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Credit cards-a little advice?

Discussion in 'Off Topic [BG]' started by Bryan R. Tyler, Mar 9, 2003.


  1. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    Connecticut
    I've been planning on getting a credit card or two recently. I personally think they're evil, but I need to build up my credit and I'd also like to purchase some gear in the process. I'd like to know if anyone has any advice on what's a fair APR, or if there are any websites offering good deals on them (like a low permanent APR or something), or if getting one through my bank would be the best option. To this point, I've only had one credit card, and it's just a Guitar Center one, although I've used debit cards for years. Thanks guys.
     
  2. jasonbraatz

    jasonbraatz

    Oct 18, 2000
    Oakland, CA
    i just got my first credit card about 6 months ago after rocking a debit card for 5 years. my advice?

    PAY IT OFF IN FULL EVERY MONTH!


    even a "low" APR is still freaking high and you can easily get in over your head. your credit limit will likely be too low to get anything cool with it to start out, so it isn't worth it.
     
  3. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    Connecticut
    Trust me, I need to build up credit. I've been refused an apartment before because I didn't really have credit. I'm self-employed (fine art painter), so I have no employer or job to make reference to, or a steady income for that matter, so credit is one of the only ways to go for me. Thanks for the advice though-keep it comin'! :)
     
  4. Max

    Max Supporting Member

    Feb 14, 2000
    Bakersfield, CA
    Take it from a bankruptcy lawyer who despite seeing the evils of it daily, still has too much credit card debt. Just remember $7,500 at 18% interest will take you over 30 years to pay off if you make the minimum payment.

    Re-read the comments above me they are correct. Pay it off every month. Pay cash for your stuff. Use the card only for convienence such as motel, airline reservations or gas. If you are buying necessities you are living beyond your means. Drive your junky car that's paid for or play your Rogue bass that's paid for with honor. It's a better bass than a Sadowski paid for with a VISA.

    Keep your rent or house payment below 1/4 of your net take home monthly income. OK I'll shut up. No I won't. Buy used cars. Don't finance a business venture you dreamed up EVER with credit cards. Don't get a Mervyn's Target or for heaven's sake a Wal Mart credit card. Never buy a Kirby vacum over time. The same goes for a water treatment system, aluminum siding, carpet or furniture. Don't borrow against your IRA. Don't ever consoldiate your debt with a second mortgage. Somebody stop me.
     
  5. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    Connecticut
    Hmm...well I'm not sure what it could be then. I got one of those slips in the mail detailing why I wasn't accepted, and the box next to the insufficient credit info-type message was checked. The only loans I've ever taken were for college, and I've never been late with a payment. Also, a wonderfully embarassing moment was when I was rejected when applying in-store credit when buying $250 worth of rugs at a furniture store. I had more cash than that on hand, but had a no-go in their credit department. You're probably right about the no provable income thing.
    So...anyone wanna buy a painting? :D
     
  6. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    Connecticut
    Max, I swear I'll never buy aluminum siding or new cars!!! :D I belive you on the length of time to pay back interest; my student loans only have about 6-7% interest on them, and they're taking forever to pay back. I wish I could just take out another one to use for myself, but I had to go and graduate three years ago :rolleyes: ;)
     
  7. I'd kinda like you to continue.

    Being a future (hopefully) hobo, I would like to learn as much about credit as I can.

    [stupid] Question: For purchases online, if you have the cash, could you use your credit card? All this talk about the evils of credit has made me paranoid! :bawl:
     
  8. basspro2

    basspro2 I'm seeing Gorillas...

    Apr 6, 2002
    Northbridge, Mass
    It's only evil if it's used beyond your means......to pay it back on time...
    Listen to them boys, they know what there talking about..
     
  9. jasonbraatz

    jasonbraatz

    Oct 18, 2000
    Oakland, CA

    i use my check card for stuff like this. i even have my paypal acct hooked up to my visa check card, not my credit card. that way i can't buy stuff i don't have the money for.
     
  10. DigMe

    DigMe

    Aug 10, 2002
    Waco, TX
    Rule number one when choosing a credit card: If you are EVER going to pay something off over a few months then don't even consider getting a Discover card. Discover calculates interest using a method called "Two times average daily balance." This is a sneaky way of charging you interest twice every month. So, if they are offering you a low interest rate you are really going to pay more than what you think. One time when Discover called me instead of just hanging up the phone I said "I'm not interested." When he asked why I just said "Two times average daily balance." Knowing that there is no argument once someone knows about that he just said "Oh ok, thanks," and hung up. Discover isn't the only one that does this, but they use this method exclusively last time I checked. Always read the back of credit card offers where it lists the apr and look for "Method of calculation" or something like that. You just want "average daily balance."

    My credit card is from Wachovia and my interest rate is 6.65% with no annual fee. This is the best rate I've ever been offered personally.

    brad cook
     
  11. Bryan, I can add nothing to what's been said.
    Josh and Max KNOW WHAT THEY'RE TALKING ABOUT believe me.

    Mike ;)
     
  12. moley

    moley

    Sep 5, 2002
    Hampshire, UK
    That's the one that gets me :)
     
  13. secretdonkey

    secretdonkey

    Oct 9, 2002
    Austin, TX
    My sister and her husband just refinanced their home, taking out some equity to pay off nearly $10k in credit card debt. My parents have had over $30k in credit card debt in the past.

    No thanks - I don't need that! I made ends meet with a credit card while I was in college and after finally paying it off, I closed the account and never looked back. Some people have enough self discipline to use a credit card without getting in deeper than they'd like. Many otherwise good people do not. Between my wife and I we have a mortgage and two car notes - but NO CREDIT CARDS! - and, as some old man once said, WE LIKE IT THAT WAY!!!!

    :)

    I'm with Jason Braatz on this - I use plastic for almost every purchase I make, but it's a Visa check card, that comes out of my checking account - all of the convenience, none of the danger! ;)
     
  14. moley

    moley

    Sep 5, 2002
    Hampshire, UK
    I do the same. However, I've got a student account => interest free overdraft!! Which is better than a credit card (way better) - but it's still debt...
     
  15. jcadmus

    jcadmus

    Apr 2, 2000
    Credit cards are indeed evil -- but a necessary evil.

    Trying renting a car, or getting hotel room or making an airline reservation without one -- ain't gonna happen.

    That being said, I echo everything stated above -- pay your balance off every month, and resist the urge to buy anything that will prohibit you from doing so.

    Rule number one in good finance is: Never borrow money to buy a depreciating asset -- that covers almost anything you would buy with a credit card.

    Already in debt? Here's a quick recipe for getting out fast.

    List all of your debts -- smallest to largest. Pay off the smallest one first, as quickly as you can. Keep making the minimum payments on everything else, but put any extra you can against that smallest debt until it's paid off.

    Then take what you were paying toward the smallest one and apply it to the next one until that one is paid off, then take what you were paying toward the first two and apply it to the next.

    And so on.

    Takes some discipline, but by rolling up your payments like that -- instead of paying a little bit against each debt each month -- you'll pay them down significantly faster.

    Once you're debt-free, try to stay that way.

    Regarding a specific credit card -- consider one that requires you to pay off the balance every month -- like an American Express card.
     
  16. secretdonkey

    secretdonkey

    Oct 9, 2002
    Austin, TX
    The Visa (or Mastercard) Check card works fine in all of these situations. I've used mine to do all of the things mentioned here. Used it in Mexico and Canada, too, with no problems. I'm bringing these up again just in case some people aren't familiar with them - they're available through most banks, these days. :)
     
  17. My main Visa card is 9.9% fixed with no annual fee and I do occasionally (well, always) carry a balance on it :(

    Credit is a necessary evil. Try buying a house without an established credit record - and it's true, landlords are running credit checks on prospective tenants more often these days.

    Your credit score takes zero balance credit accounts into consideration if the credit cards have ever been used - besides public information (court judgements and so on) and collection actions, a credit report contains information on credit limit, highest balance, current balance, how long the account has been open and whether you pay on time. Even accounts that have been closed at your request show up on your credit report. IMO you should check your credit report about once a year.

    A credit score is derived from lotsa different things - length of time the accounts have been open, high credit vs. outstanding balance ratio, collection actions, court judgements and so on. In the US stuff stays on your credit report for seven years - except for bankruptcies, which stay on your credit report for ten years.

    Employers also check credit reports. If you ever get a job that requires a security clearance they'll go over all three credit agencies' reports with a fine-toothed comb - trust me, I know on this one :)

    If you can get a card with a grace period you can establish credit for free - just use the card instead of cash and pay it off in full every month.
     
  18. jcadmus

    jcadmus

    Apr 2, 2000
    Oh, and don't forget -- these will give you all the credit you can handle, and more.

    I have a home equity line of credit for $25,000. My bank just sent me a letter saying that they'll up it to $40,000 if I want!

    Here's the rope -- hang yourself.

    I'm saying no thanks.
     
  19. secretdonkey

    secretdonkey

    Oct 9, 2002
    Austin, TX
    I'm an example of this, too!

    You probably need some credit record, but a stack of credit cards is certainly not necessary. My wife and I bought a house with surprisingly little to impress a creditor. I was self-employed at the time we bought our house, and no mortgage company wanted to even consider my credit or income at all - it all fell to my wife. She had a few cards she hadn't used in years, and a salary that represented less than half of our total income, and not a whole lot else. We actually got rejected at the first mortgage co., for a favorable interest rate, but we found another that got us in at under 7% back in '98.

    I've run credit scores online for myself and they tell me I could boost my rating by obtaining credit cards. Piffle! We've bought a house and several automobiles since we've been married, and never had to settle for a greater-than prevailing interest rate (except the first car we bought). We occasionally have had to look beyond the first credit option laid out on the table, but that's no big inconvenience, in my book.

    In other words: Credit cards are NOT a must. They can help your credit, but they are not a prerequisite for financing large purchases like homes and cars. And as I said earlier, the convenience a credit card offers is available in form of a bank debit card/Visa check card.

    [/soap box]

    :)
     
  20. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    Connecticut
    Thanks guys, this is all great advice so far. I'm still intending to get a credit card, but I know more of what to look out for now.

    I've been using debit cards for years, but that's often not enough in my case. The way my income works is rather random. I steadily make about $700 a month, but some months I won't make any more than that, and other months I'll make thousands more than that, all depending on sales and when I have exhibitions. Quite often my savings run out just before a show when I need last minute supplies (Home Depot is my second home), so a card is still something I want.

    Another question: Would the interst paid on a credit card be tax deductable if the purchases made on it were for operating your own business? Also, I have no idea what the average line of credit given to first-time card users is. Is this completely based on income, or is there a generic figure, like $700-$1000 or something?