Recommend me a credit card?

[Kwesi]

I talked to one of those "personal finance consultants" at school last year and after asking about credit cards and stuff she essentially told me that college is great time to get a credit card and build credit as long as your smart about it. I'm thinking about getting one myself (only for small purchases) and I'm wondering what I should get. I shop on Amazon a lot so I was thinking that I would get their rewards card but I'm wondering what else is worth a look. I tried asking my dad about it and he thinks I'm going to run myself into the ground if I get a card and my mom never seems to be able to stay on topic when I talk to her so I'm depending on you guys . Which one of these plastic card filled with infinite amounts of money should I get?

[MJ5150]

I got one of the Capital One ones where you can put your own picture/image on it. So I used a picture of me and my cousin at a Steelers game a couple years ago.

Your dad is looking out for you, good for him. A credit card can be a little shovel to dig you into a bottomless pit if you aren't careful. Also, the money is not infinite.

-Mike

[Dr. Cheese]

Originally Posted by MJ5150

I got one of the Capital One ones where you can put your own picture/image on it. So I used a picture of me and my cousin at a Steelers game a couple years ago.

-Mike

+1, I think Capital One is decent, and will not gouge you. You strike me as a smart guy with money. I'm sure you will handle it well.

[Jim Nazium]

1. Get a card with no annual fee
2. Pay the balance in full every month like your life depends on it

Do those two things and it doesn't matter which card you get. Fail to follow #2 and you can enter a world of pain. Guess how I know.

[Kwesi]

Originally Posted by MJ5150

Your dad is looking out for you, good for him.

And I'm definitely thankful for that but information is more helpful than telling me that credit cards are the devil.

Also, the money is not infinite.

-Mike

Twas a joke .

[gnjpowell]

Advice: When you find yourself in a hole - STOP DIGGING!

[turbo chicken]

I work in the credit industry ... more specifically the credit card division for a very very large bank. I've learned a few things in the past 11 years from working in the credit, customer service, collections, ops support etc etc...

1. get a card with no annual fee (as mentioned above)
2. get the lowest interest rate possible... kind of hard when you got no credit. The bank is taking a higher risk financing you therefore higher interest rate
3. Pay off your card... sure... revolve a balance sure ... just don't revolve it for a long time. What a creditor wants to see is "willingness to pay back" charge someting and pay it off in a reasonable amount of time. I'm not saying don't pay off your balance off each month but if your able to do so... why not just use cash on hand. Charging 300 bucks and paying it off in 3 months shows your able to borrow and pay off over time.
4. Do ask for your interest rate to be lowered each year ... better credit score = less risk to the bank = lower interest rates if your making your payments on time and using your card this shouldn't be a problem
5. get a rewards program of some sort only if you are going to max it out each year... you max out rewards programs by using the card for regular daily purchases, gas, groceries, and paying off that balance every single month. (see i said paying it off is a good thing)

and i'll reiterate... revolving a balance is expected... just don't let it turn into a "slowpay" borrowing a grand and taking 3 years to pay it off isn't good.

i could go on and on... at the end of the day... Brand doesn't matter ... the interest rate, fees, reward programs is what matters.

and on a personal note... the credit trap is real... your dad is just looking out for ya. I work for this place and owe them way more on my "employee card" than I should at the moment ... i was some what irresponsible with it and the budget is strapped for one more year before i pay the darned thing off. point is ... i knew of the pitfalls but was still irresponsible and paying for it now... trust me... it's soo easy and it adds up fast.

[SoonerMatt]

Maybe not a Centurian but definitely get AmEx. Awesome rewards program, great CS, and since it's a charge card you have to pay your balance in full every month so it keeps you on your toes.

[jive1]

Get a Jive Sound credit card......

In all seriousness, don't do it unless you really need it. Get a debit card for your online purchases. You can even create a second account that has less money in it, and transfer between them if you want a little extra security from online fraud. Paying interest on depreciable goods is not a good idea. The "college being a good time to build up credit" is crap, and one of the biggest lines of BS you will hear. The best time to build up credit is when you have a secure means of paying off your debt. If you obtain credit that you can't pay, it will not help your credit rating, no matter what they say.

Credit card companies love giving college students credit. First because they are not as financially savvy, and second because they are young. The younger you are, the more years of interest they can earn on you. If you take out $1000 at 20%, and don't make a single payment it will compound to $38,337 in 20 years. In 30 years it will be $237,376. What a difference 10 years makes. That's why they want to get you in younger. More years, more money.

[Kwesi]

Originally Posted by turbo chicken

I work in the credit industry ... more specifically the credit card division for a very very large bank. I've learned a few things in the past 11 years from working in the credit, customer service, collections, ops support etc etc...

1. get a card with no annual fee (as mentioned above)
2. get the lowest interest rate possible... kind of hard when you got no credit. The bank is taking a higher risk financing you therefore higher interest rate
3. Pay off your card... sure... revolve a balance sure ... just don't revolve it for a long time. What a creditor wants to see is "willingness to pay back" charge someting and pay it off in a reasonable amount of time. I'm not saying don't pay off your balance off each month but if your able to do so... why not just use cash on hand. Charging 300 bucks and paying it off in 3 months shows your able to borrow and pay off over time.
4. Do ask for your interest rate to be lowered each year ... better credit score = less risk to the bank = lower interest rates if your making your payments on time and using your card this shouldn't be a problem
5. get a rewards program of some sort only if you are going to max it out each year... you max out rewards programs by using the card for regular daily purchases, gas, groceries, and paying off that balance every single month. (see i said paying it off is a good thing)

and i'll reiterate... revolving a balance is expected... just don't let it turn into a "slowpay" borrowing a grand and taking 3 years to pay it off isn't good.

i could go on and on... at the end of the day... Brand doesn't matter ... the interest rate, fees, reward programs is what matters.

and on a personal note... the credit trap is real... your dad is just looking out for ya. I work for this place and owe them way more on my "employee card" than I should at the moment ... i was some what irresponsible with it and the budget is strapped for one more year before i pay the darned thing off. point is ... i knew of the pitfalls but was still irresponsible and paying for it now... trust me... it's soo easy and it adds up fast.

Thanks for the info! I've got a few more questions

About #3, I've always paid everything off in full in cash and if I couldn't I just didn't buy it. I don't plan on changing that when I get a credit card, I just want my money spending to actually do something for me (in this case, build credit). So would it be a good idea to use the card for the odd snickers bar at a gas station or occasional grocery run and then pay it off as soon as I get home?

About #4, how exactly do you ask for your rate to be lowered and when should I ask?

About #5, what other cards are there besides rewards cards? Every card I see seems to be geared towards some kind of rewards program but I don't want to goof up and get one when I shouldn't. Also, I don't think I spend enough to max out any card, to be honest. All my big spending is on bass gear and those purchases aren't done with any sort of regularity.

Having no credit, I probably wouldn't qualify for this would I: Capital*One Cash ?

[OldDog52]

My philosophy is get one with a relatively high interest rate. That way I'm very motivated to not carry a balance.

[MJ5150]

I find it odd that consultants are going into schools and encouraging students to get credit cards. I'm guessing you got more advice that that, which included saving money, setting a budget, planning for retirement, and other more reasonable suggestions. I also understand why you wouldn't mention that since this thread is about something specific, I'm just hoping.

-Mike

[i_got_a_mohawk]

Let me preface this by saying that I don't know if it is the same in the US.

The best rate I could get was with the bank that I have spent most of my life with, so, I can't really help you there!

If you get a card, be sensible with it, pay it off in full each month if you can.

When shopping online, I only use my credit card. Unfortunately I was a victim of CC fraud earlier in the year, but my bank sorted it out quickly and painlessly. I've had friends who have had money taken from debit accounts and they had a nightmare getting the money back.

[Kwesi]

Originally Posted by jive1

Get a Jive Sound credit card......

In all seriousness, don't do it unless you really need it. Get a debit card for your online purchases. You can even create a second account that has less money in it, and transfer between them if you want a little extra security from online fraud. Paying interest on depreciable goods is not a good idea. The "college being a good time to build up credit" is crap, and one of the biggest lines of BS you will hear. The best time to build up credit is when you have a secure means of paying off your debt. If you obtain credit that you can't pay, it will not help your credit rating, no matter what they say.

Credit card companies love giving college students credit. First because they are not as financially savvy, and second because they are young.

Not to brag or anything but I'm not your average college student.

/totallybragging

But in all seriousness, I've been working or making my own money since 9th grade and I know how to handle myself when it comes to spending. I maintain a minimum balance in my checking and savings accounts that could cover the most ridiculous impulse buy I could see myself making. I don't have any actual income but, like I said, it would be nice to see the spending I do actually amount to something other than me getting whatever I paid for so the whole building credit thing has caught my attention. I don't want to be looking for my first loan on no credit x number of years from now.

[Kwesi]

Originally Posted by MJ5150

I find it odd that consultants are going into schools and encouraging students to get credit cards. I'm guessing you got more advice that that, which included saving money, setting a budget, planning for retirement, and other more reasonable suggestions. I also understand why you wouldn't mention that since this thread is about something specific, I'm just hoping.

-Mike

I actually called in to the bank so I could sit down and talk to somebody about personal finances at length. She was really helpful and touched on everything you mentioned except retirement. I was the one who asked about credit cards because I was curious and no one around me would give me a straight answer at the time.

Originally Posted by i_got_a_mohawk

When shopping online, I only use my credit card.

I there a reason why you use your CC online instead of Debit?

[i_got_a_mohawk]

I thought you were a special student?

As explained further along in my post, you (at least seem to) have better fraud protection with a credit card. (also, only using one account online helps limit damage when something does go wrong, I had previously used debit cards online too, but when the credit card was done, I got new cards for all my accounts, because I honestly don't have a scoob how my details were obtained!)

[Phalex]

Originally Posted by Jim Nazium

1. Get a card with no annual fee
2. Pay the balance in full every month like your life depends on it

Do those two things and it doesn't matter which card you get. Fail to follow #2 and you can enter a world of pain. Guess how I know.

This. Once you start carrying a balance it gets harder to get out from under with each passing month.

Credit cards can be a convinience, but they can also change your life for years in a very negative way.

I think Red Foreman said it best: Don't be a dumbass!

[turbo chicken]

Originally Posted by Kwesi

Thanks for the info! I've got a few more questions

About #3, I've always paid everything off in full in cash and if I couldn't I just didn't buy it. I don't plan on changing that when I get a credit card, I just want my money spending to actually do something for me (in this case, build credit). So would it be a good idea to use the card for the odd snickers bar at a gas station or occasional grocery run and then pay it off as soon as I get home?

About #4, how exactly do you ask for your rate to be lowered and when should I ask?

About #5, what other cards are there besides rewards cards? Every card I see seems to be geared towards some kind of rewards program but I don't want to goof up and get one when I shouldn't. Also, I don't think I spend enough to max out any card, to be honest. All my big spending is on bass gear and those purchases aren't done with any sort of regularity.

Having no credit, I probably wouldn't qualify for this would I: Capital*One Cash ?

Building credit is a whole nother' conversation ... and I'm by far not an expert there are other way more qualified people to answer those type of questions but you gotta pay for that advice.

buying a 2 dollar candy bar and going home to make a 2.00 online payment to pay it off isn't going to do much in establishing credit.

I'll use the "Willingness to pay back" phrase again. The bank wants to look at your credit history and say... (ill over simplify here) "I think this guy will pay us back." They do this by looking at many many things. You want to have an active card that is being used, with a low revolving balance (or none if you choose), that you are paying on each month. It's okay to not use the card for a month or two.

So your history is tracked ... they can see that you use the card, what the balance was, what the limit is, and if you pay on time, and how fast you pay off the card...

^take that and think... if my buddy was to ask for 500 bucks... and i had all this same info... would seeing he charged 20 bucks and paid it off the same day matter. or would seeing that he charged 800 bucks and paied it down in 6 months matter. I'd say the latter cause he has a "history" of paying off a balance larger than what was asked in a certain amount of time.

You call the phone number on the back of your card and just ask the represenative if they can lower your interest rate. How it works is... in order to protect themselves credit card companies will review your credit (yes they pull your credit but it's a specific type of pull coded a certain way that say's we aren reviewing this persons credit because they asked for more ... a good creditor looking at your report can see this contrary to popular belief not all credit pulls are detrimental to your score) so... the review your credit peridocially to make sure that nothing has gone awry in the time since they gave your the account. When they review your credit it is put into your profile on your account... they have a system that looks at this stuff and does risk calcs that will tell them... hey this guy is lower risk .. lower risk = lower interest rate... but the bank makes money of off higher interest rate... why change it if we can make more money... so you have to call and ask for it to be lowered.

There are cash back reward programs where you can get a check in the mail ... i think these are the best as you aren't stuck with spending it on a specific product or reward that you might not end up using. Think of the reward just an extension of a credit card... the reward is mostly used for marketing... the bank after all needs to seperate themselves from their opposition. They are just trying to add a "value" to the card that the other's don't have. they want the interest you will pay when revolving credit.

that being said... there are credit companies that specialize in giving high risk cards... research "student card" if your a studend... your more likely to be approved for one of these. Infact any card with an interest rate in teh upper 20% range is going to be geared towards high risk segment and you with no credit are more likely to be approved.


now... about a card with no fee... this just dawned on me... Since you have no credit... your going to be hard pressed to find one without a fee and get approved. 10 years ago it wouldn't be a problem... but now it's a rarity.

What I have seen many many times with people establishing or re-establishing credit... you gotta pay for it you have to pay the banks to take the risk of extending credit in both a fee and interest. The first card you get will likely have a yearly fee. This is common for no/bad credit. But make sure the fee is under 50 bucks any higher than that and ... well ... don't go any higher than that.

After a year of using the card and keeping a low balance (to minimize finance charges) and making on time payments ... apply for a card with no annual fee and a lower interest rate. once you get that card... pay off and close the old card so you don't get charged the fee every year.

Never ever only pay the minimum balance ... never ... do the math on the interest and how much goes towards your principle ... it's not pretty ...

and the capital one card you asked about ... nobody except the bank can tell you that as every card has a different credit criteria tied to it... but im fairly certain that they will have a product that you will have a better chance of being approved for.

BTW if you were to call a lender and ask ... they cannot say anything to keep you from applying and they can't give you a straight answer to the question "do you think" ... their decision are yes or no... and that can't be answered until you apply...

i hope that helps ...

TLDR version ... charge, revolve a small balance, pay off completely every few months... this shows "willingness to pay back" It's sad but in order to build credit you have to literally pay for in finance charges/interest.

[Strohsx]

Credit, where where going we don't need... credit.



Lowest interest rate and lowest APR that you can find.
Buy small everyday things and pay them off as soon as they hit, always have some sort of balance on it (since they don't report on good things you need to show that your credit is being used..

Another great way and how we built ours to get the house it to take out a few personal loans from your local credit union. Don;t spend the money.Take the money you got from the loan, sack it away in a separate account or the same account and use it to pay it's self off, Yes you will pay some interest but it builds your credit.

[Rickengeezer]

Discover cards have a decent cash back, although some merchants don't want to accept them (because that cash back comes out of their fees). I had an Amazon visa once but figured that cash back was more flexible than having to buy from Amazon (at the same 1% return).

Whichever you do, PAY THE STATEMENT BALANCE IN FULL EACH MONTH. Paying off individual purchases does nothing, in fact many companies will limit the number of payments you can make each month. Don't "keep a small balance" because having ANY unpaid balance allows the CC company to charge you interest on it as well as on any new purchases, immediately (rather than having a "float" period). Just pay it off, once a month, for the FULL amount of the previous statement (you don't have to pay the current balance, just the statement balance). That way there should be no interest, ever. And you'll establish a record of making monthly payments on time, which does help the credit rating.