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Can I handle getting my first credit card as a americorp employee?
August 9, 2012 8:48 PM   Subscribe

Can I handle my first credit card with the earnings that I get from Americorp?

I'm a recent college graduate who will embark on a new job with Americorp in the future. It means I will be living at the poverty level and I will not be making very much money. I have no debt or credit to my name right now but I want to get a credit card as a way to begin my credit journey. The thing is...I don't want to start going into debt. Can a person living on ~$300 dollars a month handle the expense of a credit card without going into debt? I probably will have to get food stamps. This position will be located in New Orleans which from what I heard will not be too expensive compared to most cities. I will be provided my own room so I won't have to worry about the expenses of an apartment or extra living costs like those. So, I will be paying basic expenses like food but not much else. I'm currently taking temporary jobs as a way to earn some money. I understand this would take some very frugal spending. Can I afford to do it?
posted by mind2body to Work & Money (11 answers total)
 
Do you have the discipline to never charge more than what you can actually afford to pay off, FULLY, each month?

If yes, then you can handle a credit card.

If no, then you cannot handle a credit card.
posted by 6spd at 8:51 PM on August 9, 2012 [7 favorites]


You totally can. It doesn't hurt to build credit, and as long as you pay it off each month (for real) and get a card with no annual fee (this is key) it shouldn't cost you $$. But be super careful and avoid temptation, because living on the cheap can make misusing a credit card (overspending, spending more than you have) really tempting. Get one with points or airline miles or something to make it worth your time.
posted by c'mon sea legs at 8:54 PM on August 9, 2012 [2 favorites]


It's not the cost of the credit card, it's the cost of the stuff you charge. I uses my credit card for all my purchases. I also pay off my balance in full each month. Are you the kind of person who can stick to a budget and do that? Or are you the kind of person who'll be tempted to charge more and more, just out of ignorance or convenience, then find yourself with an immense balance, interest charges, penalties, fees, etc?
posted by BlahLaLa at 9:00 PM on August 9, 2012


There is no specific "expense of a credit card." (unless you have one with fees. For your purposes, that should not apply.). The expense is what you put on it each month. If you are on a tight budget, you need to keep a close eye on how much you are spending. If you can only pay $200 a month, don't dare spend over $200 a month. Pay it off every single month.

It wouldn't hurt to read a book or two on basic financial literacy before you get one.
posted by murfed13 at 9:02 PM on August 9, 2012 [1 favorite]


I am a lawyer (but not your lawyer) who works in creditor's rights and whose family business is in finance. This is what I do every day, and I think that now is not the time to start building up credit. The primary reason is that you have not described any need to establish credit, and there is no sense in building credit just to build credit. The risks of the temptation to abuse the card is greater than the benefit of a theoretical increase in your credit score. Do you even know what your current credit score is? Get a report from one of the big three agencies. You are entitled to one a year per agency, so if you wanted to be really up to date, you could request a report every four months as you make your way through the agencies. Do not use a website that will run your report with all three at once - that is just a waste.

By the way, do you have any student loans? If so, you already have a fine means to establish your good credit. Pay your student loan on time (I recommend auto-debits) and you will establish good credit.

Also bear in mind that having too much credit can actually lower your credit score. It is possible that the act of opening a new credit account could lower your score.

For now, just focus on your AmeriCorp job.
posted by Tanizaki at 9:16 PM on August 9, 2012 [1 favorite]


There is no reason for you to get a credit card. You would be handing yourself a loaded gun.
posted by tylerkaraszewski at 9:45 PM on August 9, 2012 [2 favorites]


I dunno, getting a credit card when I was poor and in college certainly helped me later for building credit. You don't want to be 30 without credit history. But it helped rather than hurt me because I restrained my spending and paid everything off at the end of the month. I never carried an outstanding balance and was never late on a payment. I essentially treated it like an extension of my bank account--if the money wasn't in my bank account, I didn't use my credit card. If you use this method a credit card will not cost you anything (unless you pick one with fees, which you shouldn't). People get into trouble with credit cards when they spend more than they can pay off and the interest starts screwing them over.
posted by schroedinger at 9:54 PM on August 9, 2012


It took some doing for me to get my first credit card out of college, even with a good job, because I had no credit. I had to get a student credit card, despite not being a student, on account of not having a credit history.

A good credit history can be useful for renting apartments or if you have any plans to purchase a car or home on credit down the road. Account age is one of the biggest factor in your credit score.

If you trust yourself not to overspend and have plans to use credit eventually a credit card can be worthwhile to use.

With or without a credit card, your first financial line of business should be to accumulate an emergency fund, so you can handle unexpected expenses. You shouldn't use a credit card to get yourself out of jams, because that's one way you can get trapped in debt. If you don't have the self-discipline to save an emergency fund, you probably don't have the self-discipline to get a credit card.

Go ahead and get the food stamps; they're part of how you get by in Americorps. A friend got, I believe, $200 a month while in Americorps in 2010, which will practically double your pay
posted by akgerber at 11:11 PM on August 9, 2012


Since you're going to be on such a low income, I recommend getting a no-fees credit card with as high a credit limit as is available to you, but with the best interest rate possible. A service such as mint.com can help you comparison shop for credit cards.

However, there is a major caveat to this advice: You will not use this card. You will not carry it in your wallet. You will not have it readily available in a desk drawer. It is not for everyday expenses, not for treating yourself, not for groceries, not for that cool new sweater, not for a brand new pair of jeans or shoes, not to cover your cell phone bill, not for any "just this once" expense. It is for true emergencies (medical, dental, auto, emergency trips home for funerals, etc). Lock it away in a box and give the key to a responsible trusted person in your life. If you do wind up having to use it, you will devote all possible resources to paying it off as quickly as possible.

General credit advice: One of the major things that can help you build a credit history and a good credit score (crucial for auto loans and home loans) is the length of your open revolving credit line (a.k.a, a credit card). Once you've been extended a line of credit (major-brand store card, credit card, etc), never close it. Cut up the card if you don't want to be tempted to use it, but don't close an account unless you absolutely must.
posted by erst at 12:02 AM on August 10, 2012 [4 favorites]


addendum: While I agree with akgerber in principle about "If you don't have the self-discipline to save an emergency fund, you probably don't have the self-discipline to get a credit card," I don't believe it applies in an Americorps situation. There is no way someone on an Americorps income would be able to save for a major emergency. A credit card is like an insurance policy with retroactive payments in this specific case.
posted by erst at 12:07 AM on August 10, 2012


Thank you, everyone. Good advice from all of you.
posted by mind2body at 10:55 PM on August 10, 2012


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