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juniper_silver
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#1
Old 01-05-2009, 03:50 AM

I've never had a credit card in my life and I feel so confused about fees, eligibility, etc. The reason I want one is because I want to build up a credit score so that I can get a loan on a house in the future. I'm planning on using it for the same basic things I use my debit card for: gas, food, school, etc. I really don't spend very much at a time aside from paying for college, so I'd like to pay the card off at the end of every month to avoid interest. Is there some sort of direct deposit where it automatically takes money from a checking account at the end of each month to pay the credit card in full? (I realize that's basically the same as a debit card...which is what I want, a debit card that improves my credit score).

Besides the yearly fees and interest rates, what other things should I watch out for when applying for a credit card? Am I going to need to rip myself off financially to even get a card with no credit? I realize that with all the questions I have that I should probably talk to a professional about all this, but I'm wary about who is trustworthy since I don't really know any professionals that deal with credit cards specifically and I definitely don't know any that don't have a preference as to which kind of card I sign up for.

Vickicat
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#2
Old 01-05-2009, 06:31 AM

I got a credit card several years ago mainly so I could make online purchases. I use it once in a while when I don't have cash with me as well though I prefer to use cash when possible. It really isn't that big of a deal if you just pay everything when it is due. I pay my bill every month right when it comes so I don't ever have any interest on it. And I make sure not to buy more than I know I have in cash stashed somewhere so I know I'll always be able to pay it. It's really not a big deal at all. I also recently opened a checking account for myself though I have no money in it yet, since I am just starting my job on Tuesday and won't have a significant amount of money to put in it until I get paid. One of the reasons I opened it was because I'm considering paying my bills online. So yeah you can open a checking account and set it up to send the money directly to the credit card company when the bill comes. I'm still debating if I'm going to do this myself or not, since apparently if you don't use it every month you get charged a fee. That's at my bank though, so I don't know if it is that way for everyone. Just make sure you read all the fine print on these sorts of things so that they don't take you by surprise later on. As far as eligibility goes, I don't think you really have to do much to be eligible for these things. I got my credit card when I was eighteen and it was a pretty simple thing to do. I'd never had a credit card before then, didn't really even have much money or a job, but I was going to college and being supported by my parents so they might take those things into consideration. For the checking account I simply went into the bank and talked to someone and asked for one. She had to call somewhere to make sure I was approved for it or something, and I was, and as I said, it's not like I really have any money or anything so I don't think it takes much to be approved for these types of things.

Jenova4
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#3
Old 01-05-2009, 03:22 PM

Vickicat has excellent advice.
I was able to keep my cards clean of all debt for a while, and then unemployment, bills, getting hit by a truck, and art supplies happened. I'm still trying to clear away old debt, and it is very hard. I recommend getting a card through your own bank, or just having a debit card. Debit cards, funnily enough, when rung as credit cards, seem to help your credit rating; because that's how I got my first actual credit card. Other than that, after you get those loans, pay off the credit card and make minor purchases that can easily be paid off on it. They're a terrible thing.

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#4
Old 01-05-2009, 04:30 PM

Credit cards aren't a horrible thing unless you get behind on making payments and you don't know how to control your spending habits.

As far as I know, in the fine print of most CCs, if you miss a payment by seven days, your interest rate jumps up to 24%, which will NOT go back down. Make sure that, if you do use a CC, only buy what you can and absolutely can afford.

juniper_silver
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#5
Old 01-05-2009, 05:31 PM

Thanks for the advice everyone, I really appreciate it. I'm glad to hear that my debit card should be improving my credit rating some of the time. I've heard that about interest rates jumping too, that's why I'd really like to set up an automatic electronic payment. Hopefully if I go to my current bank, they should be able to help me out with that.

(And I know that this is totally off topic, but credit card debt isn't always when people can't control their spending habits. For example, my mom has a lot of debt right now because when she didn't have a job for 2 years, we continued to eat and pay bills by using her credit card. I guess that could be considered not controlling spending habits in a way, but it seems like eating and bill paying really shouldn't have to be controlled. Sometimes life just happens.)

MaryKay
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#6
Old 01-05-2009, 07:02 PM

I have a credit card that my dad puts money on every month. I know this cause one month I went over and he got charged an interest thing, and he called and yelled at me. I don't know why though because he just put the same amount in, and I just had a little less to spend the next month. I think maybe a debit card would be better, but it's not what I have. I only use it for stuff I need for school and such anyway. My dirty little secret though, is that on those months where I don't spend everything, I go to the store before the next deposit, and get cash back on the remaining balance. That way when I want to get something witout the parentals knowing, I have that nice little nestegg.

ya gotta love modern technology.

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#7
Old 01-05-2009, 07:38 PM

So I've dealt with the whole building credit history more than once in more than one country. I'll presume you are in the states for the purpose of my response. Credit cards are a very good way to build credit history if you are smart about it. If you plan on using the card anywhere, you are going to want to go with Visa or Mastercard. As far as companies go, a lot of them don't like automatic payments. Capital Once didn't allow it last I checked, and American Express only just added it to their website. For the sake of simplicity, you want to be able to use online banking to check your balance and manage your card, and being your first card you don't want to cancel it - ever. So for that reason I would suggest getting a card with Chase. Make sure it has no fees, and make sure that it gives you a reasonable amount of days interest free. Chase I know for a fact allows easy setup of automatic payments which is why I use them. I've never carried an interest on any of my cards and I never plan on doing so.

Now, as far as credit history goes, you're going to want to request a credit limit increase every six months, regardless of whether you need it or not. A large amount of your credit score is based on debt to credit ratios and having a large credit limit with a zero or close to zero balance is a good thing. After a year I would suggest getting a second credit card, making sure that it gets used occasionally like your first.

Doing roughly what I just outlined I went from having no credit history in the states to having a 760 credit score within a year and a half, and last I checked I'm hovering around 800. Building credit in the states is easy if you take the time to do it right.

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#8
Old 01-06-2009, 12:14 AM

My problem with the credit cards is that life happens and if they're there, you or your significant other uses them. I got into debt because I was unemployed, still had to eat, and still had to buy books/art supplies for school. And the interest rate is retardedly high. Not to mention that it's a revolving credit account.
Word of advice: never get revolving credit. You will want to shoot yourself in the foot because that is less painful.

 


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