Oh Noes ! I am Getting a Credit Card For the First Time! Need advice

I am 23 and never had a credit card before.My car was hit by another driver and while he was held liable and my insurance will pay for a rental while it is in the shop, Enterprise will not let me rent one unless I have a credit card.(i fail to understand since payment is guaranteed).) I signed up for a student credit card through Discover and was amazed when I was approved. I fully intend on using it a couple of times a month and paying it right back. I have no idea what I should be aware of. I should be building credit right now and was wondering if it hurts my score to cancel the account or if it is only good for x amount of time or if to build better credit, do I need to move up and graduate to a non student card at some point? I can't really go to mom or dad for advice since they arn't the best at money management (the main reason i was too scared to get one before)

Any advice is appreciated

Its got a $1000 limit and I've used it probably 4 times in 10 years. I have no interest in building up loads of debt or credit. Most likely they will surprise you with rate hikes for no reason.

I never liked the idea of relying on a credit card so I never put much effort into trying to build up to a better credit card. It should only be used for emergencies as far as I'm concerned.

Credit cards freak me out. I do however want good credit so that I can have my name on a lease instead of just putting down the room mates name.

this person has a $1K credit limit on their credit card

they are not a person who has any useful experience to offer

it's like asking a sex question and a priest posts with "well i never get to 3rd base myself but here's what i do"

ask the guy who has at least once in his life hit a home run! ;-)

The best experience is gained by fucking up, but some people learn from the fuck ups of others. Not all wisdom is gained by experience.

I learn far more from people who have struck out and admitted it, and I'm wary of people who claim to have hit home runs but based on their advice have probably struck out more often than not.

Make sure to include the expiration date. Thanks

You should ask for those 3 digits on the back of the card too

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Please don't get your panties all riled up. PMS again?

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My wife just finished that up a couple days ago.

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you already know what to do

everyone needs a credit card so they can rent cars, reserve hotel rooms, and do other basics of adult travel/business life without being forced to make huge deposits (or being denied the right to rent the car/reserve the hotel room at all)

discover card is not widely accepted outside the usa, which is a hassle, however, for the time being, this is what i would do, i would sign up to make online payments, and i would use the discover card to buy gas and groceries (don't buy anything special, just buy what you would normally buy) -- at the end of each week, check your account and pay the balance, yah, you can check once a month but i'm old and i don't remember exactly when the due date is, so if i check (and pay) every week it's cool

i don't see any hurry for you to get a different card unless you are planning a trip out of the country, at some point, yes, take advantage of your good credit and get a visa/mastercard but there's no hurry unless you have international travel planned

if you do NOT have international travel planned, after several months to a year of prompt regular payments, then call discover and ask them about their "cashback" program, you get between 1 to 5 percent back on your purchases depending on various promotions, and if discover continues to be your bread and butter card then you need to be getting these cashbacks

if they won't change you to a "cashback" card after you have a proven record of being a good prompt payer by all means get thee over to visa/mastercard, even if it's only a "paypal" mastercard !!!

we lived on credit cards for a few years in the 80s while starting a business and we have great credit even though we never had a huge income, that's my only credential, i'm not a finance advisor

but you can profit from having the right card, i've chased plenty of credit card promotions over the years and received everything from cashbacks to free air tickets for two -- a WELL ORGANIZED person or couple will profit from holding a credit card, but one late fee wipes out a lot of your profit, you're playing with small edges here -- if you're a careful person who can put dates on a calendar and follow a plan, you can actually end up making money from your credit cards -- even if you NEVER pay a fee to the credit card company the credit card makes $$$ from a percent of the sales you put on the card so don't feel guilty about gaming the system

PM me for the account number of my swiss bank account.

What you should be aware of most: DO NOT CARRY DEBT ON IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Seriously, it's the spiral of death.

And don't ever miss a payment or pay later, either - credit cards will use that as an excuse to charge you $30 and raise your interest to 29.99% or higher.




The better thing for you to do is to go to your bank and see if they have a debit card that you can get that is a VISA or MasterCard.

I've used one of those the last five years - they look exactly like a credit card and function exactly like a credit card, except that instead of revolving debt and paying interest, the money is taken straight out of the bank account within a day or so. So it's never borrowing money - it's like using a check, but one that let's you rent a car, not have to carry cash around, and buy things over the Internet.

for one thing, and it's a serious thing, then a debit card usually can't be used to reserve hotel rooms unless you want to lock up the entire card for up to a week

this is her ONLY card at the moment, if enterprise decides that the car she is renting is worth $3K and they put a $3K "hold" on her card, then she's fuck out of luck when she tries to make a charge at the grocery store for example

i'm guessing either you don't travel much or you have TWO debit cards and you are way oversimplifying the matter because you're thinking student=don't travel which may or may not actually be the case

plus as you say yourself a debit card is never borrowing money and is not really any proof that a person can make a commitment to repay debt, it's proof of something but at some point hey she's 23 it would be nice to prove that she's a grown-up -- some day she may want to buy rather than rent a car or buy rather than rent the house

even use it ATMs in Japan. I buy shit over the Internet with it. I use it at the grocery store, and I use it to pay for fixing my car.

Speak when you know what you're talking about, and stop spreading lies.

It works where they take visa.

But it dosn't really help with your credit, and I have yet to find a debit card that offers a decent cash back arrangement.

is all I get, from running probably $15,000 through it.

And you're right - mine's a VISA, so it works anywhere a VISA is accepted.

And even if I reserve a hotel room 11 months in advance (which I sometimes do), I can still use the card, counter to what Pitohui would have us believe.

I had a gas station do exactly what he described, put in an overlarge hold, that didn't lift for about a week, and got my card rejected a couple times before I got smart. It was solved via a credit limit increase. In that case, I had just bought a couch that I had been saving up for, so the $100 hold would not normally have caused any issue.

Generally the holds are small enough that they are not a problem, unless you are right up on your credit limit.

I am averaging about 2% back on my Discover. Which adds up when I use it for work expenses. My expense check runs up pretty equivalent to my paycheck each payday, so using that card makes a noticeable difference in my annual finances. I've got a debit card that claims to do the same, but its been like pulling teeth to get them to honor it. In 2 years, I think its built up like 48 cents on top of the promo $5.

if you use the pin, it's using it like a debit card....

I had just looked into that a few days ago.

I've used it for travel in Canada.

This is so frustrating! First of all I was hit and not liable and my auto insurance will cover up to $900.00! I just don't get it . I have been functioning with just a debit card(with the VISA logo) because I saw my mom and dad go into debt and bankruptcy

Use it to buy pizza once a month until you get over the newness or any credit infatuation. You won't get in over your head that way. Make sure you keep a register, just like you would(or at least should) with a checking account. I do mine in Excel, which helps in preventing any math errors, as well.

Do that until its old hat, and any newness has worn off and you are comfortable that you can handle it responsibly. Treat it just like a complicated debit card.


Also, if you do decide to jump in and use it more(not reccomended), you can call the bank and request that they set it so that it will reject any charges over the credit limit. Not a bad idea anyway, as it can provide at least spending cap if its ever stolen as well

Assuming the final collapse of society dosn't strike in the interim.

some will let you rent with a $300 deposit, but you also are an under-25 driver so that could be part of the problem. I used to rent from Enterprise with a visa debit, maybe their policy has changed.

There's a lot of misinformation in this thread, so I'd like to clear some of it up.

You can use a debit card for just about anything you would use a credit card for except renting a car. I use mine all over the world, including hotel rooms, with no problems whatsoever.

There's a reason why rental car companies won't take a debit card and you DON'T want to use a debit card for renting a car anyway. If you look on the rental car agreement, you'll find a clause that says you are liable for any damage to the car if you don't buy the rental car company's (expensive) insurance. If you have insurance on your own vehicle, chances are you're also covered in a rental car (check with your insurance agent). If you opt out of the rental car company's insurance, and the car comes back damaged, they will immediately charge your credit card for the damage(I found this out the hard way). For this reason, I keep a credit card with only a $500 credit limit. I use it for nothing but renting cars and it will cover about a 2-3 week rental which is the longest I ever rent a car anyway. If some rental car company tries to plop a $1000 charge on it for some damage they say I did, they are going to be shit out of luck. Credit card companies will always reduce your credit limit if you ask.

Not all credit cards will allow you to pay off your balance immediately(at least as far as paying online). Some make you wait until the statement comes out. You may be able to get around this by mailing them a check.

There is no clear cut answer as to whether canceling a card will help or hurt your credit. The real answer is...it depends. If you have an unpaid balance on the card, it will do absolutely no good for your credit to cancel the card. Even though the card is canceled, other creditors will still consider the account available credit because they are easily reopened. If you have credit cards that you don't use and that have a zero balance, it's best to close them because they show up as available credit and they are doing absolutely nothing to improve your credit score. If you have credit cards that you do use, never have a credit limit that's much greater than you intend on using. There is a fine balance here. If you have 2-3 credit cards, and you have run them all up to your limit, that will count against your credit score because it makes you look over extended. On the other hand, if you have huge amounts of credit that you're not using, that can also count against your credit score because it looks as if you're trying to hoard credit and then run them all to their limit (I know it sounds silly, but that's the way the score works).

The reality is that credit cards are the worst credit device out there. They typically charge the highest interest of all loans, and usually the rate is up to the whim of the credit card company. They can start you out at a low rate and jack you up to 30% if they want. They will do this if you are late on just one payment, or they may just do it because they can. You are smart to avoid credit cards. Keep one with a small credit limit to rent cars, and shitcan the rest.

The best credit device is a secured loan. I have a home equity line of credit that I can borrow money against for 4% interest. The interest is also tax deductible which effectively lowers my rate even more. Chances are if you are trying to build credit, you may not have a home, much less equity you can borrow against, however that's not the only type of secured loan. If you have a car that's paid off, you can borrow money against it, even past it's actual value and it's still a secured loan which will get you a much better rate. Other options are a signature loan from a bank or credit union or overdraft protection on your bank account (which you can use just like any other type of loan). The rates on those loans are higher, but still less than what you'll typically get from a credit card, and the rates are usually fixed or at least tied to the prime rate. Small local banks and especially credit unions are usually the best places to get credit, even if you're just getting a credit card with them.

and only use the card enough to keep it active.

Though, discover has a decent cash back program. Which is why I use mine. And I still work on a cash basis. I have an account at my credit union that is just for paying the bill. I put applicable money(gas, work expense, etc) in the savings account. Every time I use the card, when I get home, I move the equivalent amount to the checking account. The cash is always there, and if I don't have the cash for what I want, I don't use the card. That way it ALWAYS gets paid off, on time, without fail. Plus I get my cash back bonus, and my credit looks good.

Or more accurately, having it open, but without a balance will help your credit.

Part of your credit score is based on how much credit you have available to you, and more of it is based on how much of what you have is used. So having credit available to you makes you more credit worthy. Unless you have used up that credit. As far as I can tell, it would be better for your score to owe $100k(out of 300k available), than to owe only $2k but only have 3k available. Though that could be an exaggeration, regardless of your income.

I was also told to be taken seriously on a home loan you need to have at least 3 active accounts in your record.

Looking at their website, it appears that the student card has the same cash back and fee-less-ness. The main difference I see is that they seem to be a few % higher on the APR. Which is not terribly important if you PAY IT ALL OFF EVERY TIME!! If you pay it off every time, there is no interest charged. But if you leave even .01 from the last bill, they charge interest on all the new charges as well.

FYI, If you call them every year or so, you can request and normally get(or at least could before the credit crash) yearly interest rate decreases and credit limit increases.

To reiterate- Never use the Card unless you KNOW beyond a shadow of a doubt that you have the resources to pay it off when the bill arrives. Do NOT speculate, or borrow based on what you may earn next month, year, your tax return, etc.

If you have a credit card that you never use, it hurts your credit score to keep it open. Credit accounts are only useful towards your score if they are being used. It's not necessarily better to owe more and have more credit available. Part of what counts towards your score is how much you owe and what your ability is to pay back that amount. Being over extended is never good regardless of how much credit you have still available.

You don't necessarily need 3 active accounts, but you need to show that you have taken credit and paid it back or you're in the process of paying it back. Inactive accounts still help your score so long as they were paid back on time and you have few (preferably none) late payments. When I bought my last house, I had one credit card account with a $500 limit and no other outstanding loans on anything. My credit score was one of the highest you can get. However, I did have past accounts that I had paid on time.

use the card the once a year that it takes to keep it from incurring nonuse fees (Thats visa. Discover, amex and mastercard dont seem as prone to have those) and the account stays in active status.

I have more accounts than I ever plan to use regularly. I have enough available just in cash back on my cards to buy a nice car or a crappy house, and enough more in credit to then renovate the crappy house. I figured having massive amounts owed in student loans would torpedo me, but nope. My credit score is stellar.

As I talked with 4 banks and a number of brokers trying to decide who I should go with, the consistent word that I got is that your credit score does not have anything to do with your ability to repay loans, only your debt to credit ratio and your repayment history. When It comes to getting a particular loan, they start to look at your ability to repay. Sometimes. But as I understand it your credit score has nothing to do with your income or assets.

You are correct in that the credit score has very little to do with your income, however when you apply for many loans, and especially home loans, they will require proof of income and that's when they are going to be looking at your ability to pay. It does you no good to have a high credit score if your income to debt ratio is too high, although you can more easily get many types of consumer credit because all they ever look at is your score. Typically this type of credit comes with a high interest rate. They don't care what your income is because they figure you are a good risk. If you default, at least they got 20% or so out of you in the mean time and they work on the assumption that most people with good scores don't default. However, if you go to a bank or credit union and try to get a loan with a much lower rate, they will always check your income. Because they charge lower rates, they can't afford to have as many people default, so they want to make sure that you have the ability to repay them.

If you use credit responsibly, you can bolster your credit score, which will provide chances to increase your credit, and improve your score that much more. Which is not the whole picture, but which sure can help when it comes to wanting more credit, even a more in depth process like a home loan.

As I noted before, despite having a modest(read under the average) income, I have access to major amounts of credit. Which has served me well in looking at homes. Even with the "credit crunch", my credit has remained untouched. And it has given me the alternative to look at homes I might not otherwise consider.

For example, the ones soliciting cash offers. I have the ability to take that cash out on cards, and then repay it via a home equity loan, which could then be repaid as I would a normal home loan. I had an offer like that on the table, and while I was overbid by another offer, there was strong potential for walking away with a home at slightly under half price, on a house that was already listed at less than half the pre-crash price. It was a situation where even if I failed to get a home equity loan, the Monthly payment on the cards would still have been lower than rent.

And, as I noted, having a large amount of available, unused credit seems to have more than counteracted any negative effects of having a large amount of outstanding student loan debt(which is its own world of fun. I debate myself regularly on whether i would do that again or not, knowing what I do now. I suspect I would, but that debt is a major anchor)

Now, its possible to use that credit poorly, and then it becomes a serious liability rather than a tool. If I were to overspend what I could afford, and buy a BMW on cash advances, that would be a problem. But if you choose the appropriate credit cards, and can commit to use them responsibly, I would say you are better off with credit than without.

out for an expensive dinner.

Don't believe them...

break it in.


mark

this will prevent impulse buys. Keep it in a secure location when not in your wallet.

amount out of your checkbook just like you'd paid with your debit card, then the payment $$$ is already there when the bill comes

great suggestion. Thanks.

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have a stellar credit rating should you decide to make a major purchase --like a house--and you will then qualify for the best interest rate.