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Old 09-25-2004, 02:45 PM   #1
2.5RSMatt
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Question More banking advice. Credit card, never had one, want to build credit.

Well since I asked for advice on a Savings account a bit ago and it was good advice I decided I want to know what I should do credit wise.

I'm 19, have a nice steady job (part-time) been there almost a year, and I am also a full time student. I have no credit and would like to build some before I get too old. I'm good with my own finances, do not wrecklessly spend money and have a nice amount in my savings.

What should I do? I have a checking account at Washington Mutual and my savings is INGdirect. What is the best way for me to build credit? I am assuming with a credit card. Any advice with what to go with? I won't be spending over $400 / month and have sufficient funds to pay things off.

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Matt L
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Old 09-25-2004, 02:49 PM   #2
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Honestly - DO NOT GET A CREDIT CARD - EVER.

They are a total waste. Buy everything with cash and/or a debit card. THe only thing you should ever need credit for is buying a house.

Check out this cat:

www.daveramsey.com
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Old 09-25-2004, 02:51 PM   #3
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Quote:
Originally Posted by doppelganger
Honestly - DO NOT GET A CREDIT CARD - EVER.

They are a total waste. Buy everything with cash and/or a debit card. THe only thing you should ever need credit for is buying a house.

Check out this cat:

www.daveramsey.com
So when you go to buy a house, or a car you get a crappy APR since you have no credit? That is the worst advice I have ever heard in my entire life. You need credit, just dont spend money you dont have.
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Old 09-25-2004, 02:53 PM   #4
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A credit card may offer the buyer a lot of protection that a debit card cannot. Just don't go crazy. It's a good tool for building credit.
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Old 09-25-2004, 02:56 PM   #5
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apply for a credit card w/ no annual fee and use it ONLY for gas/food. then pay it off every month.
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Old 09-25-2004, 03:01 PM   #6
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Try to talk to your bank. They might have programs for someone like you. Young with no credit. They might do a personal loan for you for $500 for 12 months. Pay that off, in time and your bank might give you a bigger loan. Have a utility that you pay directly from your bank account. Your bank will see that you pay it every month. Building credit takes time. Your young so you have plenty of it. Try a credit union too through your school. They might be able to help you out and good luck. Mikal
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Old 09-25-2004, 03:01 PM   #7
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just get a small credit card and never raise the limit, and never buy anything taht you don't have the cash in your bank account for. I.e. you have a 100 limit, you buy GT4 for 50 bucks with your credit card. You have the 50 in your checking adn you either transfer it right away or when the payment is due. if you start buying stuff and not have the cash in your account to pay for it "Oh I'll pay it off with my next check" thats how you get in credit card debt, becasue what if your tranny or somthin goes and you need your check ot fix it? then how are you gonna pay the credit card?

your time at your job and current residence is worth alot of credit also, the loger you are at a job the better.
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Old 09-25-2004, 03:05 PM   #8
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Quote:
Originally Posted by soundwave
apply for a credit card w/ no annual fee and use it ONLY for gas/food. then pay it off every month.
This was my exact though..I'm just wondering if one card is better than another, or if I should go through WAMU.
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Old 09-25-2004, 03:07 PM   #9
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Quote:
Originally Posted by bobturismo
just get a small credit card and never raise the limit, and never buy anything taht you don't have the cash in your bank account for. I.e. you have a 100 limit, you buy GT4 for 50 bucks with your credit card. You have the 50 in your checking adn you either transfer it right away or when the payment is due. if you start buying stuff and not have the cash in your account to pay for it "Oh I'll pay it off with my next check" thats how you get in credit card debt, becasue what if your tranny or somthin goes and you need your check ot fix it? then how are you gonna pay the credit card?

your time at your job and current residence is worth alot of credit also, the loger you are at a job the better.
I like how you put it in terms everyone here can understand.
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Old 09-25-2004, 03:13 PM   #10
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Find a small credit union near you. They should offer like a 500 dollar cc. That is what I got when I was in high school and then bummped the limit just incase I needed it. Also if you are in college and have a loan that should show up on a credit report.

edit: and pay it off every month. i have never had a balance left on my cc from the previous month.
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Old 09-25-2004, 03:54 PM   #11
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im in the same situation, 19.....blah blah blah and bobturismo, said it the main reason i want to have a credit card, is in case that tranny every poops out on me, credit card would = RA gears
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Old 09-25-2004, 04:03 PM   #12
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I think american express you have to pay the whole balance. If you limit is $500 and you spen $300 you have to pay off the $300 at the end of the month, you cant pay $10 a month till its paid off. Mikal
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Old 09-25-2004, 04:14 PM   #13
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Quote:
Originally Posted by MikalsWRX
I think american express you have to pay the whole balance. If you limit is $500 and you spen $300 you have to pay off the $300 at the end of the month, you cant pay $10 a month till its paid off. Mikal
Not all AMEX cards are like that. I have an Amex Blue that gives 5% cash back for each purchase I make.

So the people who say use it for gas and food and pay it off every month...

This is somewhat of a good tactic. I have a friend that works for Bank of America Credit Division and he mentioned something to me. I am the same type of person (never carry a balance) because I never spend money I dont have. He told me that altough this is a worthy strategy, it comes with a price. The credit companies will watch your account like a hawk if you do this, and raise your APR for no reason. Why? Because they dont make any money off of you if you dont carry a balance.

So, the trick is, to get a CC and use it till you have a decent line of credit on it (few grand). Before you make a big purchase on it, ask to have your APR lowered because you are making a big purchase, and then pay it off over 2 or 3 months, eating a little bit of finance charge.

A CC is a good way to build credit, but also getting credit at stores for single purchases is a good idea. I bought my laptop via a line of credit from Citibank and paid it off before interest hit (6 months 0 payment 0% apr), as well as my new mattress (same dealy). Just be sure they go through credit report beureaus (there are 3 major ones, and they dont all share data with each other, but they all get the same data... hell if you ever get an incorrect ding on your credit report and you have to sort it out with 3 different large companies).

Anyways, get the CC. I got my first one in college and it had like a $200 limit. Now, of course, my credit cards (I have a visa, a mastercard, and an amex) all have much higher limits on them than that. I guess I'm doing a good thing, I hope.
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Old 09-25-2004, 04:45 PM   #14
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Just get a credit card from your bank. I have an ATM and also a cc from wells. just make sure you use around 100 bucks a month and pay it off that month. You need credit..so start building it. I'm in the mortgage industry, and if you ever plan on owning your own home, you better start building credit.
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Old 09-25-2004, 04:46 PM   #15
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I got my second credit card a little more than a year ago with a $300 dollar limit. I've paid off all the balances and they keep raising my credit limit in an attempt to give me enough leeway to get myself into trouble. Bastards.

-faast
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Old 09-25-2004, 05:03 PM   #16
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Another great way is to determine which (if any) of your monthly creditors (utilities, rent, gas, groceries, insurance, etc.) can accept credit card payments and funnel them through your card. I do this with my AMEX that gives rewards points.

The beauty here is that this is money that is going out every month anyway...you aren't adding to your expenses with your credit card payment, just paying the card instead of the creditors directly.
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Old 09-25-2004, 09:25 PM   #17
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If you get a credit card, follow this one word of advice:

NEVER CARRY A BALANCE.

Having credit cards can be incredibly helpful. Just don't use them to buy:

1. Gas
2. Food
3. Clothes
4. Toys

Use them for emergencies only, and pay off the balance in full (or at least as quickly as you can.) The real problem with credit cards lie in the fact that most people see them as income, not as debt, so they go buy "things" until they max the card out. Then they pay the minimum balance every month.

For the rest of their lives.

The trick is that the credit card companies WANT you to max out the cards and then pay them interest every month. If you are like many people I know - myself included - you will max them out. Then every month your income will only cover enough to pay $100 - $500 towards payments, but you'll be broke afterwards. So then you have to use the credit cards again to buy food, gas, etc. It's a very viscious circle.

But if you do ever have a true emergency, they can save your ass. I lost my job a month ago and was broke. I paid rent on my card. As soon as I got my new job the first thing I did was to pay off the credit card.

However, having filed for bankruptcy TWICE due to (1) lack of financial self control and (2) being stuck in debt with credit cards I have finally learned my lesson. I have 6 credit cards now, and have a zero balance. THAT is where you want to be.
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Old 09-25-2004, 09:39 PM   #18
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Quote:
Originally Posted by doppelganger
Honestly - DO NOT GET A CREDIT CARD - EVER.

They are a total waste. Buy everything with cash and/or a debit card. THe only thing you should ever need credit for is buying a house.

Check out this cat:

www.daveramsey.com
Dave Ramsey is the man. Nice job on the recommendation.
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Old 09-27-2004, 09:34 AM   #19
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Quote:
Originally Posted by JewPac42
So when you go to buy a house, or a car you get a crappy APR since you have no credit? That is the worst advice I have ever heard in my entire life. You need credit, just dont spend money you dont have.
You obviously have NO CLUE on financing. I feel sorry for you and the mistakes you must be making.

Crappy APR for a house with no credit card?
I have a fixed 4.25% 15 year APR with NO points. I got this rate with no CC's or a car loan. You want a financial institution that does manual underwriting. They will actually PREFER that you carry no debt.
No debt = no tied up income. It's not rocket science.
Another thing you want at application time is something most people with car loans and credit cards don't have: It's called a substanial down payment!
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Old 09-27-2004, 09:44 AM   #20
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Get a credit card but don't act the way my wife did with hers. She actually said this to me: "I don't have to pay it off, it's just numbers, not real money"
Sad but true...
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Old 09-27-2004, 09:56 AM   #21
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Quote:
Originally Posted by doppelganger
Another thing you want at application time is something most people with car loans and credit cards don't have: It's called a substanial down payment!
Your inability to manage your finances is no reason for others not to have a credit card.

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Old 09-27-2004, 10:01 AM   #22
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I'm with Fuzzycuffs. Depending on the card, you may not want to have a zero balance. Some of them even REQUIRE you to have a balance or they'll drop you. It's usually pretty small, like 5-10%. Those companies aren't there to give you free money you can pay back at will, they're there to make money off of you, and they're not doing it if there's nothing for them to collect interest from. Having a $25 balance isn't going to break your bank if you run into money troubles, but having a credit card company DROP you leaves a big black mark on your credit history.

A friend of mine is a financial wizard. He had a Sam's Club CC that could be used at other stores and had a rewards program. He used it for everything and always paid off the balance in full, earning reward points in the meantime. They actually dropped him at the end of the year because he MADE $300 off of the card instead of owing anything!
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Old 09-27-2004, 10:06 AM   #23
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Quote:
Originally Posted by MikalsWRX
Try to talk to your bank. They might have programs for someone like you. Young with no credit. They might do a personal loan for you for $500 for 12 months. Pay that off, in time and your bank might give you a bigger loan. Have a utility that you pay directly from your bank account. Your bank will see that you pay it every month. Building credit takes time. Your young so you have plenty of it. Try a credit union too through your school. They might be able to help you out and good luck. Mikal
1. this builds awesome credit especially with the bank you do business with.

2. take the money from the loan and dump it into another account that you won't use (preferably another bank without monthly fees).

3. deposit all interest payments into that same account.

4. pay the automatic bill pay fee and preset the payments for the loan.

Do this a few times for teh win!

you'll have cash for an emergency if you need it, but hopefully you won't have to ever touch that money.
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Old 09-27-2004, 10:14 AM   #24
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Quote:
Originally Posted by Neek
Another great way is to determine which (if any) of your monthly creditors (utilities, rent, gas, groceries, insurance, etc.) can accept credit card payments and funnel them through your card. I do this with my AMEX that gives rewards points.

The beauty here is that this is money that is going out every month anyway...you aren't adding to your expenses with your credit card payment, just paying the card instead of the creditors directly.
this is what i do also. i have credit cards but i rarely use them. i pretty much pay cash for clothes, food, toys, etc.

then again i'm debt free as of this year and i own my house. bank's itching to give me a loan.

but like awdity said, banks want to make money. they do that by loaning you money also known as credit and charging you money for the loan.
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Old 09-27-2004, 11:01 AM   #25
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I've never met a multi-millionaire (and I know plenty) that said "I've made all my money and became a millionaire through use of credits cards with "rewards" programs and frequent flyer miles".

When using a CC, the average transaction is 18 to 21% higher than when using cash.
When paying with cash - you can get a even further discount on a product by 3% by not using a CC.
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