Get a credit card?

[Caldus]

Hi all,

 

I think it is time that I start to be a little smarter about my money. Right now I just have a debit card that I have had since college and a company credit card. I am thinking about getting my own credit card. I really don't have any credit history and I need to start building some. I really don't know too much about credit cards other than the basics, so what sort of things should I look out for when getting a credit card? Is it even worth getting one at this point in time?

[hmdreamer7]

Does the company credit card have your name on it? Can't you build credit with that?

 

I started out with a secured credit card through my bank. You 'secure' it by putting a certain amount of money away in a savings account, say, $300, and that ends up being your credit limit. You keep the secured credit card for a certain amount of years, and eventually can turn it into a regular credit card. It's a good way to start building credit.

[High5girl]

I was always told that if you can't pay for it with cash on the spot, then using a charge card wasn't the best idea. It's almost like paying for an item 2-3x's over after you tack on the interest rate.

It all depends on what your interest rate would be. I've seen alot of ppl go in debt due to credit cards.

 

You have to look at how responsible you are with money. If you aren't that responsible, I would not consider a cc at this time.

 

if your credit isn't that good, then you might want to start with a small credit card. One to Sears or something like that. You must likely would be approved for a smaller company if you haven't established any credit yet. Some companies offer something (I forgot what it's called)

They ask for $200 upfront to put into a bank. Then offer you a credit card. Read the fine print when it comes to this. Some of these companies are legit, others, well...just out to screw you.

[Cassie]

Caldus, I would almost argue that you're REALLY smart about your money by not using a credit card. I wish I knew more men like you!

 

I always pay cash in hand. I've reached a point in my own financial journey that I now simply refuse to give credit card companies my business. It's very easy to get caught up in debt and they know this - which is why they offer such great credit limit balances and teaser rates to many people (especially college students).

 

The borrower is servant to the lender and Americans are addicted to their credit fix. Please proceed with caution in whatever you decide.

[shikashika]

I use a credit card for convenience.. and the fact that you need one when booking things online. For eg you can't rent a car without a credit card, or make a hotel booking, or book a plane ticket online.

 

However, I never see my credit limit as what I can spend. I probably go online every 2 days or so and transfer the funds over from my chequings account to my credit card to keep the balance at zero all the time.

 

I have never understood why people put things on a credit card when they don't have the money in the bank to pay off that amount. When did anyone ever learn that was OK?

[nutbrownhare]

I've managed all my life without a credit card. The debit card's great in that you don't have to carry cash around, will pay for stuff online and everything I need to do. I've taken out loans in the past, and have a mortgage; this seems sufficient to establish credit. But all that faffing about paying it off at the end of the month or you'll pay through the nose and all that ... who needs it?

 

If you've managed this far, I'd say 'Don't bother'.

 

By the way, I've always been REALLY good at managing my money and keeping out of financial difficulty. There's lots of seductive stuff out there which can get you into a lot of trouble!

[Cassie]

Shika, I use a debit card for online shopping and reservations (which acts as a credit card) but it will immediately take the funds directly out of my checking account. Your question is an excellent one. Most of my friends have borrowed lifestyles - they don't even own all the fancy trinkets they've voraciously bought on credit and seem fine with being up to their eyeballs in debt.

 

Being a consumerist society in general, I believe, has made it very convenient to develop some pretty bad habits.

[renaissancewoman101]

Sometimes a credit card is a necessary evil, and also to build up a credit history so that you can qualify for good terms when you go to purchase a house or car.

 

Besides, having a credit card around can be a godsend, esp when an emergency comes up, like your car dies on you and needs expensive car repairs, and you are two weeks from payday. Stuff like that.

 

Yes, one needs to be responsible and restrained when it comes to using credit, but credit is not necessarily evil on its own.

[shikashika]

I don't think you should use the excuse of "ohh i'm building up my credit history" that's why i'm spending more than is in my bank account.

 

I call bull on that.

 

Sorry, but if you do not have the money then don't buy it. People lived before without credit cards and can live now. If your car dies and you are 2 weeks away from pay day with no money in your bank acccount then its your fault for not living with in your means. It's not an emergency. You shouldn't be using a credit card to bail you out... that's what got everyone into this mess in the first place.

[avman]

Well you need some sort of credit history when it comes time for a car loan or a mortgage. That's the time when it's nearly always impossible to pay cash. So having an occasionally used credit card that you regularly pay off is a good idea for that reason.

 

You might try to apply for a card that isn't secured and see what happens. If you get turned down for that, then you can go with a secured card. They keep an amount on deposit (like $500) and that will be your credit limit. Use it occasionally and pay off the charges. And your amount on deposit will earn a little bit of interest. Then after a year or two you can try again to apply for an unsecured card. You should have some credit history built up by then.

[shikashika]

Shika, I use a debit card for online shopping and reservations (which acts as a credit card) but it will immediately take the funds directly out of my checking account. Your question is an excellent one. Most of my friends have borrowed lifestyles - they don't even own all the fancy trinkets they've voraciously bought on credit and seem fine with being up to their eyeballs in debt.

 

Being a consumerist society in general, I believe, has made it very convenient to develop some pretty bad habits.

 

i know, I have so many friends that appear to have so many 'things' yet nothing they own is completely paid off so in my mind, it's not theirs. It belongs to the bank.

 

I have friends that are paying off cars, sofas, kitchen sets, student loans... EVERYTHING..

 

if you actually look at them, you'd say, "She has a nice house, a nice car, nice clothes, goes on holidays...but it's paid for by the bank.. not her. It shoudn't be so easy to get loands for things.

 

Why buy a new sofa, car, holiday, bathrooom set when you haven't paid off your student loan yet??? i think there should be stricter rules when the banks give out money for this sort of thing, but it's gotten to the point where people are made to believe that they can just get loans for everything.

 

The funny thing is, when I talk to my friend about this sort of stuff, she doesn't think she fits into that category!! That's the problem... most people don't! They look at someone with a massive credit card debt and point fingers, while they themselves got out a car loan or keep buying nice furniture which they pay off each month!!

 

It's nuts!!

 

People want it all and they want it all now.

[CaptainPlanet]

Hi all,

 

I think it is time that I start to be a little smarter about my money. Right now I just have a debit card that I have had since college and a company credit card. I am thinking about getting my own credit card. I really don't have any credit history and I need to start building some. I really don't know too much about credit cards other than the basics, so what sort of things should I look out for when getting a credit card? Is it even worth getting one at this point in time?

 

Credit cards will help to build your credit. They're a good item to have in case of emergency. They're also convenient for paying bills. You can delay payments which provides added convenience.

 

They're great if you're working and have the ability to pay them off quickly. People get into trouble and credit cards have a bad name, because of people who are not working or do not pay their debts. If you're earning $50,000 per year or more you should have a credit card.

 

What I like to do is use my credit card for specific purchases. Such as if I buy clothing or a book. I can see exactly what I have purchased and pay it off however I would like. I find it easier to manage money that way.

 

If you aren't working and can't pay off the debt before interest stats to get charged then credit cards are a bad idea.

[CaptainPlanet]

I have friends that are paying off cars

 

I spent $5000 of my own money on a car. I could have easily taken out a loan and I wish I had have. The reason is that the money I am saving on fuel would have covered the cost of the loan. I've gone from spending $20 a trip. To spending .39 cents a litre on LPG which works out to be about half the cost. At the moment probably less. The loan would have been $25 a week, and the savings on fuel around $50. Sometimes it is better to go into debt.

 

It is also better to go into credit card debt. Than to go into default on some of your bills. One little default can make life a lot harder...Plus by my understanding banks won't usually report poor credit card conduct to reporting agencies. If the card is written off at that point it hurts your credit. I could be wrong, but don't quote me. Banks want you to take out these products because they earn high interest on them so there are certain advantages to having a credit card.. again I could be wrong.

[shikashika]

The problem with credit cards and 'emergencies' is what defines an emergency? if people know they have their credit card in case of an 'emergency' then they will be less willing to stick to their budget.

 

and then they will use their credit card and get futher and futher into debt.

[shikashika]

i dsagree.. it's NEVER good to go into credti card debt. and, what you did was much smarter... to buy a car outright.

 

If people don't have the money to buy a car, then don't buy one. if you only have $2000 to spend on an old clunker, then that's what you buy. What makes me people think they have the ability to spend 20 grand on a car when they don't ahve 20 grand in their bank account.

 

people just want to have everything pretty and everything now.

 

very silly indeed.

[CaptainPlanet]

The problem with credit cards and 'emergencies' is what defines an emergency? if people know they have their credit card in case of an 'emergency' then they will be less willing to stick to their budget.

 

and then they will use their credit card and get futher and futher into debt.

 

Yeah they do. But if you're earning $50,000 per year you're taking home about $1600 a fortnight which is more than enough to service the debt. People get into trouble when they are not working.

 

I know of people who have paid for dental, immigration fees and survived a term of college because of a credit card. Sure, they have to pay the debt. But that is fair enough because you purchase that money from the institution. Obviously you have to pay off the debt and the interest. The interest might be high but you agree to those terms.

 

I'd rather have my painful teeth removed, be able to come to Australia or finish my Biomedical Engineering degree than not have debt and be missing out on those things. As long as you are responsible credit cards are a matter of personal preference. Personally I think they're good.

[shikashika]

Yeah they do. But if you're earning $50,000 per year you're taking home about $1600 a fortnight which is more than enough to service the debt. People get into trouble when they are not working.

 

I know of people who have paid for dental, immigration fees and survived a term of college because of a credit card. Sure, they have to pay the debt. But that is fair enough because you purchase that money from the institution. Obviously you have to pay off the debt and the interest. The interest might be high but you agree to those terms.

 

I'd rather have my painful teeth removed, be able to come to Australia or finish my Biomedical Engineering degree than not have debt and be missing out on those things. As long as you are responsible credit cards are a matter of personal preference. Personally I think they're good.

 

I think that is the problem though... people think, "Oh I make xxx amount" thereforee i can afford xxxx amount of debt.

 

Then something happens where they have a sum of something to pay unexpected. Thats where the danger is, people don't account for extra things that come along... and they always do.

[CaptainPlanet]

You usually need a level of debt. It is impossible for most people to go to school or to own a property without debt. Credit card is the same thing.

 

I got a mate like that. Snubs his nose at debt. Parents paid for all of his school and bought him a car.

[shikashika]

You usually need a level of debt. It is impossible for most people to go to school or to own a property without debt. Credit card is the same thing.

 

I got a mate like that. Snubs his nose at debt. Parents paid for all of his school and bought him a car.

 

 

i don't think you NEED debt. it should be avoided at all costs but obviously most people don't have a few hundred thousand to spend on a house or that kind of money when you are a student. Education and a mortgage is one thing... buying a car and racking up credit card is another.

 

Do you think I'm snubbing my nose just like your friend? I love how you bring the parents paying into it. I have never been in debt and never had any help from my parents for education, nor did they buy me any cars or houses.

 

I love how when people find out I'm debt free that the first impression is that someone else must have paid for me. I've had that quite a bit.

[Anthropic]

I'd watch out for annual fees, and choose one with a rewards program of some kind that suits you. I go with a cash back program that gives me back 1% on all purchases at the end of the year. I use my card almost exclusively so 1% adds up.

 

In my opinion, if you are responsible with the credit card, things like the interest rate, overlimit fee, and transaction fees they may charge you if you try to transfer the balance, are not important. Why? Because you will never go over the limit or carry a balance and thus never pay a cent of interest.

 

I'm actually curious how difficult it would be to get a credit card these days in the U.S., especially if you have little credit history. A co-signer may be an option or a secured card like others have mentioned.

[renaissancewoman101]

Shikashika, so what is a person to do when, as I mentioned before about the car thing, the car dies two weeks before payday. Sometimes you can be in the process of saving up a nest egg and the car dies, or an unexpected medical expense comes up that you have to pay right away? Without a car, you don't have a means of transportation to your job, stuff like that.

 

I do agree, people spend WAY too much on credit, hence why we have the current credit crisis. People buy too much and aren't careful. But if one is careful and pays off the credit card in full each month, one can build credit history which will be good when it comes time to buy a house (most people can NOT buy a house outright and will have to take out a mortgage), to qualify for good interest rates. Also, if you pay off the credit card each month, it can be like an "interest-free" loan for one month.

[Cassie]

I think Caldus may have a tough time right now receiving credit without a history. But if you decide to go that route, please let us know how it works out.

 

My FICO score is currently above 800 and I'm constantly flooded with offers. They even send checks now for over $20,000 and blatantly encourage me in the letter wrapped around the checks to use them and treat myself to something nice or take a vacation! The only thing those checks ever see is my shredder.

 

I definitely don't agree with the word 'emergency' and credit card in the same sentence. That's what an emergency savings is for. I generally keep at least $1,000 tucked away somewhere safe in case something really dire crops up. It was built slowly up over time but once it's established, you never have to worry about it again. As long as it doesn't get spent, of course.

 

I love how when people find out I'm debt free that the first impression is that someone else must have paid for me. I've had that quite a bit.

 

I hear you, Shika. People are amazed I managed to pay off my student loans and car as quickly as I did - took me about two years of aggressively tackling all my debt and every penny was straight out of my pocket. I've had to make sacrifices along the way but it's been so worth it to know I actually own my life and paycheck again. I will never go into debt again, ever. Taking a loan out on a car I also realized was rather silly since it's one of the worst depreciating assets a person can own.

 

I've just witnessed too many predatory tactics and prefer at this point in my life not to give credit companies any more of my business. But good luck, Caldus, in whatever you decide.

[CaptainPlanet]

I usually assume that they didn't earn it. Unless they're worked a lot of hours in a hard job I don't count it as anything admirable. Especially women. Who can get better less strenuous jobs easier than the men early in life. I've just seen too many cases of a chick working admin at an insurance company for 27 an hour doing next to nothing, while the boys struggled to get by washing dishes or working at a servo. Jobs that are much harder and require more effort than sitting in an office. You had a way to stay out of debt not everyone else has such an opportunity. Yes I am bitter because some people have life easy and never appreciate it. When they look down on others who have not had it so easy, I will speak up.

 

That is how I feel. I don't usually have a problem, until they start looking down, and putting down those with debt. In that regard I can't see how it is shameful or silly or in any way unencourageable for Caldus to get a credit card. Debt is only bad if you cannot manage it and sometimes it is necessary. I think a credit card would be a good way for him to build credit rating is as Caldus is obviously more than able to manage debt.

[shikashika]

ahh CP, and I thought you'd been more positive lately with your new job offer and now you're back to 'women have it easy'. You seem to think you know all these jobs I've had or make gross generalisations of all female admin workers or poor ugly males.

 

Don't tell me I had it easy, I had a parent who was out of work and one who only worked part time for the last couple years I was in school and basically my whole university, so I wasn't getting a penny from them.

 

I'm not telling the OP not to get a credit card, but he did dask "Get a credit card?" So I'm just hoping that my advice will help him make the right decision.

 

I've seen friends of mine relationships ruined over finances, over debt, over too much spending. It really isn't something to take lightly. And most of them , if running out of money before paycheque, will never sit down and make a budget and stick to it. If you dont' have the money, either don't spend it, or find a way to make more. Some of my friends think that it would be ' beneath them ' to get second or third job when they have a 'respectable' mon-fri 8-5 job. THAT to me is silly.... most people in credit card debt are not there because of their education or their mortgage, it's because they want to buy a coffee every morning, or buy a $80 moisturiser, or buy a 20 grand car instead of a 5 grand car.... or a bus pass.

 

I don't think people should be buying things where they calculate that if they spend everything and pay all their bills they are left with only 5 dollars a month.

 

don't try and tell me that I'm saying the OP is silly when I said nothing of the sort. I think that people often get into debt for silly reasons.

 

I actually think it's a good thing to get a credit card because you need one to buy many things online.

 

too many friends of mine are in credit card debt and it's not because they haven't had the opportunities, I have single friends who make 6 figures, yet they are in debt.... why??? because of their credit card!

[Cassie]

Captain Planet, I hope you're not receiving the impression from my responses that i somehow see debt as something shameful. It's a personal choice and I frankly don't care what anyone does with their lives and I certainly don't judge their decisions. I have enough in my own life to take care of and that doesn't include worrying over what other people are doing.

 

At one point I received an epiphany - I had absolutely nothing to show for all the hard years of work I've done because I was paying bills all the time. And irregardless of what you might want to believe, I have worked damn hard in my life. The problem was, I was living paycheck to paycheck while paying debt and making everyone else richer. So i finally became fed up and my main priority became building my own wealth up. A big part of that strategy is avoiding the debt trap of easy credit.

 

No one twists anyone's arm to get into debt, so I don't buy your "some people don't have a choice" argument. There are always choices. There was a girl who had so much debt, she was almost forced to declare bankruptcy. Instead she chose to give up her apartment and go homeless while sleeping in her car and working two jobs until she could afford a gym membership. She would then shower at the gym every morning and eat at the restaurant she worked at before continuing to her next job. This went on for months until every cent owed was paid back. Today she is now highly successful in her field and also very comfortably wealthy.

 

I have no doubts Caldus would be very responsible with a credit card. As I've stated many times, it's my personal choice not to use one but he may very well feel differently.