Think Of Getting My First Credit Card

[trainman0978]

odds are you are prolly gonna get avery high interest rate being your first card, and prolly a small limit to start. To get your credit score to go higher, a few key rules to follow. Do not let your debt to income ratio get out of hand. In other words, don't end up having more than 30 % of your income show as payments. Say you make a thousand a month, you should have no more than 300 dollars in credit reportable bills and payments. You get the Debt to income ratio out of balance and you will get turned down every time you apply for any type of credit. Also, try not to run up any charge card to any more than HALF of your credit limit. If a emergency pops up and you gotta use it then fine, that is one thing cards are good for. But PAY IT DOWN as soon as possible. Your keep your balances at half the limit and your score will jump up a few points every couple of months. If you run up a balance on it and can pay it down to zero shortly after - do it. Try not to use it after that for a month or two so that it will show up on your credit that you paid it off, this really looks good for your beacon score. After that, use it again if you want, and follow the rules above. Also , no matter what, make that minimum payment EVERY MONTH. - One day late and you get a late fee, and the industry standard is around 29.00-30.00 bucks. With some cards , one late payment causes your account to default to the MAXIMUM ALLOWABLE INTEREST RATE, set by the feds. That is somewhere in the neighborhood of 29% right now. Some cards charge you a "membership fee" this is some bullshit, and I have seen some that are as high as 150 dollars, taken from your credit line the day you open the card account. STAY away from anything like this. Another good way to pay it down quicker is to make half of your minimum payment every fourteen days, instead of once a month. It seems like it does not make any sense to do this, but the quicker they get the money you owe them, then you will be billed less interest and this generally makes paying off the balance in 2/3 to 1/2 of the amount of time that it would if you just made the payment once a month. And of course if you can afford to send in more than that then by all means do it. To give a example of this - I make half of my mortgage payment every two weeks. My thirty year mortgage will be paid off in just under twenty-one years. Now by making one extra payment a year, each year ( usually with some of my tax return ) I will have it paid off in 14 years. I was told at my closing that my thirty year mortgage had a interest balance over thirty years of around 120 thousand dollars. So my 165 k house would end up costing 285K from just making one payment a month, with no extra payments over thirty years. Trust me this is common, just ask your folks. But Doing it the way I am doing it, I am saving close to 100k in interest alone over the life of my loan. This is basically the same way it works with credit cards.

A good show to watch is that Suzie Ormond on one of the news channels. Her show ( some cheesy title about managing money ) and her education about financing is some of the best down to earth info on manging your credit report and your finances along with planning retirement. Yeah it is a long way off for most of us, but what you do now will make a difference by the time you are 60 yrs. old....

Sorry for the novel - But I think it is worth the read.

Edited March 13, 2008 by trainman0978

[jokanate88]

See i thought i was the only one not getting any interest. I swear one time i payed $20 for one months payment and the next month my balance was just the same. Hey im not gonna complain. I should just go and buy 4 BTL's and pay my credit card payment off when i feel like it. lol.

[Ernesto]

Thanks for that post trainman, very helpful.

[kingsuv]

Here's my take.

1st off your 19 so I doubt you will listen to us older folks anyway

Credit cards are only useful if you can match the limit of the CC with expendable income at the end of the month. Can you do that? NO? most of us can't. We all think oh it's just a dinner out it's just a tank of gas. It becomes a deeper hole every month until you can't dig yourself out.

If you want to build credit then do this.

Get the card, put it away. When you want a big ticket item, save like you do now without a CC then buy it with the CC and take and pay it off at that same time.

Another way to build credit, buy a car, make the payments on time.

Utilities are another great way to build credit.

and time at the same job.

[jimbob]

I got my card when I was like 18 or 19 or so and I'm 22 now. I just got a 15000 car loan in November with a good interest rate and didnt need a cosigner.

I ended buying lots of crap off the internet with my card and I paid it off when the bill came. The only time I didn't pay in full each month was during the introductory no interest period and even then it wasn't fpr very long. I also got some home audio equipment at a local place which gave me a pretty high limit which i paid off pretty quickly.

I had a check about a year ago and my score was at 736 (that was before I had any loans).

In short don't pay interest and your score will go way up and so will your limit.

Edited March 13, 2008 by jimbob

[gs430]

If you have a bank acc. save up and use the debit card. That way it's always paid for. But if you want to build your credit then get a CC.Make sure you make the monthly payment.

[Twigz]

First thing you wanna do is get a Debit Card. once you get the hang of using a Debit card get a credit card. I started out with 400, went up to 800, and now i'm at 1100 and only have the card for I think not even 6 months. Start out using your card for gas, ciggerettes, or cheap food. Another thing you need to know is, if your bill is $200 dollars and it's due at the end of the month and you use the card again and say you spend $250, you now have to pay an extra $250 in the same month. I owe $321 on my card =) but that's the last time i'll be using it for a while. The more money you spend the more credit you get if you pay it off with no late fees.

hope that helped.

[focalrock4life]

If you have a bank acc. save up and use the debit card. That way it's always paid for. But if you want to build your credit then get a CC.Make sure you make the monthly payment.

I have a Citi Platinum dividend card (cash back) whcih is nice I put my big ticket Items on my cc and use my debit card for anything else. I just take my minimum monthly payment and triple or quadruple it and I pay it off in no time with little interest. works for me and my last credit report 3 months ago was 700. Not bad for a 19 yr old.

[bangin_explorer]

x2 dont go out and buy all kinds of stereo stuff lol and think u will pay it off soon than it doubles in interest

so very true!!!!!!!!!!!!!!!!! i learned that the hard way after not listening to ppl.....

be VERY smart with your card man... otherwise you might owe over 7000.00 too !!!!!!!!!!!!!!!!!!!!!!!<< all taken care of now, thank God....

[Torres]

i didnt read all the replies, but yeah be careful. look around for a good card. my first one had...9 or 12% interest i think. the card can get up really high really quick. they say if it's not a material thing, dont use the card for it (unless you need to) like gas, food, and things like that. but imo i think it is a good idea to get one to start working on your credit score. just make every payment on time