ryanbis

"Regarding 3 cards - an ATM/debit should be your everyday card "

It is generally considered a very bad idea to use a debit card for anything other than ATM withdrawls (for the reasons discussed here Credit/Debit Cards ). Using a debit card for purchases can make you more prone to fraud, which can have serious consequences for debit card users that credit card users don't have to deal with (such as important checks bouncing). I highly recommend using credit cards for all purchases and then paying it off at the end of the month.

Sweetny007

You should also note which cards are CREDIT CARDS and which are CHARGE CARDS. American Express I believe are charge cards. This means you must pay off the card each month in full. No matter what card you get you should always be paying it off in full but with Amex there is no leway. Amex will usually charge you an annual fee too (specially if it is a rewards card). Watch out for Capital One they do aggressive marketing to students. The problem with them is they do not report your credit limit to the credit bureau.This means anytime you use the card it appears that you are utilizing 100% of the credit allowed. For a good credit score you should only be using 30% or below.

ryanbis

"You should also note which cards are CREDIT CARDS and which are CHARGE CARDS. American Express I believe are charge cards."

Most AmEx cards I've seen were credit cards. While I'm sure that AmEx does have charge cards, their most popular products (like it's Blue credit card) are true credit cards.

"Watch out for Capital One they do aggressive marketing to students. The problem with them is they do not report your credit limit to the credit bureau.This means anytime you use the card it appears that you are utilizing 100% of the credit allowed. For a good credit score you should only be using 30% or below."

This is a good point--if CapOne is your only card and you don't use it often, it can really drag down your credit score (since it looks like your utilization is abnormally high). Since the credit reporting agency doesn't have a credit limit number, they use your historical highest balance. If you've used your card to make a large purchase, it won't make much of a difference; however, that's usually not the case.

Most of CapOne's student cards seem to come with annual fees now and they rarely (if ever) grant credit limit increases, so students should avoid them at all costs. Capital One wasn't such a bad company years ago, but they changed their strategy and have become one of the worst (for customers, at least--their shareholders have been happy).

Sweetny007

"Most AmEx cards I've seen were credit cards. While I'm sure that AmEx does have charge cards, their most popular products (like it's Blue credit card) are true credit cards."

The Amex cards I have gotten offered are charge cards. I am positive you are right though about them having regular cards too. I mainly wanted to stress the point of knowing what kind of card you have.

ustas06

okay, so a perfect credit score is 800, right? what credit score does someone (a student) who just turned 18 have? do they not start out at 800? if not, why not?

and if you DO start out at 800, what is the point of getting a credit card to raise your credit if you already have *a perfect score*?

geniusgen

I think you start out with nothing at all. That is why you must build it.

weski

It is almost impossible to get an 800 and no you don't "start" with 800 and deduct - it adds up various elements, which as a young person with a short history you are unlikely to have - don't worry, just don't overextend or be late with payments.

Another note on credit scoring, which is a newer concept: if you are given a $2000 credit limit - do NOT go over $1000 unless you repay it ASAP. One of the scoring aspects is how much of your credit limit you are using. Over 50% is considered "bad."

Also, I disagree with Ryanbis: when I said use your ATM/debit for "everyday expenses" let me clarify. I think people can and should safely use their debit cards for small purchases or use cash. I generally use mine for $20 and under and for things I would possibly use cash for, i.e. groceries. I don't want a bill at the end of the month for $300, I WANT it taken from my checking account as a control on ME. If I keep an eye online on my balance, it forces me to be more frugal. Of course, you can give yourself a cash allowance weekly and only spend that or go 50/50. But it is TOO EASY to use your credit card for things that are $5 or $10 and get bit at the end of the month when you get your credit card bill.
And please avoid using your credit card in a bar - too many temptations!
And of course, read the fine print, but many ATM/debit cards now have good protections on them so you aren't screwed if it is stolen.

weski

As a frequent ATM/debit card user - a tip: when asked debit or credit at the counter - press the credit button and you don't get dinged with a $1.50 ATM fee.

NosNs3

^ yea and the store then gets dinged with a 1.00 fee. lol thats whay some gas stations have told me i cant but a pack a gum on a credit card. Im the type of guy who watches his bank account and what i spend so i put everyhting on my card. Then i just pay it off. So much eaiser if you just watch out.

geniusgen

Yeah i do the same thing! I pay with debit but mark it as credit. i have a wachovia card and if I use it as a creditcard I get bonuses. I am not too worried about fraud (though i would never use a debit online), because Wachovia has full refunds.

ryanbis

"okay, so a perfect credit score is 800, right? what credit score does someone (a student) who just turned 18 have? do they not start out at 800? if not, why not? "

Your score is determined by a (very complex) formula. It's based on the information in your credit report. If you have nothing in your credit report, you have no score.

A major component of your credit score is the length of your credit history, which means that the credit scoring model is slightly biased against students who have little credit history (granted, that doesn't mean that students can't have an excellent credit score).


"And of course, read the fine print, but many ATM/debit cards now have good protections on them so you aren't screwed if it is stolen."

Most ATM/debit card providers will now return any money stolen from you, but:

(1) Policies concerning when you get the money back can vary. A friend of mine recently had her debit card stolen, and she has to wait a few days to file a claim (since the fraudulant transactions haven't posted to her account yet--debit card transactions aren't always as quick as credit card transactions when it comes to posting) and then another few days for her claim to be processed. You may have to stretch yourself for a week while waiting for the money to return. Also keep in mind that the process only starts once you catch it--if you're not adament about checking your balance daily, you may not realize that money has been stolen from you for several days.

(2) If you've recently written several checks, there's the possibilty that someone could try to cash them while your account balance is depleted. While your bank may have policies to protect you from this, the third party who got the returned check may not be very understanding.

(3) I still would rather dispute having to pay something in the future than worrying about collecting money that I already had.

"I think people can and should safely use their debit cards for small purchases or use cash."

I think that using a debit card to get cash and then using the cash to make a purchase is fine (although you lose your ability to track your expenses), but I don't see the need to use a debit card at a store and risk the fraud. While I'll agree that using a debit card for a small purchase at CVS is probably safe (especially since the cashiers never touch the card at many large chain stores), anytime you hand over your card to someone else, you're taking a risk. I don't see why one can't exercise a bit of self-control in their spending and just use a credit card and pay it off at the end of the month (and letting the money sit in your bank account an extra month to earn interest). It is, of course, up to the individual to decide how they want to manage their money, but that's my take on it.

It is definitely not advisable, however, to ever use your debit card for an online purchase or at a restaurant.

weski

I guess we will agree to disagree - I will use my bank card for small purchases. You will pay them off monthly. We agree that online use is a bad idea.

But if you are going to use credit cards and also have online banking, I highly recommend setting up an automatic monthly payment so you are never late (and check the payment date every now and then as the credit card companies have "short" months and what is due on the 15th may creep back to the 10th....