[ARCHIVED THREAD] - Credit Cards (Page 1 of 2)
Posted: 12/5/2004 12:55:16 PM EDT
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Allright so exlpain me on credit cards, im only 19 and got my first real CC not a debit card. Tell me what to do and not to. One question though if I dont pay the bill off in full every month instead just pay off like half of it, is that good or bad on my credit? |
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lol. Um, make sure you get one w/o monthly or annual charges (aside from interest). Then avoid the interest by paying off the balance of the card in full every month. contrary to some people's opinions, this DOES build credit. And you don't pay out the ying yang for interest charges. as a bonus try to get one that will let you get money out of an atm. Fraud protection is a must. |
| Use it only to build credit. What ever you put on it, pay it off that month. Use it only for things that you need or for emgergencies. If you are not carefull with it you will find yourself over your head. Also if you go out drinking DO NOT TAKE THE CC WITH YOU! One night I did and I racked up a ton of money for drinks, pool, wings and a cab. |
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As long as you pay the minimum monthly, your credit will be okay. They may however start jacking up your interest rate. Miss a payment, they will raise your minimum monthly payment (my gf missed one, they doubled her monthly payment.) Forget to pay other bills (power, cable, etc) and your CC company may jack up your interest rate and/or min monthly payment. You basically have to have a credit card these days... Which sucks, but they make thing easy. Do not let them jack up your credit limit. Get to a limit that you can get youself out from under in a reasonable time period, if they raise it, call and tell them to return it to the number amount you want. FWIW: I think they finally gave me a CC when I was about 20... I paid it off, always, my credit was perfect and I was never turned down for anything. |
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What the credit card companies look for is you ability to make payments over time. This reflects into your credit score which is what banks look at when they give loans. If you spend (say $500) and take a 3 months to pay it off, this will help your credit score. Also the bank will give you a higher credit line. But beware of this trap! Eventually, you will spend more than you can pay off in less than 6 months and you'll have a tough time just making the minimum payment. Other credit card offers will come in the mail and you will apply and continue to spend driving your debt up further. Soon you find you are a slave to the credit card companies with the only escape being Bancruptcy court. Only then will you be a full fledge member of the consumerism club. Have fun! |
+1 My wife and I have spent the last three years digging out from those things. Most of what we bought we either don't have anymore or don't use. Go figure. Seriously, you will enjoy life and the things you have if you pay cash when you get them. |
+1 million (at 28%) |
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Make sure it gets you stuff like frequent flyer miles or something, and then use it for as much of the stuff you woudl normally buy anyway. Groceries, rent (if you can), gas, etc. But ALWAYS PAY IT OFF EVERY MONTH. NEVER buy anything you cannot afford. Doing that will help you build credit, and will actually get you something for nothing (miles/points/whatever - that you might be able to redeem for a free flight or hotel stay someday). The only time you should EVER carry a balance is for some completely unpredicable emergency where using the card is the only alternative. Like a childs surgery, or a new roof before you get the check from the insurance company. |
As some who is buried in credit card debt I highly recommend this.
Here's a little warning. At your age the CC companies will be more than willing to give you a card, after 6 months to a year they will automatically increase your credit limit. Other companies will offer you "better deals" to get you to sign up for their card. Now you have two companies that will give you more and more credit every 6 months to a year. This will make you feel great. Obviously you are doing so well with your life that you deserve to have this much power at your finger tips...at least that is what they want you to think. Pretty soon you start believing that you do deserve it and you start buying things, just because you can. Even with a maxed out card the minimum payment will still be managable so you aren't too worried. A couple years go buy and you suddenly find yourself $30,000 in the hole, all owed to credit card companies. Then your car breaks down or something else tragic happens and you are a couple days late with your payment...BAM...you 11.9% intrest rate is now 24.9%. Your minimum payment only covers your interest and the balance never goes down because you can only afford the minimum payment. Even if you make all your payments on time the credit card companies can still jack up your rates to 24% for no reason. It just happend to me. The above is my story. It sucks...and it started out exactly like yours.  Don't let it happen to you.
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+1 That's exactly how I use my card. Always paid off every month, but the balance is never $0 because there are always new charges by the time my check clears from the last bill. |
I wish there was another way to build credit for me but there just isnt. My car is finianced through my dad and I dont have any other means, and I do need to start building credit. BTW I got a pretty good interest rate at 3.9% till the end of the year and then 8.5% thereafter through USAA ETA why is it bad to have the balance at 0? |
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I know there alot of people here with sad stories but listen: If you exercise moderation a CC can be a powerful tool. I've had one for 3 years, I'm 21 years old and I've NEVER paid an interest charge. I use it for almost everything, but I don't buy anything I don't have money in the bank for. I use my credit card like a debit card. By using it so much and paying off the balance every month I'm building a really good credit rating. Just use some common sense and you'll be ok. |
I know of too many others with the same story. As for using a cc to "build" credit, don't count on it, because the eventual bankruptcy will demolish it. Using a credit card without a LOT of self discipline is fools money. It is money you do NOT have and usually spent on goods you DON'T need. Then, all of a sudden, you open up that envelope and suddenly realize "what the hell have I been buying???" |
Check out what this guy has got to say before you take the jump. www.daveramsey.com |
+1 True dat... BTW, the CC companies don't just jack up your rate for no reason...it's much more insidious than that...they keep raising your credit limit until it makes your debt-to-income ratio too high, then they use that as justification for declaring you an "increased risk" and thus jacking up your rates. Strange logic that is, though...they think you might have difficulty making the payments because your debt-to-income ratio is too high, so what do they do? They raise your interest rate and thereby INCREASE your payment!  Given that, you can see why most people don't assign any stigma to bankruptcy anymore...it's like the consumer's revenge...  |
That is the key. |
| Your credit report shows your limit, your balance, and the maximum you have charged. All you need to do is use it once, charge max, and pay immediately to gain maximum effect. After a bit, ask for a higher limit and then get another card. If you are trying to build credit to buy a car or house, this is the way. |
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Only spend what you can afford to pay off each month. The more you spend on them, so long as you pay off your balance each month, the better your credit. That shows that you're responsible with your money and you live within your means. Once you start having late payments, or exceeding your credit limits is when you start having problems. DONT use your credit card to buy things you can't afford to buy in cash. If you do, you'll be drowning in debt before you know it. It's not that big a deal if you don't care about ever buying a house or a car. If you're credit is bad, you'll only qualify for high interest loans. |
This is pretty funny, Credit Cards are no more ‘Evil’ then guns. They are a tool, when used properly, that can do wondrous things. When misused, as with guns, they can cause life changing problems.
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Lots of good advice here. I use my credit card for pretty much everything - however it is of crucial importance that you pay it off every month. Someone said that it's better for your credit rating if you carry a balance. I highly question this - and even if it were true, no way am I paying hard earned money (interest) just to further increase my credit. Want a good credit rating - pay your bills on time. That ALWAYS works. In my experience, I've found Citibank to be one of the best CC companies out there. MBNA plays games and gimmiks too much for my taste. For some strange reason, I have a hard time turning around my bill in time to avoid their $50 late fees. I doubt I'm the only one. Don't have that problem with Citibank. Avoid Discover with all your might. |
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Using CC's is a high risk game. They are trying to use you, but you can use them instead by paying off your balance every month. Do not use them if you don't have a cushion of cash in the bank. Do not use them if you don't have self discipline. Do not ever go into debt with them. Your credit rating will build if you pay off the balance on time, every time. If you don't have the discipline to do it, just use an ATM card. Why are people saying the Discover card is so bad? I pay the balance off every month, and I was thinking about using one to get the 1% cash back or whatever. Do they play games with the billing periods? Or are we just referring to high interest rates? (sorry for the semihijack) |
At age 18, I had to declare bankruptcy. At age 35, I've been using credit cards wisely as a tool for many a year and have 770+ credic. Responsible use is entirely possible, but I will say that at your age, wisdom is *NOT* on your side, be wary. And when you do go bankrupt, file ch.13, it's your debt and ya gotta pay it. |
How's that possible? You racked up that much debt in less than a year? |
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You can easily learn how to ue a credit card wisely. Since it's your first one, get used to spending very little at first, then see what the bill looks like. ALWAYS PAY YOUR BALANCE IN FULL EVERY MONTH. That's probably the most important rule. I don't know how much a credit card will help your credit score, but it definitely has the ability to bankrupt you. For myself and my wife - we use one credit card for everything and pay the balance off every month no matter how painful. |
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Some extremely bad advice given here. Here's my learned advice: 1. Use you credit card wisely and responsibly. 2. Only buy what you can afford to pay for - NOW. 3. Pay the bill every month, on time, and in-full if possible. You will build credit that will be absolutely necessary to you and your family in the future. Pay no attention to those on this site that have not used credit responsibly in the past. SWS (805) |
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Get one or two cards with a combined limit of $1000. Pay them off every month. If you NEED to buy something quick, then you can still do so, but you should still be able to pay it off quickly. Take this from someone who is just finally getting out from under the thumb of credit card evil... 
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Yessiree Bob! In just under one year I went from a Bon Marche and Nordstrom card at $100 each to a little over 3k in debt. Not much, is it? It is when you're a fuckup little piss-ant shitstack like I was at the time, couldn't pay even the minimums and make ends meet, plus I was on my own. Even then, though, I knew the honorable thing to do was to pay my debt, so I did a ch13 restructure and paid 'em off in 3 years. About 3 years after paying it off folks began to talk with me, and I've been sterling since. I love credit, it's a great tool for the mature and disciplined. I think NOTHING of going many many thousands into debt, if I know I will be paying it with the quickness, often w/out even incurring interest it's on the books so shortly. I bought some pretty bling rings for the missus and I for Crimmus, and I'll be paying using stock options in Jan. But FIRST, I'll pay the 90 days same as deal on the rings with my BP platinum, getting much pointage, then wiring them the money the moment after I pay the rings. Credit is good. *IF*. |
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I only have one, which I pay off every month. I use it primarily for travel, internet/phne purchases, and maybe eating out. I do NOT buy anything with it unless I have/will have the cash on hand to pay it off when due and I always pay before due. Get it from a credit union NOT a bank. A credit union will more than likely have a respectful business relationship with you. I had one in reserve from Bank One which I closed and tore up yesterday. They sent an amendment which stated that if I failed to make a payment on time, fail to pay another creditor on time, exceed credit line, etc etc etc they could jack the rate to prime plus 23.99%. As soon as I read it I called up and closed the account. They are like sharks and will figuratively financially fuck anyone they can to make a buck. You get hurt, miss the due date, forget to mail a utility bill on time. You are fucked. You are nothing but a profit center to them. Remember in the financial world the only one looking out for you is yourself.  |
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3 words, discipline,discipline, discipline. Do not go apeshit and buy stuff just because you can. Visa and MC can screw you, but you can screw them too if you play it right. Cards are powerful but dangerous tools. Like many things, they give with one hand and take with the other, only with finance charges tacked on to boot. I built a business on credit card borrowing, but did it EXTREMELY consevatively. Do not bite off more than you can chew, and your goal should be to get to a point where you don't need them at all. ( almost there myself, will soon be doing cash only purchases. Here's an example of how you screw them... Got an offer from AT&T universal for 2% for the lifetime of the balance transfer. Promptly dumped all my balances on that card, $10,000, and cut it up. Since then, interest rates have fallen, I'm now paying .9% on that account, balance below $1900. 76 cents per month finance charges, when it gets to $1000 I will cut them a check & retire that fucker. Every possesion I have will be pwn5d free and clear, and I ain't never goin back. Wealth generation will then be my focus, not debt management. In the meantime, nearly free lending! FICO=786 |
There's my boy! |
+1 I misread the fine print in the balance transfer - actually I did not see in it what they said it meant, and my 3.9% jumped up to 18 or so. I did not miss a payment. One of the conditions of that fine print was that I made a 100 dollar charge starting in 3-4 months. I did, but they considered a billing cycle to apply to the previous month, or some BS like that. Paid it off in full and cut loose on the poor slob on the other end of the phone. There are too many CC companies around to play games like this. +1 on Citibank. Good company. EDIT: Yes, if you are VERY careful you can use CC companies. 2% for the life of the loan? Sounds good, but MOST of the time you will violate that agreement someway, somehow. Those SOB's play the odds and win MOST of the time. |
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1. Use card to purchase tannerite. 2. Pay off card. 3. Tape card to tannerite bottle and shot. 4. Go to bank and get checking account with Visa check card. 5. Use Visa check card to only spend the money you have. 6. Get dad to co-sign on your first car loan and pay it off on time. |