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April 14, 2009 11:27 a.m. SlickDizzy SuperDork

I make $11.25 an hour, working 38 hours a week. For my age, in this economy, that's pretty good (and they're hiring, if anyone REALLY needs a gig). Unluckily for me, the BABE Rally comes at the same time that my lease ends, and I'm moving, which means I'll be losing a first month's rent and a security deposit while waiting for the current deposit to be returned, all while paying for hotels and gas on the east coast. I will have the money to support it all, but not all at once.

I need a credit card.

Now, I've never done this before. I'm 19. I get all kinds of pre-approved crap in the mail, but I don't find that very trustworthy. Where do I start?
April 14, 2009 11:29 a.m. DILYSI Dave UltimaDork

SlickDizzy wrote: Where do I start?

Don't.
April 14, 2009 11:30 a.m. 93celicaGT2 Dork

If you MUST get a credit card, just do one of those pre-approved ones. MAKE DAMN SURE YOU PAY THAT SUCKER OFF IN FULL EVERY MONTH. Chances are it'll have a $300 or $500 limit.

I personally wouldn't do it, but that's just me.

But if you play it smart, you'll get everything taken care of, and start building your credit, to boot.
April 14, 2009 11:34 a.m. curtis New Reader

you will probably have the easiest time getting a card with your current bank but your limit will probably be superlow like 500 beans or so. You might be able to get a capital one or something pre approved like that but they will bend you over with the interest. It also takes a couple weeks to get approved and get your card regardless. Credit isnt made in a day.

Its kind of like trust. Well actually its exactly like trust. Takes a second to lose it and a lifetime to gain it back. Dont get yourself in to deep.
April 14, 2009 11:39 a.m. RX Reven' Reader

I don’t know how much trust you need to have as it’s really about the credit provider trusting you to pay them back. In other words, what’s the risk…are you concerned that they’ll sell your contact information or over bill you or???

I think a lot of people pick their credit card provider based on the reward program offered which is probably a mistake as redemption rates are very low. For instance, airline cards require that you spend a lot and or fly a lot per year to qualify for a free flight. So, if you’re attracted to the reward opportunities, go with something like a gas card where you know you’ll get the benefit of the reward.

I just have one personal card and one corporate card provided by my employer and I pay both off in full at least once per month without exception.

Make sure you get into that habit!!!
April 14, 2009 11:40 a.m. John Brown MegaDork

Get a card from your bank or Paypal Preferred Business member card.
April 14, 2009 11:55 a.m. bludroptop Dork

Join a credit union and get a card from them.
April 14, 2009 12:07 p.m. 914Driver Dork

You can't make hotel reservations or get towed out of a ditch without one. If you pay the statement every 30 days when it comes, it doesn't really matter who put the card out (I don't think).

This is the beginning of "Credit History", you'll need that.

Dan
April 14, 2009 12:09 p.m. spitfirebill HalfDork

I agree with the "get one from your bank or join the credit union" group. You will need credit history to establish credit for that American Dream Home you will want. If you don't have a checking and savings account, shame on you. Credit unions will generally give you the best interest on savings (which isn't squat right now) and the best interest rate on car loans down the road.

Would you want to do business with somone who sends out thousands of invitations to numbnuts offering "pre-approved" credit? Nothing is pre-approved. They will nail you when they finally give you the card at 29% interest. Yea, thanks a lot pal!
April 14, 2009 12:09 p.m. oldopelguy HalfDork

As a former credit card Junkie the only one I miss of the 40+ or so I once had is American Express. Sure they bend you over every year for a $75 annual fee, but you more than make that up in discounts if you actually travel much and use it for hotels and the like. The other positive it has going for it is that it has to be paid off every month (the old green card, not the blue (Optima) one) and that forces a certain amount of responsibility.

If you just need a little cash to get you over the hump, maybe a small loan is a better option? Join a local credit union and look into a signiture loan with a short term payback.
April 14, 2009 12:31 p.m. maroon92 SuperDork

I had mine under control for a really long time until I started living on my own, I quickly hit my limit, and I am still working on paying it off.
April 14, 2009 12:40 p.m. Kramer Reader

If you want to use a credit card to establish credit (it's not a bad way to start), get one with a decent grace period. The interest rate isn't that important (unless you abuse it), as long as it's under about 15%.

Open up a second savings account--one that you won't touch.

Now pay things with your credit card. Then immediately put the same amount of money into your savings account, at the same time you pay the bill. Act as if you're actually paying the bill.

Before your grace period is up (measure from the time you make the charge, not the statement date), pay from the savings account to the cc account. This is pretty easy to do, if you get your cc where you do your banking (and if they have online access).

You'll get some use on the card, which will help your credit score. If you do go past your grace period, it will only cost you about 1% (as long as you pay soon after that).
April 14, 2009 12:45 p.m. Joe Gearin Associate Publisher

Regardless of what kind of card you get, pay it off every month, and only use it for emergencies. (no, that $1,500 Renault is not an emergency!)

If you are late, on a payment, your 8%, or lower rate will immediately jump to 30%. This is how they get you. Then you will find yourself paying interest fees instead of the balance.

Getting a card isn't a bad idea in itself, but you'll need discipline, or it can really bite you in the ass. Make sure you pay the sucker off every month.
April 14, 2009 12:45 p.m. pigeon Reader

I don't know if you'll qualify for a card with them, but join Pentagon Federal Credit Union. Any military in your family qualifies your for membership, or join the affiliate organization they have that supports military families. Their credit card pays back 5% on gas, 2% on groceries and 1% on everything else. Pay it off every month and make money by using your credit card. Apply online, instant decision and a card in your hands in just a few days too. I just closed my used car loan with then, 3.99% for 60 months is almost free money.
April 14, 2009 12:53 p.m. Keith UberDork

It's not really that hard. Just don't spend money you don't have. I know, it's un-American to think that way.

Keeping a balance on a credit card is a really stupid (and popular) thing to do, and you don't need to be a rocket scientist to figure out that it's one of the most expensive ways to borrow money. In a situation like this, where you need a short bridge loan to cover the first month's rent on a new place while waiting for a refund for the old, they'll work as long as you can pay it off before the bill is due. A real loan, as suggested, is probably a better choice in this case. Just don't mention that it's for a rally.

I don't consider cards to be for emergencies only, I use my card for most transactions. But I don't spend more than I have, so the balance is paid off every month. No problem.
April 14, 2009 1:09 p.m. YaNi Reader

914Driver wrote:

You can't make hotel reservations or get towed out of a ditch without one. If you pay the statement every 30 days when it comes, it doesn't really matter who put the card out (I don't think).

This is the beginning of "Credit History", you'll need that.

Dan

FWIW I don't have a credit card and haven't had any problems making hotel reservations with a debit card.
April 14, 2009 1:59 p.m. Jake HalfDork

The debit card thing is true. Most banks offer debit card holders some kind of overdraft protection anyway these days, so hotels don't really care. The hotel will happily ding your checking account or whatever your debit card is tied to for $150/night, even if there's only 11 cents in the account. Then it becomes your problem to sort out the charges, NSF fees, etc with your bank.

That said- don't get a credit card. You get in the habit of getting what you want, when you want (which is what the credit card company REALLY wants) and next thing you know you have a big ol' balance that (due to the mail, or you forgot, or they didn't apply your payment on time, or ) is at 35% APR instead of 3.5% For all your good intentions (you're not the first to have them) it's a rare bird indeed who can pay the card off every month without fail.

Folks say it a lot on the internets, but in this case, it's absolutely true. IT IS A TRAP.

<--Learning hard-won fiscal responsibility at 30, when I should have figured it out at least by 25.

Short term signature loan at a bank or credit union will be just as useful, good for your credit, and shouldn't be that hard to get given a pulse and some kind of employment. If you really want to develop the credit history that banks and stuff look for when you try to get a car loan, a mortgage, etc., the idea about paying into a savings account to have a ready reserve of cash for your monthly credit card payoff isn't bad.
April 14, 2009 2:48 p.m. Scott Lear Club Editor

Credit cards are like guns. It takes bad judgment on user's end to cause trouble.

If you're the kind of person who makes snap purchases that you later end up regretting, probably not a good idea to get a card. It'll simply allow you to make snap purchases beyond your means with money you don't actually have, and then you're in big trouble.

If you can exercise monetary control and use it intelligently, then go for it. Pay it off every month and you'll help build a good credit score.

If you have need of the money up front (like your BABE trip), consider getting the card, using it exactly for what you need, and then shredding it until it's paid off. Then, if you want it again after your balance is zero, call 'em and tell them that the card was destroyed and you need a replacement.

Set the card to send you email reminders and whatever else you need to make sure you pay it on time and in full.
April 14, 2009 3:02 p.m. Keith UberDork

With regards to the credit vs debit - in many cases, the retailer can't tell the difference. They look the same and act the same. The biggest difference to a retailer is that sometimes a debit card will have a daily limit on it, so if you want to buy a $5000 turbo system (to pick a random example), you may have to either spread the payments out over several days or pre-arrange things with your bank.

One thing I've found - an amazing number of car guys have a secret credit card, one that their significant other doesn't know about. It's used to buy go-fast parts, of course.
April 14, 2009 3:14 p.m. oldopelguy HalfDork

Keith wrote: One thing I've found - an amazing number of car guys have a secret credit card, one that their significant other doesn't know about. It's used to buy go-fast parts, of course.

My ex-wife had 3 of those, to the tune of $12k I didn't find out about until after I gave her the boot. I don't know what she used them on, the only thing she seemed to ever have more of while we were married were pounds....
April 14, 2009 3:27 p.m. ignorant PowerDork

I got my first credit card after college and used it to build credit. Pay off eveyrthing at the end of the month. My credit is solid with high available limits. I never use it. But it could be useful in a pinch.

Don't be like the coop I had a while back who would get loans and use credit cards(when he had no real money) to purchase items.

I use my card wisely and its one that gives me cash back. Just for using their card I made $900 last year in real cash rebates.

Even if you are responsible it is possible to spend over what you want some times so it takes restraint. I do not understand those who don't want one. Learn to let credit work for you wisely and you'll drastically increase your profits.

To be quite honest, since you are asking these questions.. You'll be fine.
April 14, 2009 4:03 p.m. Strizzo Dork

ignorant wrote:

I got my first credit card after college and used it to build credit. Pay off eveyrthing at the end of the month. My credit is solid with high available limits. I never use it. But it could be useful in a pinch.

Don't be like the coop I had a while back who would get loans and use credit cards(when he had no real money) to purchase items.

I use my card wisely and its one that gives me cash back. Just for using their card I made $900 last year in real cash rebates.

Even if you are responsible it is possible to spend over what you want some times so it takes restraint. I do not understand those who don't want one. Learn to let credit work for you wisely and you'll drastically increase your profits.

To be quite honest, since you are asking these questions.. You'll be fine.

+1

i just got $250 back from my card for doing nothing more than paying off the balance every month for the last year. its also a good way to keep track of your expenditures for the month, because they're all in one place.

i can easily go through and add together rent, car payment, insurance, and cc statement to see how much money i've spent this month and where i might have spent too much money, if necessary. its also nice to earn points while paying bills as well as when you buy groceries or gas.
April 14, 2009 5:31 p.m. jamscal HalfDork

The rewards money/points works like a Casino or Race Track:

Thousands of losers support the few winners, and the winners talk up their winnings, thus recruiting more losers .
April 14, 2009 6:07 p.m. Twin_Cam Dork

I am a credit union member and have a card through them. I pay it off every month in full, and thus they keep upping my limit to the point that it makes ME nervous that they trust me with that much money. Although paying off every month makes your credit rating solid gold. Which is worth it's weight in gold-plated Bugattis in this economy.

Either join a credit union or don't get one at all. Just about everyone else really destroys you with interest or limits so low you can't do anything with them.
April 14, 2009 7:05 p.m. ignorant PowerDork

jamscal wrote:

The rewards money/points works like a Casino or Race Track:

Thousands of losers support the few winners, and the winners talk up their winnings, thus recruiting more losers .

I disagree. To get these rewards you merely have to sign up. No luck or slight of hand involved. The company is actually paying me to use their product. Now let me tell you. A couple interest charges could wipe out all of my savings.. so I make sure that doesn't happen.

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