[Bicyclist]

So my bank is 'recommending' I get a 'college credit card' through them, with no annual fees and 0% interest for the first 6 months. After that, the rate can vary from 4-17%, which seems pretty high.

My question is whether a) I should even be considering a credit card when the most major purchase I will make in the foreseeable future will be a bike frame and b) whether the variable rate should be enough to scare me away. Will I build enough credit w/ small purchases to justify getting a card in the first place, or should I stick to debit cards for now?

 

[stosh]

All CC rates are high right now.

So your BANK is recommending, that sounds odd.

 

[binary visions]

Get a credit card and use it for purchases that you'd normally pay cash for. Then pay it off. Make sure you are absolutely diligent about that: if you find yourself regularly thinking, at the end of the month, "meh, I can just make a partial payment and pay it off next month" - stop using it, you'll dig yourself into a hole very quickly.

Also, interest rate doesn't matter if you pay it off regularly.

It's worth it. My credit sucked several years ago because I literally had no credit. You don't want anything major now but when you go to get a car loan or a house in a few years, it'll pay dividends in your lower interest rate.

 

[OGRipper]

If you are disciplined, it's not a bad idea to start building good credit and to have credit available for emergencies. The key is to not use it except for true emergencies, and to pay it off at the end of each month if at all possible.

If you are not disciplined, stay away. If you get the card, charge up a bunch of junk, and then skip payments, you'll get hit with penalties and a higher interest rate, and it will mess up your credit for years.

 

[Bicyclist]

Sounds like it might be worth it then.

If I spend under $500 a month on purchases here and there, would it be worth it for me to get a 'rewards' card, or will the amount back be negligible.

 

[SkaredShtles]

Sounds like it might be worth it then.

If I spend under $500 a month on purchases here and there, would it be worth it for me to get a 'rewards' card, or will the amount back be negligent?

Depends on your definition of "negligible"... at $500/mo you'd get at a minimum $60 back at the end of the year (assuming 1% back, which is conservative).

This ONLY works if you pay off your balance EVERY month diligently. If you don't, the finance charges will DESTROY any rewards you might expect to get.

 

[Bicyclist]

Depends on your definition of "negligible"... at $500/mo you'd get at a minimum $60 back at the end of the year (assuming 1% back, which is conservative).

This ONLY works if you pay off your balance EVERY month diligently. If you don't, the finance charges will DESTROY any rewards you might expect to get.

Thanks for the advice on both the spelling and finance fronts.

 

[binary visions]

Depends on your definition of "negligible"... at $500/mo you'd get at a minimum $60 back at the end of the year (assuming 1% back, which is conservative).

Yep, and it's free money.

Free.

If you're just spending normal money that you'd spend anyway, and paying it off (thus not paying finance charges or interest), then they're just mailing you a check at the end of the year - just for you existing on the planet.

 

[Arkayne]

What those guys said. Build up your credit and pay that ish off every month.

 

[Konabumm]

I hate credit cards - credit card company's F*ck to 10 times harder then anyone else on the planet.... with that said. It's nice to have 1 card - for internet purchases, reservation, and travel.

like everyone else said - pay it off every month and you'll be ok

 

[N8 v2.0]

Of course once you have it, it's oh-so-easy to run it up then it becomes a genuine bitch to pay off...

I'm at a $0 balance now days, but my ex managed to run mine up to $22k. Took me a solid year to pay it down.

 

[mandown]

Get a card. Use it. Track your purchases. Pay off every month. Don't spend more than you have in real cash each month.

There are times where certain credit cards offer better fraud and purchase protection than what you get on a debit card, so the security could be an added bonus.

 

[Fool]

http://www.creditcardconnection.org/

 

[Montana rider]

Get a card, but not the one the bank recommends.

Get a miles card (free for the first year...) which includes 25000 miles which is enough for a free ticket to take your bike on vacation...

something like this:

http://www.bankingdeals.com/delta-skymiles-amex-with-50k-bonus-miles-april-2009/

DON'T RUN A BALANCE and you'll be fine...

 

[jimmydean]

Tossing a credit card at a stripper isn't as fun as a single.

 

[allsk8sno]

one tip no one mentioned, don't use over half your credit limit for your card, anything over half damages your credit score!!

ie, your card has a $$1000 limit, don't use more than 500 of that as a balance at any given time!!(and as said always pay off your balance!

we do this for all our purchases for the 1% and it works good, though you can get better rewards by getting a costco american express if you shop at costco, rei has a nice rewards plan too but i'm guessing you don't spend much there

 

[gtastro]

I looked up my credit score the other day, and the service I went thru recomended carying a 7% balance. Which was a reference to those who typicaly had the best credit scores. So if your trying to build credit, paying off every month wont build as much as carrying a small balance over time. Thats what the different credit bureaus seemed to look for. But for gods sake dont EVER miss a payment.

 

[gonefirefightin]

Do it!


with a credit score of 238 I approve this message

 

[SkaredShtles]

I looked up my credit score the other day, and the service I went thru recomended carying a 7% balance. Which was a reference to those who typicaly had the best credit scores. So if your trying to build credit, paying off every month wont build as much as carrying a small balance over time. Thats what the different credit bureaus seemed to look for. But for gods sake dont EVER miss a payment.

I've never seen this advice. I'd SERIOUSLY consider getting a 2nd, 3rd, and 4th opinion as to the wisdom of this advice. Even then I'd probably still recommend NOT carrying a balance.

 

[JohnE]

Just say no.

 

[Toshi]

I've never seen this advice. I'd SERIOUSLY consider getting a 2nd, 3rd, and 4th opinion as to the wisdom of this advice. Even then I'd probably still recommend NOT carrying a balance.

12345.

Credit cards. Use 'em. Pay them off. Profit.

 

[Serial Midget]

though you can get better rewards by getting a costco american express if you shop at costco

We have a Costco AMX that charges 15.24% if you run a balance, I use it instead of my company P-Card for travel expenses - last year I "earned" over 300.00 Costco dollars.

Our regular Visa charges 6.2% right now with no gimmicks like air miles or anything else but I think rate is variable, we don't owe anything on it and the rate is somehow tied to home equity.

 

[TreeSaw]

Yup, what the majority of these monkeys are saying!

Use it, pay it off and rewards cards are great...I haven't bought an airline ticket in some time

 

[dante]

Get a credit card, but PAY IT OFF EVERY MONTH, or don't even use it (once or twice a month on small purchases is enough for them to keep it open). My wife was offered dozens of cards when she was in college (and didn't have a job) but didn't get one, and when she graduated, found a job, and then tried to get one she couldn't, since she didn't have any credit history.

 

[gtastro]

I've never seen this advice. I'd SERIOUSLY consider getting a 2nd, 3rd, and 4th opinion as to the wisdom of this advice. Even then I'd probably still recommend NOT carrying a balance.

If he's trying to build credit the his fico score will improve by carring a small balance over time. they are looking for fiscal responsibility (carrying 10% or less) and having the ability to make payments over time like 10 years. If you go to get a large car loan or any house loan they are going to want to see those same type of things. To carry 100.00 dallors on a thousand dallor limit isnt going to hurt that bad, and may teach him discipline also. But dont ever miss a payment. It will waste alot of effort to improve your credit score.

 

[gtastro]

I hate credit cards - credit card company's F*ck to 10 times harder then anyone else on the planet.... with that said. It's nice to have 1 card - for internet purchases, reservation, and travel.

like everyone else said - pay it off every month and you'll be ok

While paying it off every month is an iron clad way to handle a CC. It will not build your credit score. If your only reason is convience then stay with the debit system and dont bother with it. But to build credit you have to play the credit game.By the way I've been on both sides of the credit scores from 550's in my 20's to 780's in my 40's.

 

[cannondalejunky]

Im 23 and I've never had a credit card, I've bought two cars (sold first, second is paid off) and I just bought my first house last year

 

[gtastro]

Im 23 and I've never had a credit card, I've bought two cars (sold first, second is paid off) and I just bought my first house last year

It all depends on each ones situation. All I was trying to say if he wants to build credit. Now every one should check there fico score and see where its at. And take the needed actions to improve it. Mainly for the benifits that come with better fico scores. mainly lower car ins premiums, and lower interest rates on every loan that you may need.

 

[kickstand]

fatwallet.com

 

[johnbryanpeters]

Of course once you have it, it's oh-so-easy to run it up then it becomes a genuine bitch to pay off...

I'm at a $0 balance now days, but my ex managed to run mine up to $22k. Took me a solid year to pay it down.

$22K in martinis?

I've never seen this advice. I'd SERIOUSLY consider getting a 2nd, 3rd, and 4th opinion as to the wisdom of this advice. Even then I'd probably still recommend NOT carrying a balance.

 

[BurlyShirley]

I also haven't seen that advice, but it makes sense logically.

Carrying a balance means that money can be made off of you, so companies would rather lend to someone who will take their time paying things off because they'll make more in the long run.

 

[binary visions]

If he's trying to build credit the his fico score will improve by carring a small balance over time.

You're saying it, but I think what people were looking for was some kind of reference. For instance:

http://www.bargaineering.com/articles/only-ever-voluntarily-carry-a-0-credit-card-balance.html

http://www.publicradio.org/columns/marketplace/gettingpersonal/2008/09/credit_score_carry_a_balance_o.html

It's a good financial habit to get into, and when it comes to his credit score there's no need (or extra benefit) to carry a balance.

http://ezinearticles.com/?5-Ways-To-Raise-Credit-Score&id=17788

Most people don't realize that credit bureaus don't distinguish between those who carry a balance on their cards and those who don't. So by charging less you can raise credit score even if you pay off your credit cards every month.

http://financefreelancelife.com/2009/03/10/do-you-need-to-carry-a-balance-to-get-a-credit-score/

http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYour20s/9waysToBuildAKillerCreditScore.aspx

Finally, you don't need to carry a balance on a credit card to have good credit scores. Paying your bill in full each month is the best way to keep your finances in shape and build your credit at the same time.

Kiplinger is a pretty well respected source and they say:

http://www.kiplinger.com/columns/starting/archive/2005/st0630.htm

Don't carry a balance. One of the biggest myths about credit is that you need to carry a balance month to month in order to build a history. Not so. In fact, credit scores don't even distinguish between those who carry a balance and those who don't, according to Consumer Credit Counseling Services. Go ahead and use your credit card each month, but stick to smaller purchases you can afford to pay in full. You'll save money on interest charges and you'll be less likely to get into trouble down the road.

 

[gtastro]

The web site I was on made reference to those with the highest fico's. Typically carried a 7% balance and had a history of making consitant payments over many years.
Thats where all that came from I think it was My fico score.com but its on a different computer.

 

[Toshi]

It's bad advice. BV has shown this, and it's clearly not something that you should be recommending to someone who has never had a credit card.

 

[Prettym1k3]

Do what Binary said. Go a CC, make about $100 worth of REGULAR purchases a month (gas, groceries, or pay your cell phone with it) and then PAY IT OFF. EVERY MONTH. ON TIME.

I made the mistake of getting a CC when I was 18. 2 years later - $6k worth of debt. Another year later? $9k worth of debt. Took two jobs, and moving home with my parents to pay it all off, but I paid it all over in less than a year, AND paid cash for an engagement ring.

Of course, that's me. I can't be trusted.

 

[SkaredShtles]

The web site I was on made reference to those with the highest fico's. Typically carried a 7% balance and had a history of making consitant payments over many years.

Sounds like the outliers on the high end may not be so smart.

Just for reference - my score is 794 (as of today) and I haven't had a CC balance since 1999.

 

[gtastro]

It's bad advice. BV has shown this, and it's clearly not something that you should be recommending to someone who has never had a credit card.

Now Toshi I never told him to get a card and run wild (which I have done in the past) I only made reference to what I have seen recently. Also I expressed that if he is going to use it as a debit card, then just use the debit card and forgo the fees, interest, temptation, and evil that is the finacial system of our time.

 

[Toshi]

Now Toshi I never told him to get a card and run wild (which I have done in the past) I only made reference to what I have seen recently. Also I expressed that if he is going to use it as a debit card, then just use the debit card and forgo the fees, interest, temptation, and evil that is the finacial system of our time.

There's no evil if you pay your bills. Also, using a debit card carries much less fraud protection than using a credit card, not to mention the usurious overdraft fees akin to credit card rates. Additionally, I don't think that using a debit card builds credit history.



/pileon

 

[gtastro]

There's no evil if you pay your bills. Also, using a debit card carries much less fraud protection than using a credit card, not to mention the usurious overdraft fees akin to credit card rates. Additionally, I don't think that using a debit card builds credit history.



/pileon

I'M not going to bite on this one. But I cant believe you really think that.

 

[reflux]

Sounds like the outliers on the high end may not be so smart.

Just for reference - my score is 794 (as of today) and I haven't had a CC balance since 1999.

Credit Score of 802.

NEVER carried a balance on my 1 credit card. It is paid in full each and every month. I have had this credit card for almost 13 years, and in addition to my student loan, displays a trend of consistent and on-time payments.

BV has listed great credit information. Read it well.