How do credit cards work?
I have 28k saved up. need to be an adult and start building credit.
do credit cards cost Anything, assuming I don't miss a payment?
id like to travel once a year.. should I get some kind of rewards card?
rewards are pointless. Credit cards don't charge unless you make a late payment, however you have to pay the whole balance off in the time allotted, not the minimum balance. Credit cards make money by charging people who accept them a couple extra % on the transaction so you are paying the companies just by using them.
unless you miss a payment or have a card with an annual fee, credit cards don't cost anything.
if you're making a lot of purchases, you could do a rewards card, but most rewards cards either have a fee or a rewards cap. if your sole intention is to build your credit: get a card through your bank, make 1-2 small purchases, pay them off in full every month
you'll lose money if you mail in your payments, because you'll be out the stamp/envelope
Credit cards are for idiots and rich as fuck people get a debit card instead. If you never fucked up on a bill your credit will be stellar and get better as you pay things on time.
It can be tough to get a card at first due to you having no credit. Apply for whatever you want but you have a better chance of getting one with an annual charge.
An annual charge is a yearly cost and it varies card to card. Some have no annual charge but you usually need decent credit for it.
There is your credit limit. Basically how much you can used you card for before its declined.
And interest So if you have $100 owing on your credit card and you have an interest rate of 10% your bill will be $110 if you don't pay it your bill that month and it compounds so if you don't pay that is adds another 10% next month.
And finally be ready for a security deposit. A lump some of money you give the credit card company for usually a couple hundred bucks to cover clean up if your account gets out of hand.
You don't need to be scared of credit cards as long as you pay them off in full every month. In that case they're just like debit cards but with some extra protection (and sometimes extra fees).
They're good for your credit rating, just don't believe the lie of 'spending other people's money' because it's misleading - it's your money so don't spend more than you have.
I put everything on my credit card - haven't seen my debit card for months.
That's why I get about $300-400 cashback every year just from paying for essential things like groceries, gas, and paying my utilities and truck insurance with a credit card. Such a dumb thing to do on my part huh? Free money dumbass.
Then if you fly a lot credit cards are really worth it for the flyer miles.
Credit cards aren't for retards, retard. Just because you have a credit card doesn't make you an idiot. If you're already and an idiot then get a card then get into debt. Surprise you were already an idiot.
thanks, this is exactly what I was trying to figure out
still a bit confusing.
1. I wont have trouble paying off anything. I am responsible with money
2. my goals: credit and possible rewards
So I wont be able to get a free card with rewards as my first card?
Any advice in which exact card to get with my hopes?
You might be able to get a free card (not American so not sure how it really works over there, but I know the credit industry). The general rule of thumb is more credit is better up to a plateau beyond which no one cares any more because you're great.
Most credit cards, even the basic ones, offer some sort of reward. Credit very quickly becomes a buyer's market and companies can't do enough to throw their cards at you. Getting started can be tough - I started with my bank on their lowest limit card, which had a sort of penalty fee if I didn't use it. It soon ramps up from there.
If you're responsible with money that means you probably already have a decent amount of capital in your bank account. That can help the bank decide to extend credit to you on the basis that they know you can cover it, so I'd start there.
Some of the shadier credit companies will try to sell you payment protection bollocks and other 'extras' to basically minimise the amount they charge you if you do incur interest or fees. Most of it is bollocks and if you make sure to pay off in full every month then you don't need any of the extra crap.
Final thing, you might find higher-apr credit cards easier to obtain. The higher APR won't be an issue if you're paying off in full.
Nah bro, there's people who will post
>own 2 cars
>own my house
>never owned a card
>lol you don't need one
Sure it can happen but it's not the likely scenario for most people. It's terrible advice that's incredibly anecdotal.
Who do you bank with?
Chase offers a few cards with no annual fees and decent Rewards programs. They do require you have a decent to good credit score. I'm sure most banks offer the same thing.
I got a Chase Freedom card. It gets 1% on all purchases through out the year and 5% on certain purchases on a rotating schedule. For example from January to March gas will be 5% and then April to June groceries will get 5% and so on.
I got that card probably 10 years ago. I probably didn't have that much of a credit score. I had only lived on my own for about 2 years.
A couple years later I got a Chase Sapphire because I have a great credit score. Now I can practically get any card I want but really I just alternate those two.
Having good credit allows me to apply for store credit cards when I make big purchases so I can promotional deals like X% off the purchase. Then they always offer no interest for a year so I'm not taking $2,000 out of my account at once and I can spread it out.
There is a catch about getting a credit card just for your credit rating that gets over looked in these threads.
Owning a credit card and never using it will damage your credit score.
Surprisingly the banks don't like their card users being inactive. So the key is to use your credit card to make the payments you will have to make regardless, such as utility bills.
Develop a savings account into a Money Market/CD's and you won't need one.
Tame your excessive spending habits now and you'll thank yourself later that you'll never need one and you'll spend smarter.
So, I have a debit card from a credit union. I make all my purchases with it. 9/10 times when asked credit or debit, I say credit. It charges my card the same as debit. Does this do anything for my credit score?
Buy as much as you can - almost max it out as often as possible. That's the way to build credit. Spend their money, then give it back. Everyone wins. Obviously don't spend more than you would anyway, but put as much as you can on the card that you're going to buy anyway. Try to avoid using cash wherever you can.
I have a few cards and I mainly use one with decent rewards and a £5k limit. I typically only spend ~£2k of it each month, but I have the rest there for one-off purchases. I use some of my others for bills so there's a regular flow of money going out.
In the UK we get a decent protection called 'section 75', where basically we can get refunds for purchases over £100 from the credit card company and let them get their refund from the vendor. I don't know if you have that in the US but it's a pretty nice incentive - a few of my friends have benefited from it.
More you spend (and pay back), better for the credit score, in general.
> does credit work by.. the more money you use the quicker your score rises.. or how many months in a row paying your bills on time?
Both. Defaulting will wreck your score, and spending money will improve it. As I say, don't spend more than you would anyway, just put as much as you can on your card without hitting the limit (if there's a penalty for hitting the limit).
No. A credit charge and a debit charge are completely different.
I actually just checked my credit score and it only tracks credit transactions.
Months in a row. It's a cumulative thing.
Credit scoring is about trying to predict your future behaviour and to see if you'll make the lender any money.
The most profitable customers are those perpetually in debt, never defaulting, but always meeting the minimum repayment.
Those customers that always repay in full are credit card company nightmares and if your too good at playing the credit game you can find yourself being rejected in the future.
>if your too good at playing the credit game you can find yourself being rejected in the future.
Source please. I find this really hard to believe. Actually, I don't believe it all.
Jane Bank & Sarah Lender are on the pull. Neither like overweight men, and both like dark hair and good looks. Yet while Jane prefers intense guys with stubble, Sarah likes 'em clean-shaven with a sense of humour. So while there are lots of guys they both reject, and some they both lust after, they can still end up fancying different blokes.
It's like going on the pull!
Credit scoring's the same. Different lenders want different things, so one rejection may not mean a rejection by all.
Some borrowers are unattractive to almost all lenders (ie, most will turn down bad risks). However, a small few may have a fetish for those with poor credit histories as they can charge more.
And sadly for those rejected, just as when the guys ask Sarah or Jane why they're not interested, they just say: "'Cos I don't fancy you," and that's about it. We don't always get to know other than: "Your credit score wasn't high enough."
I just asked my mother and she said "theres no such thing as a free credit card, I just got offered a 0 interest for a year card"
she has great credit
should I advise her to get a new card, with rewards?
shes prob ignorant to this.
can you please tell me a specific card
It means just pay on time so you don't have to worry about interest accumulating.
If you charge $100. Make sure you have $100 in your checking account to pay if off as soon as it posts or before the payment date.
All that APR stuff means is that if you charge $100 and don't pay by the due date that $100 turns into $115 @ 15% APR next month if you don't pay that turns into $132.25. You get the picture. That's how people get into debt.
having credit, especially good credit, doesn't hurt you. a lot of people build credit through credit cards, monthly payments (rent, utilities, car payment, cell phone contract), or small loans (sub $10k). having a good credit history makes buying a house easier because you can secure a loan and your credit history is just saying "historically, I've paid back other people consistently"