as Visa or MC. Discover is accepted in even fewer places than Amex. Check out MSN's Money columns for some interesting information on credit. And this one too.
Get a card with no annual fee, and as low an interest rate as you can get. If either you or your husband belong to or are eligible to join a credit union, get your credit card through the credit union- their rates tend to be a little lower, and many (not all) will give you breaks that the big banks won't. They're MUCH nicer too.
Avoid store charge cards like Victoria's Secret, Sears, Gap, etc. Their interest rates are INSANE- 24% and up, and it's not like you can use it at the grocery store. Also avoid getting more than one or two credit card accounts. If you're planning to buy a house in the next few years, you need to show that you're not using too much of your available credit, or else it will look like you won't be able to pay your monthly mortgage because your income will be stretched too thin.
If you don't have the cash in the bank to pay your credit card off in full, don't buy it. I can't stress enough how important it is to not let your credit card debt ride for months and months. That $50 dinner can easily cost you $400 if you only pay the minimum due every month. And if you're late just one day in paying your credit card bill, it can affect any other credit card account you have and cause your interest rates to go up as high as 25% or even 30%. It's buried in the fine print of the credit account agreement you get when you're approved.
Bad credit can affect whether you get a job or an apartment, and even the car insurance companies are using your FICO score to determine your insurability and premiums. Protect your credit card the way you would you Social Security number!
Always pay more than your minimum balance, or you else you could be paying off your credit card debt for decades.
I agree that you should go through your bank or credit union if you can because of lower rates. Also, if you want lower fees, don't go for a card that offers rewards (like air miles).
Pay day can seem so far away. The difference between today and your next pay day can seem like an ocean of time, and at times you can come up short. Unexpected expenses happen, and it can leave you short until your next pay day, and this can leave many wishing they could get a cash advance until next payday. Well, you can – they're called payday loans, and payday lenders have loan options that can fit your every need. You can get a payday loan the same day you apply, with no faxing, and no credit check, even direct deposit. There are even payment plans so you can get an installment payday loan until pay day.
I have a Visa card and am quite satisfied with it. I got it through my bank, and their name is on it, but the only thing they handled was the application process.
My tip is that you only buy things you have the cash to pay for, at least at first. When my uncle was first married, he charged all of his furniture and appliances to his credit card, ended up unable to pay off his debt, then lost all of what he bought. I'm always wary of spending too much, especially since my bank just upped my credit limit (they'll do that even if you don't ask for it--be sure to keep track of this!).
@planetedie@xanga - What do you mean by the store charge cards? I've never heard of that! lol
I have Visa and Discover. The only reason I have Discover is because it's a student credit card, and my parents thought that the whole "5% cashback" is pretty good (especially because they had it for gas ... and gas was getting pretty expensive). But true, many stores don't accept Discover.
My friend has the citi creditcard and he says it's really nice because of the thankyou points. Maybe you can look into that? But I'm not sure if that's accepted at most places..
Hmm, also ... don't forget to pay off the credit card bills. I usually pay them all each month. I don't like to pay the "minimum fee due". I'd rather pay it off all at once. I did forget once, so they automatically deducted $25 from my checking account >.> spend money that you already know you have! :)
good luck. and keep track of your receipts and everything.
@a_single_raindrop@xanga - Store charge cards aren't the same as credit cards in that you can only use it at that store. Companies like Victoria's Secret, the Gap, Sears, Express, Bergdorf's- those companies have their own cards and perks, and do not have the VIsa/MC brand on them. For example, you cannot use a Victoria's Secret charge card at the Gap or at a restaurant, only at Victoria's Secret.
True credit cards (Visa, MC, Amex/Discover//JCB) can be used just about anywhere. So to me, why get a card that's limited to one store when you can get one credit card that is good at almost all businesses?
I have to disagree very strongly with LohanK. Payday loans are a very very bad deal. Not only are the fees high, but if your paycheck isn't stretching far enough to cover your expenses between paydays, it's not going to cover those expenses AND the cost of a payday loan. It's worse than credit card debt. It sounds like the ideal solution to a financial bind, but it is like digging a hole while wearing handcuffs. Don't do it.
Check out Dave Ramsey's Money Makeover website. He's a little extreme but a LOT of his advice is sound and very practical. He's a big advocate of staying out of debt.
Credit cards are a trap. Don't use them. Imagine the worst thing you can that will destroy you; credit cards can up it hands down.
One other thing, just because you have a stable job today means nothing; the sky may be clear now, but a storm can move in without warning.
Get something through the bank because they'll be more likely to approve you and give you better terms. Don't get a store card. Mind you, there are some decent ones out there. But those are almost all put out by well known companies and not forked over to newbies.
OT: how do you report someone for response spam?
I'm 25, a great way to boost your credit rating is through a credit card.. it can be a great tool, but do a lot of research on the cards before you lock into one.. some seem really great but have serious drawbacks.
I'd advise something like the amazon visa.. I get 25.00 every so often in rewards.
I use mine for my bills and average monthly expenses and whatever else.. I stick to a strict budget, never spend more in a month than I have and pay the balance off immediatly (the entire balance) using it this way I boost my credit score, never get in trouble and get plenty of card rewards. (mine is amazon credit,I get a couple of hundred dollars or more a year) but there are a lot of different reward systems out there)
also, set up your account online, monitor it weekly at least (if you do use it for bills and everything else, you can split the payments into pay days and pay online)
I got my card as I entered college. I'm just set on building good credit. Just always watch what you spend and don't go over your limit.
The best advice I can think of is to avoid them all together.
You guys are young. your debt is manageable. You have your own place. You've already got what you need and no real good can come of having a credit card, currently. All that's gonna happen is that it'll end up a crutch or a convenience item.
If that weren't true, there wouldn't be people dying by the thousands financially, today xD.
Even using it on emergencies will land you in too much debt at once.. cuz I mean..an ambulence service, in the event someone gets really hurt or sick.. 5-600 bucks. That's just the ride. Being treated and stayed in a hospital is gonna be an additional grand more.
Sure you wanna have it on hand, but you don't wanna owe these things.. least of all not to a credit institution.. cuz that 2000 bucks will inflate to 3000~ by the time you pay it off.
Set yourself a savings account up at your bank and save for what you want or need. Learn to put money away for when you want nice stuff or need it badly.
If you absolutely have to.. get one with a teeny limit. Maybe a MasterCard. (Visas are too widely accepted among big things.. and therefore addicting..). This way you use it for small things. Credit building is the sole reason to have one.. because you'll need good credit to get a house (though you said you had a place.. it's not clear if you rent or own). Other than that, stay out of huge credit limits.. gold/platinum cards and all that.
I was just explaining this to my niece that the bottom line thing to remember about cards is that its not your money, and eventually they'll go through whatever you own to make you pay em back.. so you wanna avoid any situation of owning anyone lots of money that isn't yours.
This makes big cards a trap, unless you're using them as buying power to fuel a highly profitable business.
Pay attention to the interest, right now interest rates should be decent... shop around, get brochures.
Do not get a credit card if you are not planning to make the payment in full every month. The reason is that credit card interest rates are too high. Don't pay just the minimum, that's how the credit card company get you into debt. With the high interest, it's harder to get out of debt.
The only reason I use credit cards is to increase my credit score. A high credit score is important to get a lower interest rate on car loan or mortgage. With a master card, you do not need to sign your signature for purchase under $25. It is convenient to scan and leave without holding up the line.
Get rid of it and use cash. One late payment and those bastards will raise the interest rates sky high.
The best thing to do is to not have one. A debit card is all you need.
Just don't get one. It'll make you spend more than you should. Pay off your student loans and live debt free.