<p>Hey there. I just finished up my first year of college, so (thank god) I’m not a parent, but I was hoping some of you wise folk could give me some advice about something.</p>
<p>A year ago I got a credit card for college (tied to my money, obviously, not my parents’). The thing is, I’ve barely used it. I prefer to use cash, but I use my debit card for large purchases or stuff online. That works a lot better for me, since it withdraws automatically from my account, without me having to worry about sending anybody a check every month. So I decided I might as well get rid of my credit card, since I don’t really use it and it’s a hassle… but my parents said that I might want to hang on to it and use it once a month or so, just to “build credit.”</p>
<p>So… do those of you who know something about “building credit” want to give me some advice here? Will using my credit card for small things every month help me get an appartment or a job or something later? Or is it just more hassle than it’s worth? I’m a pretty responsible kid and I can handle it, I’d just rather not if I don’t have to.</p>
<p>Yes…start using your CC will help you build credit. That will be very useful in 3 years when you go out get a job, rent an apartment, finance a car. A high credit score will save you money in interest payments.</p>
<p>Son does not like cash or debit cards. With credit card, he just needs to check balance once a month and pay once a month. He also likes the kickback he gets from using the card.</p>
<p>First rule of credit card…don’t charge anything unless you have cash money to pay for it. Just use it for ease. It is easy to subscribe to this philosophy when you don’t have much money. When you have money, the habit just stays with you.</p>
<p>Though I don’t enjoy the debt that I’ve unfortunately accumulated (moving four times in 2 years, including once to a foreign country, and then applying to grad school, will do that to you) I enjoy the fact that I’m able to basically finance anything I want by myself.</p>
<p>This is a freedom that not everyone my age enjoys. Plus, by the time I graduate from grad school, I’ll be able to get a mortgage on a house, if I desire one. I won’t, but I like the idea that I’m worthy of one.</p>
<pre><code> I disagree, UCLAri. Many young Americans hold to this philosophy that they put themselves in SO MUCH debt that is incalculable to comprehend. Some go into debt so badly for that “new” vehicle or big screen tv that they no longer can afford the payments each month.
“Easy credit” can be a nifty sort of deal, but use it in moderation. No matter how well off you are financially, “easy credit” can “bite” you back later on. One missed payment for your credit card can send your credit score spiraling down the deep, dangerous abyss. Just my 2 cents!
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When combined, these two philosophies avoid the trap Justinian describes.</p>
<p>There are things you can’t do without a credit card (or can’t do without serious hassle) - rent a car, for example. Good credit <em>will</em> help you in apartment hunting. Landlords will often check your credit rating. When and if you do incur sensible debt (buying your first home, for instance), good credit and a high credit score will mean you can obtain the lowest interest rate possible. Someone who hasn’t established good credit may be able to buy a home, but not on as favorable terms as you will obtain.</p>
<p>Don’t close the credit card account. Ridiculous as it may seem, that could hurt your credit score.</p>
<p>You would think that someone who “doesn’t owe a cent” and has never had a credit card would have “Good Credit.” Not so. You have to have used credit - and used it wisely - to achieve a good credit history. </p>
<p>Follow the two rules of the wise posters above and you will be glad you did.</p>
<p>There’s a little thing called “moderation,” Justinian.</p>
<p>Believe it or not, without a decent credit history, you may not be able to get some jobs, get a mortgage, rent a car, finance a car, and in some cases, get an apartment.</p>
<p>Those are all things I’d like to be able to do.</p>
<p>Liz Pullman Westmon is a good source for this information. She is on MSN money. </p>
<p>As for my two cents, you should keep the card open. You will be thankful you did later. I use mine for known monthly expenses (cell phone, insurance, gas, water, electric) and then immediately pay it off. This way I am not spending any extra money and I am still building my credit. I have a rewards card so I also get perks for using the card. I have an EXCELLENT credit score and I just turned 22.</p>
<p>According to your previous post, UCLAri, you obviously did not use that “little thing” called moderation throughout those years when you moved here and there. Moving is expensive, I must admit, with renting the moving van and purchasing boxes; however, as your claim implies, you must have accrued quite a bit of debt via your credit card other than moving and education( ie: restaurants, movies, etc). I am just saying that at such a young age, I believe that young Americans should live their life in extreme moderation until they have a secure job. Using that little piece of plastic can not answer everything nor solve problems.</p>
<pre><code>Fine, lets say you have a monthly cell phone bill of $150.00. Great! Use your credit card and pay off that bill, by golly! But wait! The next day, your boss says," YOU’RE FIRED!" Oh my! Now what are you going to do? You have no job and no money. A few weeks later, your credit card statement comes and you have no money whatsoever to pay the bill. You miss the payment deadline and your credit score completely goes down the toilet.
Different scenario.
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<p>Justinian I has a monthly rent payment of $300.00. Although he would love to use the credit card for the rent and use the money to go to the movies, he decides to be a good stewart of his money and pays the rent payment in CASH. Next day, Justinian loses his job, but wait! He already paid for his rent payment so he has a roof to stay under til he receives a different job. While he is unemployed, he can use the credit card for groceries, etc.
Which scenario would you prefer? Anyone?</p>
<p>IloveBrown, here is a copy-paste from my post of the other day on this matter - I highly recommend getting and reading this book asap - it’s excellent, and it’s not boring - actually extremely interesting. </p>
<p>The abbreviated answer to your original question is (1) keep your credit card, and (2) try to keep the balance at around 30% of the total credit limit of the card, and (3) always, always pay on time - but this last is obvious. </p>
<p>I just HAVE to very strongly recommend this book, especially if anyone can make their 18 year old soon-headed-to-college person sit still to read it - I picked it up this weekend and read it in one sitting. (Trying to figure out how to get my FICO north of 800, and finally I concluded maybe it’s not possible.) </p>
<p>I learned a few things I just stone cold did not know, but, there is a section regarding Sallie Mae, their relationship with Equifax, and problematic issues with student loans later in life (in terms of how the loan balances can sometimes be wrongly re-aged, and how Sallie Mae does not always report consistently to all three bureaus). </p>
<p>Other interesting details on identity theft, the free credit card offers that arrive in the mail, also very intriguing information on auto insurance costs, etc. </p>
<p>I just cannot say enough about the wealth of information in this very fast read, especially for students headed off to college, and perhaps handling loan decisions, credit cards, etc.</p>
<p>Justinian, I believe the OP came here for advice from parents. From reading your posts in HS Life and College Confidential Cafe, it appears to me that you are not a parent? I suggest you leave this thread to the parents, who have adequate experience and wisdom to advise the OP without resort to overdramatized and non-helpful scenarios such as in your post #9.</p>
<p>Your point is well-taken. Use moderation. No need to beat it into the ground. Move on.</p>
<p>“Fine, lets say you have a monthly cell phone bill of $150.00. Great! Use your credit card and pay off that bill, by golly! But wait! The next day, your boss says,” YOU’RE FIRED!" Oh my! Now what are you going to do? You have no job and no money. A few weeks later, your credit card statement comes and you have no money whatsoever to pay the bill. You miss the payment deadline and your credit score completely goes down the toilet. "</p>
<p>Actually JustinianI, here is the great thing about KNOWN monthly expenses…they are known. I have the money to pay my bills long before they are due. When the bill comes I use my credit card to pay them and then I use a check to pay the credit card. By the way, if you have $150.00 phone bill you need to find a better plan. It is clear from your other posts that you are not credible but I thought I would answer you anyway.</p>
<p>Sweetny007’s approach is exactly the one that we parents are recommending. (I, too, wanted to comment about the $150 cell bill, sweetny. A student with that size bill is definitely not one whose financial advice I would follow ).</p>
<p>Sweetny also highlighted another advantage of using credit cards (wisely) - affinity cards give a variety of advantage: could be rebates from favorite retailers, could be contributions to a favorite charity. We accumulate airline miles and earn a few free trips per year.</p>
<p>Well, you just told me where you accrued your debts-from moving and school. That is why I stated such.</p>
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<p>You know, I don’t even own a cellular phone for it is too expensive and a waste of money. $150.00 was a hypothetical figure, sorry for the confusion.</p>
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<p>Umm…okay. Thanks for spending time to sift through my posts, you can’t be paying off credit card bills trying to sift through my posts trying to bring me down, 007.</p>
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<p>Thanks jmmom! The key word “wisely” is what I have been saying all along. That means that purchasing a big screen tv is not best purchased on a credit card.</p>
<p>“Umm…okay. Thanks for spending time to sift through my posts, you can’t be paying off credit card bills trying to sift through my posts trying to bring me down, 007.”</p>
<p>…This doesn’t make any sense…LOL</p>
<p>“Thanks jmmom! The key word “wisely” is what I have been saying all along. That means that purchasing a big screen tv is not best purchased on a credit card.”</p>
<p>All of us (besides you) were advocating keeping the card and using it wisely. (sigh) … why do I even bother?</p>
).</p>