#11. Posted:
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Status: Offline
Joined: Jun 13, 20149Year Member
Posts: 529
Reputation Power: 20953
#12. Posted:
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Joined: Sep 25, 20149Year Member
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Credit cards are simple, and honestly needed. You're doing a good thing by starting out early. Your first credit card won't be so good, both my brother and I got stuck with a 24.99% rate, I got a $1,200 limit and he got a $500 limit. 4 years later I have around $10k in credit but the key is DON"T USE IT ALL!!!!
Generally speaking you want to spend less than 30% of your credit limit, so for me that's $3,000. It sounds hard, especially with a $500 limit but it's actually really easy. My payment is due on the 12th of each month so what I do is I pay it off in full at the first of each month. Sometimes around the 10th I'll have to pay off a little more to stay at the 30%. When your statement is due (for me the 12th), that's when they report so even though I max out my card almost every month, by the time it's reported I only owe $2-3k on it. Basically you use your credit card like a debit card. By paying it off, you don't have to worry about the interest but you still get that credit history. I hold 2 cards right now for different reasons. 1 is a hotel card so I get hotel points and airline miles, and the other is a cash back card. I strongly suggest finding a card with something you'll use and do the math. The hotel and airline points sound good, but if I look at it and put it in terms of cash, that card gets me about 0.6% cash back, almost a third of my cash back card. The reason I like it though is because I can accrue a vacation on it pretty easy and my cash back card I use for random stuff I usually wouldn't buy. Paying it off is simple, I got a credit card through the bank my savings and checking account are in so it's automatically there, but my hotel card is through a different bank. All I had to do was go to their website and add my bank information (account number, routing number, account type) and then I just click pay from this account. Keep in mind that it takes a little bit for the payment to process sometimes, so for example my cards are due on the 12th, I make sure my last payment is in by the 10th (or 9th if it's a weekend) so I know it's processed by the due date. TL:DR version Get a card and compare the benefits (cash back, points, etc.), don't worry about the APR too much Pay it off monthly but make sure there is some sort of balance below 30% by the time your payment due date comes around Add your bank account to the credit card so it's easy to pay off Lastly don't be the guy that says "oh this $200 thing will only cost me $20/mo". That's how you get into debt and by the time you pay it off it costed you $250. Use your credit card like a debt card. EDIT: Couple other things I forgot. You do not want to have to pay a fee to keep your card, just get fee free cards. Keep your first card for a bit before applying for another card and don't fall for store cards UNLESS you frequently visit that store and the points would be good for you. At the point you have 2 or more credit cards, make the companies fight against each other. My hotel card was the first one I got and that was the $1,200 for 24.99%. My cash back card I got a year and a half later, it is a $7500 limit at 11.99%. I called me hotel card and said hey, this other card is MUCH better for me so I'd like a higher limit at a lower percent and no I won't pull credit. They said they wouldn't do it so I said I just won't use the card and that was that. I didn't use the card and a month later they raised my limit to $3700 at 11.99%. |
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