If she does not use the Visa/MC feature, she may want to change it to a PIN-only card that can be used to get money from the ATM, but not Visa/MC transactions.
twoinanddone, I have many of my bills and CC paid in full each month automatically. I also check my CC charges online several times a week, and the utility bill charge notifications are sent at least 20 days before they are deducted. I would know if there were fraudulent charges. My kids, I’m not sure how often they check their CC amounts, but they were all taught to pay them off each month, and they make good salaries so they have the funds to do that.
I agree with PP who said having a credit card is not the same thing as having debt. I think it would be a shame to throw away cash back rewards.
My kids started with credit cards in high school. Those were really my accounts but I taught them to do what I do. Check the balance on line every week. Pay it off when it hits a certain amount. In HS that was $100. Once they started college they got Cc of their own with me as guarantor. They had to pay it off when it hit their budget for the month or monthly. Both paid off weekly as a matter of course.
I’m not getting the concern. You see the bill (either electronically or paper) well before it’s taken out of the account. Electricity, gas, water, credit card … They are all variable. Relatively few bills are static month to month - cable/internet and waste disposal are the only ones that comes to mind. What do you do? Write checks in this day and age?
@mathyone New credit cards for new teens should be applied for 6 months after they turn 18, it should be applied for at the bank they have an affiliated debit card with, also when they apply youll see most teens are approved for 500-1000, if ur nice with ur banker they can bump that up to 1500, if theyd like, after that they start building credit, it takes a year of responsible spending low percentage usage. Kept mine 30% or less for most of the time.
Now for the whole payment thing companies have made it easier, you are able to link ur cc to your debit card on ur app for mobile banking, you are then allowed to set up automatica monthly payments directly to your credit card, now this would stop having a late fee azsuming your debit card has the money, ive never had a late fee, another reason my credit score is high for a 19 year old. My recommendation is for your kid to set that up, and to understand how it can effect them if they pay late, use it too much, or dont pay it off monthly and allow the interest to kick in.
??? What are you talking about? What is this 6 month rule? What is the 3 credit card rule?
You start building credit the very first month that you have a credit line. You’re not going to see any drastic improvement in your score until at least 2 years out.
@Pizzagirl. I don’t have auto deductions but I don’t " write" checks either. I just use the bill paying feature on my checking account. You can pay all your monthly bills in about 5 minutes or less. It just helps me focus on how much I’m spending and I like that. Not worried about fraud from auto pay though.
“New credit cards for new teens should be applied for 6 months after they turn 18, it should be applied for at the bank they have an affiliated debit card with”
Where is this “6 months after they turn 18” coming from?
Why even go through a debit card stage?
“My recommendation is for your kid to set that up, and to understand how it can effect them if they pay late, use it too much, or dont pay it off monthly and allow the interest to kick in.”
This all feels like “let your kid put his hand on the oven so he learns how hot it is.” What is so difficult about saying - this is a credit card. You pay it off monthly. The end.
As mentioned recently in another thread debt is a tool.
The consensus here seems to be that carrying a balance is ALWAYS wrong.
I currently know that my family is planning on taking a family cruise at the end of 2017. I expect to pay for myself and my son probably $1200-1500 depending on the cruise that is selected.
It’d be nice to have that entire amount available to pay immediately, but I’m a single mom with a college student and want to keep a slight cushion of savings, but what I can do is set aside $100-150/month.
But let’s say 3 months from now, I see a deal on the cruise I’m going to take for 50% the 2nd passenger - amounting to at least $300 in savings.
Is it better to take advantage of the deal carry a balance and then take that $100-$150/month to pay it off or to let the deal pass and continue to save to pay in full? Assuming $150 payments and 21%APR the debt would be paid off in 9 months with less than $73 of interest making the $300 savings a better deal.
What if I’m planning on making a major purchase, like replacing appliances and I can take advantage of a discount if I buy 3 items or spend more than $1000…does paying a small amount of interest make it worthwhile? How about if I can get approved on the spot of a 0% APR introductory offer…is carrying a balance on that bad?
It seems the real challenge is just to understand some basic math.
We check our bill line by line each month, so we don’t like to advocate that option for them. We use the online bill pay feature with our bank. We like to feel the pain of writing those electronic checks each month-keeps us mindful of our budget.
You see an improvement within a year, 6 months after 18 is recommended because whilr your eligible 18, in the system you will literally appear as brand new , waiting 6 months gives you a higher chance, ive done this aswell as read this online through many hours of research before applying to my credit cards, now the whole 3 credit cards thing, is yes u have a credir card for 500, cool, lenders are gonna see that you have 1 card, thats it, ik people say your credit score is not going to go up if you have 2 or 3 but it will, depending on the type of loan or credit it is, having 1 single card isnt going to help your kid one day buy a car, its not going to help when they want a mortgage, because guess what having a cl of 500 or even 1000 is useless when determining credit, now mainting various types of loans or credits and paying them off on time, and never havimg any late payments will boost ur score, and one day you will be able to buy a home.
Im not trying to sound like a jerk just giving advice, 19 years old here closing the deal on a multi family house in about a month and a half. But heck what do I know.
I went through the mortgage process recently, too, as a young person. They didn’t care nearly as much about credit as they did about income and my ability to make a down payment and make monthly payments. Yes, credit score is important but more for figuring out how good of a deal you can get than whether or not you’ll get the mortgage.
No offense, but I just don’t believe you. If you’re closing on a “multi family house” then you have a massive down payment and the income to show you can make mortgage payments. Or you are well-off from family money and are buying it outright. Or you are buying a house in a slum like Detroit. Heck, at 19 I could’ve bought one of those houses outright.
Also, punctuation is your friend.
Punctuation ill take that into consideration when I start writing my essays in school again, no look up NACA, sorry you had to make a massive down payment or you thought you needed too, I didnt, once you look it up and understand that what I said is true and possible, come back, not paying PMI, didnt even need to pay closing cost, during the loan procces they take into consideration the amount of income you will receieve from renting a home into how much you can afford, also im from Medfoed about 10minuted form Boston, dont know how detroit looks only heard stories but nice try at an assesment, I also work at a title company at 19… but then again you might respond with "punctuation my friend " so should I really bother writting this if it was just to tell people its doable.
@raulhumber2 if you want people to understand your thoughts and opinions, you need to write clearly and make it easy for us. Otherwise you’re just wasting your time-people skim over giant paragraphs and ee cummings-style writing because ain’t nobody got time for that…
I would be interested to know how you’ve managed to buy the real estate at such a young age, but I have no patience trying to wade through your text-speak.
"Is it better to take advantage of the deal carry a balance and then take that $100-$150/month to pay it off or to let the deal pass and continue to save to pay in full? Assuming $150 payments and 21%APR the debt would be paid off in 9 months with less than $73 of interest making the $300 savings a better deal.
What if I’m planning on making a major purchase, like replacing appliances and I can take advantage of a discount if I buy 3 items or spend more than $1000…does paying a small amount of interest make it worthwhile? How about if I can get approved on the spot of a 0% APR introductory offer…is carrying a balance on that bad?
It seems the real challenge is just to understand some basic math."
What’s ideal and IMO the best is to set aside that $150 per month UNTIL you have enough to afford the vacation (cruise deals are fairly common). Ditto on the appliances. Buying things on sale saves you money over buying things full retail price. Not buying them at all saves you more. 
As far as taking advantage of 0% financing, that’s great because you aren’t paying any interest, which I think is what most here are saying rather than not to carry a balance if you don’t need to pay for financing.
Best method is save up, have a financial cushion for emergency situations, and yes, taking advantage of good deals that come your way. Basic math tells you that is the cheapest and most financially astute way.
Re: post #73, I feel like I am experiencing pre-2008 deja vu. The Big Short anyone? (good movie by the way)
Well, I paid cash for my last car, how many people make monthly car payments (with interest) or worse (shudder) lease their cars. What’s your thought on car payments?
How about your home? Did you save and pay cash for it or did you decide what a reasonable interest rate was on a loan so that you could buy a home before you had the cash saved?
If you understand what you are paying and are making a conscious decision to do so, then how is one form of ‘borrowing’ better or worse than another. I don’t say anyone is wrong for opting to make a car payment if that’s what they choose to do and I guarantee the balances on my credit cards are significantly less than what many people are carrying on a car loan.
And I acknowledge that comes with a higher APR, but I choose to make educated choices about when I choose to use that debt and how long I choose to carry a balance. I understand my finances well enough to decide when it’s in my best interest to pay $20 to use the banks money for a month.
Not sure if your questions are rhetorical but I’ll answer them.
Car payments: Cash is often best unless you can get zero percent financing, but even then you might have better luck negotiating a lower price paying in cash. I realize not everyone can afford to pay cash as it is a big ticket item and a necessity for many people for commuting, etc. Vacations are a luxury and something worth saving up for in my book.
Home Mortgage: Even more of a big ticket item, something that is the most expensive purchase most americans will make. Fortunately, current tax code makes mortgage interest tax deductible. Mortgage rates are also much more affordable because, as an asset with the potential for appreciation as opposed to depreciation as for a car or zero value as for a vacation or dinner out, etc., lenders have a secured asset so will obviously lend money more cheaply. For most people, paying interest is a necessity and even if it isn’t, it can still make sense. For example, I have a relatively small mortgage left on my home. I could easily pay it off but I don’t because the 2.5% interest rate I am paying is less than I can get investing that money. It’s very cheap credit for me so it makes sense not to pay it off. I’ll play the arbitrage on that one.
So, some forms of borrowing CAN make more sense than others and can be part of a prudent financial plan IMO. I just don’t put credit card charges in that category even if I get a “deal”. As the old saying goes, “It takes money to make money.” For wants not needs, I’d rather save my money and fund it myself (and earn money on those savings) rather than paying a credit card company a large rate of interest to fund it for me.
Interest is key here. We have one car that has a 0% apr loan on it that will be paid in December. It made more sense for us to take out that loan 3 years ago and use the saved cash elsewhere where it could make money (11% return).
You’re paying, what, 29% interest on the balance on your credit card? To me that is very expensive debt.