Credit card

futureHsTeacher8 · 10-03-2007, 07:06 PM

I'm a senior in high school and I work at CVS anywhere from 18-28 hours each week. I get about $400 a month.

I've really been thinking about getting a credit card to start building my credit. I'm talking about charging $10-$20 a month and paying it off immediately to build my credit score.

Who's the best company and what should I be looking for and staying away from?

chocoholic · 10-03-2007, 07:19 PM

My kids got a Credit Card from the bank where their paycheck goes in. For them it was Bank of America. It's easier to get approved if you link it with your checking account. Also easy to pay your bill online by just transferring from your checking account over to the CC account. They used their CCs sparingly, like the bus-pass, Netflix, you know.

futureHsTeacher8 · 10-03-2007, 07:20 PM

The onlu problem is that I bank at a local bank....would that be an issue?

corranged · 10-03-2007, 07:39 PM

Your credit card doesn't need to be linked to your bank. Go online and search for student cards on the Visa and Mastercard websites, and you'll see that you have a number of options.

ucsd_ucla_dad · 10-03-2007, 07:45 PM

Here are some guidelines -

1. Don't get a CC that requires an annual fee.

2. Always pay off the CC at the end of the month so you never pay interest. If you do this the interest rate of the card doesn't matter.

3. Don't be taken in by 'low initial interest rate' cards - the rate invariably goes up (but it doesn't matter if you always pay it off).

4. Get a free cash-back or airline miles card if you can. This way they actually pay YOU to use the card. I get paid about $500 cash per year to use a CC!

5. Don't get any more cards than you really need. IMO there's no need for gas station, department store, or other specialty cards since they all take Visa or Mastercard. One card is typically adequate - two max in case there's an issue with one of them. Any more than this will be more difficult to handle the monthly payoff.

6. It might be easier to get the card at wherever you bank but it might not be the best deal (see above points).

Icarus · 10-03-2007, 07:55 PM

^ all good advice. However, I would definitely recommend getting two cards (but definitely not the same one). Get a Mastercard or Visa, and then maybe an American Express (or another MC/Visa). Also, space out your cc applications. Too many applications at once lower your score quite a bit.

A big factor in your credit score is length of history, so get a card soon!

Also, I would recommend a major bank or CC company (like Citi or Chase) because they certainly report to all three credit agencies on a monthly basis (you probably don't want to hear all the background for this, but it is a good thing), whereas I've heard that the smaller cards, etc. may not report every month or only to certain credit agencies.

astrophysicsmom · 10-03-2007, 08:14 PM

And don't EVER pay late. The late fees are killers,and something you can prevent. If you're looking to build credit history, you don't want to have something get past 30 days late. It's harder than you think to get that stuff off your record. You should also use it at least once every other month, so that your credit history will show that you are active and responsibly pay your bills. When you have credit cards, you're given a long, long rope to build your own noose--be smart about how you use them.

goaliedad · 10-03-2007, 08:16 PM

Additional tip:

Find out how long the billing grace period is. That is, how many days from the end of the billing cycle (last day charges are included on bill) until the payment is due. In the old days 29 days was common. Now it is 25, with many card issuers going to 20 days. That 20 days means if your billing cycle ends on the 1st of the month, you will typically get your bill 3 business days later - the 4th or 5th and that bill will need to be in their hands (not postmarked!) by the 21st. That gives you 2 weeks (or less) to get that bill in the mail.

Or better yet, find out which card issuers make it easy to pay with an automatic funds transfer, which automatically transfers the entire balance from your checking/savings account on the day due. Of course, you have to have the available funds (it sounds like it from the way you describe your finances).

Those $29 (or often much higher) late fees are sometimes worse than the interest. That is where the credit card processors make their money!

fendergirl · 10-03-2007, 10:36 PM

I got my card with Capital One when I was 16.. maybe you could check and see if they still do the student cards. I just got a new card with them about two years ago. I thought about getting a Shell card which gets 5% cash back but I'm not sure yet. I get all my gas at shell and it's usually 120-150/month.. Right now I get 1% on everything on my CC.. so i'm debating if it's worth it to use my CC for everything else and get a shell card for the gas. So I'd be getting about 18/year back on my current card and 90/year back on the shell card. Not sure if it's worth my time to pay the two bills for 72 bucks a year... also worth the hit to my credit rating in taking out another card. I usually am not a fan of getting any other type of card for a department store or anything like that, which is why I'm unsure about this Shell card... decisions decisions.

Surfalicious · 10-03-2007, 11:51 PM

One of the best things I ever did was get a JetBlue by AmEx card. I don't know if you fly a lot, but I fly back and forth from home to school about once a month for various reasons, and JB offers a great fare and nonstop flight from BOS-RDU. So I got the card, and in less than a year, had earned a free flight to anywhere JetBlue flies. They don't pull any BS about getting your points, and you earn miles by either flying with them, or paying your bill. And if you get a JB card, your points never expire! I love it.

3bm103 · 10-04-2007, 06:03 AM

I wouldn't recommend Capital One. My son got one at 16 and then a few years later, when he had his own business and was buying supplies they wouldn't raise his credit limit. Since he had excellent credit, he had no problem getting another CC. He now has three with credit limits much higher than mine (he uses them a lot, never pays a dime of interest). Meanwhile, Capital One still has his credit limit at $500, which makes it useless. They lost an excellent customer.

jaylande · 10-04-2007, 06:16 AM

Stay away from them - as far as possible. Chase is involved in the subprime lending mortgage mess.

They are part of JPMorgan. Several years ago they bought the banks with whom I had credit cards for years with no problems. They add all kinds of undeserved fees and finance charges on your card.

If you catch them and call to complain they remove them, but who has time for that every month. I am someone who pays my bill in full each month, so should have no additional charges.

Same with citibank. They are actually worse about adding hidden fees and I stopped using them a while ago.

Use a credit union or Wells Fargo. They have been the best to deal with.

Also avoid Washington Mutual. My son in college is having an awful time with them putting fees on his card.

Many of these companies also use overseas customer service people. It is better to have a bank or credit union, and walk in and talk with someone if you have a problem.

Now I mainly use cash or a debit card. Only use a credit card if there is no other option. It is less convenient, but the need to "build credit" as young people is being oversold and getting them in debt, instead.

PackMom · 10-04-2007, 06:19 AM

My college son has Visa that he got through our bank where his checking account is. He's not had any problems with it.

jaylande · 10-04-2007, 07:00 AM

I recently read Chase is, or will shortly begin, advertising on Facebook, offering special incentives.

College kids, avoid Chase and their offers.

fendergirl · 10-04-2007, 07:27 AM

3bm, that's strange. My Cap one card had a 500 limit and when I turned 18 they sent me a letter changing it to 2500 and I think right now that card is at 5000. My second cap one card that I applied for about two years ago has a limit of 15000. I don't know why they didn't raise his limit.

Jayland, don't blame a credit card for getting young person or anyone in debt. It's the person, not the card. If a person is responsible, they can handle it. Regardless of if they are 16 or 85. If they are irresponsible, they can't. I have some coworkers who are in their 30's who have all their cards maxed out and can't get another credit card or a loan because their credit is so bad with them being in all kinds of debt. That's their own fault and I can't say I feel sorry.

If people would charge only what they can pay off at the end of the month, there wouldn't be a problem...

In the 8 years I've had my card I've never once carried any balance over to the next month - regardless of if it was a 15 dollar bill or a 1000 dollar bill. You just have to be smart and know how much money you actually have - not how much the card gives you.