What should I look for in a credit card?
March 20, 2007 7:19 PM Subscribe
Financially responsible, 18 year old college student looking to get a credit card to start building credit. What should I look for in a card?
I've been managing my own finances for five years now, and am completely comfortable with the responsibilities that come with owning a credit card. I have a healthy checking account that's never gone anywhere near the red line, and I've been using a check card for 5 years now, so the concept of paying with plastic is something I'm used to.
But my question:
I'm beginning to get my long term finances in order, and would like to build up credit, so I've decided to get a credit card. I plan on paying off the full balance every month, so the interest rate on the card is not of huge concern. I'm looking for the best reward plans/etc. available. I plan on only making a few small purchases on the card each month, so it's not like big bucks will be rolling through it.
A few points:
I have absolutely no credit.
My checking account is with Bank of America if that would make any difference.
I'm not interested in a Secured Card.
I get my gas from Shell.
I don't care which of the companies the card would be with.
What should I do? or at least what should I look for?
I've been managing my own finances for five years now, and am completely comfortable with the responsibilities that come with owning a credit card. I have a healthy checking account that's never gone anywhere near the red line, and I've been using a check card for 5 years now, so the concept of paying with plastic is something I'm used to.
But my question:
I'm beginning to get my long term finances in order, and would like to build up credit, so I've decided to get a credit card. I plan on paying off the full balance every month, so the interest rate on the card is not of huge concern. I'm looking for the best reward plans/etc. available. I plan on only making a few small purchases on the card each month, so it's not like big bucks will be rolling through it.
A few points:
I have absolutely no credit.
My checking account is with Bank of America if that would make any difference.
I'm not interested in a Secured Card.
I get my gas from Shell.
I don't care which of the companies the card would be with.
What should I do? or at least what should I look for?
Get a very credit limit. You can think all you want to about your self-discipline and intelligence, but a credit limit is just begging to be used when you at any age -- but especially when you first get a card and are 18. Request a limit of one hundred dollars. Use it monthly, and pay it off monthly. Every few months ask to go up another hundred or so. When they raise your limit on their own, call them up and have it reduced back down to what you want.
Or do what SeizeTheDay said.
posted by flarbuse at 7:29 PM on March 20, 2007
Or do what SeizeTheDay said.
posted by flarbuse at 7:29 PM on March 20, 2007
It's annoying me right now because my credit limit is too low to pay for some plane tickets I'd like to buy online (yeah, still weird about using a debit card for online purchases), but I'd really recommend the BofA Student Visa. They determine your credit limit by your class level (as a senior I have $1500 - I believe it started at $700) and they don't give a crap about your credit (I had no credit history eithr when I got mine, and I went in without my parents - although I did have income to report). The interest rate, while you claim it's irrelevant, is low enough that it's non-noticeable.
But the best thing about it as a BofA customer is that in BofA online banking, it shows up like a checking or savings account which means you can pay your credit card bills with direct transfers from your checking account. I've never mailed a check to pay off my credit card, and I didn't have to do anything fancy to set it up. It's extremely convenient.
There are lots of cards for students with all kinds of crazy perks and some of my friends are really happy with those perks. However, my credit card just works and I can generally ignore it, and go in and look once a month to see what I owe them.
So, yeah, go to your local BofA and say you're a student who wants a first credit card, and this will be the application they'll hand you (if now is anything like four years ago, and why wouldn't it be). $700 as a starting credit limit is small enough that digging yourself into too deep a hole will be hard.
posted by crinklebat at 7:40 PM on March 20, 2007
But the best thing about it as a BofA customer is that in BofA online banking, it shows up like a checking or savings account which means you can pay your credit card bills with direct transfers from your checking account. I've never mailed a check to pay off my credit card, and I didn't have to do anything fancy to set it up. It's extremely convenient.
There are lots of cards for students with all kinds of crazy perks and some of my friends are really happy with those perks. However, my credit card just works and I can generally ignore it, and go in and look once a month to see what I owe them.
So, yeah, go to your local BofA and say you're a student who wants a first credit card, and this will be the application they'll hand you (if now is anything like four years ago, and why wouldn't it be). $700 as a starting credit limit is small enough that digging yourself into too deep a hole will be hard.
posted by crinklebat at 7:40 PM on March 20, 2007
Low fees and low interest because suprisingly, you get better credit by carrrying a balance, yet making all the payments, than by paying off the whole balance every month. Carry a small balance, from what I have read the size matters less than the payment regularity.
posted by caddis at 7:44 PM on March 20, 2007
posted by caddis at 7:44 PM on March 20, 2007
The bigger newspapers will often print the going rates for the best cards, as well as their 800 numbers. Spend a Saturday afternoon calling them all up, and ask to apply via phone (they will all take applications this way).
Just get a list of good card deals and take a shotgun approach in this manner. Apply for as many as possible, and either cut them up or cancel them when you have too many.
Some people will tell you that too much unused credit is a bad thing, but when you're just starting out, it's not bad at all.
posted by frogan at 7:45 PM on March 20, 2007
Just get a list of good card deals and take a shotgun approach in this manner. Apply for as many as possible, and either cut them up or cancel them when you have too many.
Some people will tell you that too much unused credit is a bad thing, but when you're just starting out, it's not bad at all.
posted by frogan at 7:45 PM on March 20, 2007
Citicards has a dividends card that I've put to good use. It's something like 3% back at grocery stores, pharmacies, and gas stations: in other words, many of the purchases you'll make as a college kid.
You should not have to pay any annual fees, there are too many free cards out there for you to need to settle on one with an annual fee.
The lower the APR the better, but this only matters if you plan on carrying a balance and I definitely wouldn't suggest carrying a balance.
Credit cards can be awesome, but I have spent every month of every semester of college trying to pay off my balance. I am graduating this May and I might, just maybe, be able to pay it off by then. But I've optimistically thought that since I started accruing debt freshman year.
Just, you know, sayin'.
posted by ztdavis at 7:50 PM on March 20, 2007
You should not have to pay any annual fees, there are too many free cards out there for you to need to settle on one with an annual fee.
The lower the APR the better, but this only matters if you plan on carrying a balance and I definitely wouldn't suggest carrying a balance.
Credit cards can be awesome, but I have spent every month of every semester of college trying to pay off my balance. I am graduating this May and I might, just maybe, be able to pay it off by then. But I've optimistically thought that since I started accruing debt freshman year.
Just, you know, sayin'.
posted by ztdavis at 7:50 PM on March 20, 2007
Do you really need a credit card? I wonder if you'd be better served with a normal savings account - you can sock away some money in there after every paycheck, you won't be deducting from the "real money" if you swipe your savings-account-only-linked debit card for a smoothie or movie tickets or a trip to Paris for spring break, you'll look responsible to future lenders, and you won't actually be able to incur any debt.
Any "serious" long-term purchases (cars, homes, tuition, etc) can be financed in other ways, and small everyday purchases also don't require credit. I just don't see the need to establish credit at the beginning of college than at the end, when you start working "a real job" full-time or something and your income is higher (or at least more stable).
This is a super-basic run-down of what to look for when establishing credit, and also says having savings is something that can help you look better to credit-card issuers.
On preview, re crinklebat's debit card weirdness: I've had B of A checking for 8 years now, have used my (Visa-branded) debit card all over the world to buy all sorts of things online and off, and never have I had a problem with any online or offline retailer not accepting it or the bank not recognizing it or anything like that. (And crinklebat: have a great trip!)
posted by mdonley at 7:52 PM on March 20, 2007
Any "serious" long-term purchases (cars, homes, tuition, etc) can be financed in other ways, and small everyday purchases also don't require credit. I just don't see the need to establish credit at the beginning of college than at the end, when you start working "a real job" full-time or something and your income is higher (or at least more stable).
This is a super-basic run-down of what to look for when establishing credit, and also says having savings is something that can help you look better to credit-card issuers.
On preview, re crinklebat's debit card weirdness: I've had B of A checking for 8 years now, have used my (Visa-branded) debit card all over the world to buy all sorts of things online and off, and never have I had a problem with any online or offline retailer not accepting it or the bank not recognizing it or anything like that. (And crinklebat: have a great trip!)
posted by mdonley at 7:52 PM on March 20, 2007
Do you really need a credit card?
Do you ever want to get credit, say for buying a car or home?
posted by caddis at 7:53 PM on March 20, 2007
Do you ever want to get credit, say for buying a car or home?
posted by caddis at 7:53 PM on March 20, 2007
I'm going to go against the grain here and suggest, as mdonley did, to seriously reconsider why it is you need a credit card, and for that matter, a credit score.
If you buy cars with cash (which you can do, naysayers aside...buy good, used, 3 year old cars and you can easily do it with cash), there's very little real need for a credit score. You can get a mortgage without a credit score...not all lenders use the FICO as the end-all-be-all of your financial life. If you have, you know...an income, and savings, and a good record of paying your rent, you can get a manually underwritten mortage.
The credit score is just a shortcut that lenders use to determine your likelihood of default. If you don't use credit (don't borrow money) you don't need a credit score. There's a goal for ya...
posted by griffey at 8:00 PM on March 20, 2007 [2 favorites]
If you buy cars with cash (which you can do, naysayers aside...buy good, used, 3 year old cars and you can easily do it with cash), there's very little real need for a credit score. You can get a mortgage without a credit score...not all lenders use the FICO as the end-all-be-all of your financial life. If you have, you know...an income, and savings, and a good record of paying your rent, you can get a manually underwritten mortage.
The credit score is just a shortcut that lenders use to determine your likelihood of default. If you don't use credit (don't borrow money) you don't need a credit score. There's a goal for ya...
posted by griffey at 8:00 PM on March 20, 2007 [2 favorites]
Gah...
Do you really need a credit card *right now?*
Sorry.
posted by mdonley at 8:00 PM on March 20, 2007
Do you really need a credit card *right now?*
Sorry.
posted by mdonley at 8:00 PM on March 20, 2007
If you buy cars with cash
This is not an option for most people, and buying a home with case? Come on. How many people are going to be able to save up $300,000 cash before they buy the first one? Get real. Get credit. Use it responsibly.
posted by caddis at 8:10 PM on March 20, 2007
This is not an option for most people, and buying a home with case? Come on. How many people are going to be able to save up $300,000 cash before they buy the first one? Get real. Get credit. Use it responsibly.
posted by caddis at 8:10 PM on March 20, 2007
I was in your position four years ago. I got a Visa with my bank with no annual fee. If I were you, I'd get a Visa or a Mastercard, since they're most widely accepted, and I'd try to get it with my bank because that can make paying the bill easier. I used my card, and continue to use it, for everything. Four years later, I have an excellent credit score because of this, and I have an easy way to track my spending, since everything I buy shows up on my bill. I pay the balance every month so it doesn't cost me anything. In fact, it saves me money because, unlike with debit transactions, Visa doesn't charge the cardholder for each transaction. If you're responsible, which you say you are, you'll find that a credit card comes in handy, particularly when you want to shop online. The only way a credit card gets you in trouble is if you're not responsible. Ignore the people who assume you're in this group.
posted by smorange at 8:14 PM on March 20, 2007
posted by smorange at 8:14 PM on March 20, 2007
Speaking as somebody in graduate school at the moment (read: somebody with a substantial sum of private student loans), I'd say it's important to start building up your credit score now if you think that's a possibility.
Why? Well, higher credit score translates to lower rates on many loans--including private education loans. A higher credit score also helps if you buy a car, a house, etc, and need to borrow.
I started in pretty much the same position as you (first card as a freshman in college) and built up enough of a history to knock a few points off my interest rate on my current debt.
If you get your gas regularly from Shell, I'll speak for experience and say my Shell MasterCard (my first credit card, actually) has served me well. 5% back on all Shell purchases, 1% on all others, so you get some free gas out of the deal. Online bill payment and statements if you want, etc. Pretty standard, and no annual fee if you make like 6 Shell purchases a year.
Honestly, if you're already using a check/debit card, I'd advise having a credit card just for fraud protection, etc. I could relate the "my buddy lost his wallet and got his checking account cleaned out from his check card" stories, but...well, you've heard 'em too.
A few general pointers:
DO:
Best of luck.
posted by theoddball at 8:21 PM on March 20, 2007 [1 favorite]
Why? Well, higher credit score translates to lower rates on many loans--including private education loans. A higher credit score also helps if you buy a car, a house, etc, and need to borrow.
I started in pretty much the same position as you (first card as a freshman in college) and built up enough of a history to knock a few points off my interest rate on my current debt.
If you get your gas regularly from Shell, I'll speak for experience and say my Shell MasterCard (my first credit card, actually) has served me well. 5% back on all Shell purchases, 1% on all others, so you get some free gas out of the deal. Online bill payment and statements if you want, etc. Pretty standard, and no annual fee if you make like 6 Shell purchases a year.
Honestly, if you're already using a check/debit card, I'd advise having a credit card just for fraud protection, etc. I could relate the "my buddy lost his wallet and got his checking account cleaned out from his check card" stories, but...well, you've heard 'em too.
A few general pointers:
DO:
- Limit yourself to one card.
- Make your payments EVERY month, at least the minimum.
- Keep a zero or very low balance. Technically, your credit score improves more if you carry a low balance and pay it every time than if you carry a zero balance, but I never wanted to have anything hanging around racking up interest.
- Look for low APRs where you can, and definitely avoid annual fees.
- Use the shotgun approach and apply for a ton of cards at once. Every time you apply for a new credit card, it dings your credit score, whether or not it's issued. A bunch of applications for new lines of credit is a red flag to anybody who runs your report. Applying for store credit cards has the same effect.
- Carry large balances. Having only a small percentage of "available" credit is bad for your score also.
- Get a card from ANY on-campus promotion that gives you a free t-shirt, etc. As a general rule, these offer the same cards you'd get from other sources...plus an extra 3-5% APR. Many college students are fools about credit, and their parents often bail them out. Lenders know this and take advantage...
- ...so on a related note, if you list household income on the app, list only yours, or under-report your parents', if you're worried about having a high credit limit.
Best of luck.
posted by theoddball at 8:21 PM on March 20, 2007 [1 favorite]
Definitely get something that works well with online banking and doesn't have an annual fee. If you are worried at all about abusing it, go with something like crincklebat described. I got my first credit card at your age through BoA, since I was banking with them otherwise. It was a normal Visa with a $1000 limit, since I was financially tied to my parents, but that limit has gone steadily (and rather frighteningly) upward without ever keeping a balance on it. It has no perks, but the transparency of the online banking was more than worth it until I had to switch banks. Other cards will still have easy online payment, though, so if there is something that looks good to you, go for it.
As for why, I mostly used it for online purchases. I've never felt entirely comfortable with online purchases that come directly out of my bank account. There are other features you can use with some credit cards, like one-time-use card numbers, for even better security.
One caveat, if you ever do keep a balance. It's calculated as a daily average, so if you have 100 dollars on it for 29 days and pay off all but 10 dollars of it the day before it's due, the balance on which you get charged interest is still $97.
On preview: lots of good advice right above.
posted by Schismatic at 8:36 PM on March 20, 2007
As for why, I mostly used it for online purchases. I've never felt entirely comfortable with online purchases that come directly out of my bank account. There are other features you can use with some credit cards, like one-time-use card numbers, for even better security.
One caveat, if you ever do keep a balance. It's calculated as a daily average, so if you have 100 dollars on it for 29 days and pay off all but 10 dollars of it the day before it's due, the balance on which you get charged interest is still $97.
On preview: lots of good advice right above.
posted by Schismatic at 8:36 PM on March 20, 2007
I think you should ignore those who say OMG!!!@% DON'T GET A CREDIT CARD!!)*!%! THEY ARE IN THE AXIS OF EVIL AND WILL RUIN YOUR LIFE FOREVORZ. To successfully use a credit card you must possess financial self control and a budget. Since you have managed to keep your finances in good order for 5 years, you will be fine. There is nothing evil about credit. I've never paid a penny in interest to a credit card company, but I've reaped about $500 in rewards since getting my first card (not to mention excellent credit). If you intend to do the same, then your focus needs to be on finding a card with rewards that fit your purchases while paying no annual fees. This website is useful for comparing many different options for college students.
I never liked the Bank of America student card because (as far as I know) it still offers no rewards. I also don't see the huge benefit of having the credit card with the bank - if you just get your statements e-mailed to you, it's all on your computer regardless.
Personally, I have used Discover for about 6 years now and I absolutely love it. No fee, 1% cash back on all purchases, and 5% cash back on an ever-changing "special" (right now its 5% on travel expenses). You can cash in the rewards for between face value or double value depending on if you exchange them for merchant gift cards. The only problem is that some places don't accept it - usually non-chain restaurants and shops (same problem with American Express), so you might want to focus on Visa or Mastercard options.
Avoid airline miles credit cards - too many black out dates, there is usually an annual fee, and the straight 1% reward offered by the rest is less bureaucratic to deal with as far as cashing out.
On preview, listen to theoddball, too!
posted by gatorae at 8:38 PM on March 20, 2007
I never liked the Bank of America student card because (as far as I know) it still offers no rewards. I also don't see the huge benefit of having the credit card with the bank - if you just get your statements e-mailed to you, it's all on your computer regardless.
Personally, I have used Discover for about 6 years now and I absolutely love it. No fee, 1% cash back on all purchases, and 5% cash back on an ever-changing "special" (right now its 5% on travel expenses). You can cash in the rewards for between face value or double value depending on if you exchange them for merchant gift cards. The only problem is that some places don't accept it - usually non-chain restaurants and shops (same problem with American Express), so you might want to focus on Visa or Mastercard options.
Avoid airline miles credit cards - too many black out dates, there is usually an annual fee, and the straight 1% reward offered by the rest is less bureaucratic to deal with as far as cashing out.
On preview, listen to theoddball, too!
posted by gatorae at 8:38 PM on March 20, 2007
I'd definitely agree with those who said no annual rate.
When I got my first credit card, I had very few choices. The one I chose let me choose a design for the card. I chose the Starry Nights pattern and I still (6 years later) get comments from clerks when I use it. If you've ever wanted an excuse to strike up a conversation with clerks, this could be a good opportunity.
posted by chndrcks at 8:48 PM on March 20, 2007
When I got my first credit card, I had very few choices. The one I chose let me choose a design for the card. I chose the Starry Nights pattern and I still (6 years later) get comments from clerks when I use it. If you've ever wanted an excuse to strike up a conversation with clerks, this could be a good opportunity.
posted by chndrcks at 8:48 PM on March 20, 2007
I was in your exact situation 2 years ago, and while I can't comment on the long-term success of my approach, I'll say it's worked pretty damn well so far.
For me, the most important reason for getting a credit card was to be able to make online purchases. I've got a great Citi Dividends Mastercard that started, I think, with a limit of $500 and has since gone up to $1200. The limit doesn't really affect me in any way, really, since I only ever spend about $200/month, but since rising it's come in very handy (as in, I bought a plane ticket using it). It seems that if you get a credit card at age 18, you just cannot get a good APR, though I didn't shop around for very long.
The card also gives me 1% back on everything and 5% back on all gas, grocery store, and convenience store purchase, which is actually meaningful. You don't get any cash back until you've amassed $50, but I've done it twice in the past 2 years.
As for paying the bill: I have Bank of America but was able to set everything up to occur online. Citicards.com sends my BoA account a bill (usually a few days after I get an email from citicards telling me I have a new bill), and I log in to BoA and tell it to send the balance so it arrives on the due date. You can even set it up to be paid automatically, but that's a little frightening to me.
I carry my card most of the time, and I've found that the more I use it, the better sense I have of my financial situation. Getting bills that tell you exactly when and where you spent $$ is really great if you don't keep good track of your spending habits. I pay the entire balance every month, from savings and working on campus, and although that might not be building the highest credit possible, I'd rather not carry debt on something that definitely has higher interest rates than most other options.
posted by the_arbiter at 8:51 PM on March 20, 2007
For me, the most important reason for getting a credit card was to be able to make online purchases. I've got a great Citi Dividends Mastercard that started, I think, with a limit of $500 and has since gone up to $1200. The limit doesn't really affect me in any way, really, since I only ever spend about $200/month, but since rising it's come in very handy (as in, I bought a plane ticket using it). It seems that if you get a credit card at age 18, you just cannot get a good APR, though I didn't shop around for very long.
The card also gives me 1% back on everything and 5% back on all gas, grocery store, and convenience store purchase, which is actually meaningful. You don't get any cash back until you've amassed $50, but I've done it twice in the past 2 years.
As for paying the bill: I have Bank of America but was able to set everything up to occur online. Citicards.com sends my BoA account a bill (usually a few days after I get an email from citicards telling me I have a new bill), and I log in to BoA and tell it to send the balance so it arrives on the due date. You can even set it up to be paid automatically, but that's a little frightening to me.
I carry my card most of the time, and I've found that the more I use it, the better sense I have of my financial situation. Getting bills that tell you exactly when and where you spent $$ is really great if you don't keep good track of your spending habits. I pay the entire balance every month, from savings and working on campus, and although that might not be building the highest credit possible, I'd rather not carry debt on something that definitely has higher interest rates than most other options.
posted by the_arbiter at 8:51 PM on March 20, 2007
Airline miles credit cards are great for the sign-up bonuses. They typically amount to an entire free trip for whatever the card's annual fee is. US Airways has two banks that offer affiliate credit cards (my parents live in Charlotte, NC so I fly US Airways regularly). By opening cards with both banks, I got enough miles for two trips for one $90 annual fee. (The fee on the second credit card was waived for the first year.) But then you do have to close the accounts -- the actual rewards you earn through spending are, as gatorae points out, not that great.
Chase and Citi currently have the best rewards cards (3% on common household items). Chase has a great Web site; you can schedule your minimum payment to be made automatically so you never have to worry about missing a payment. (You should pay more, but setting that up will make sure you never get dinged with a late charge. Paying a bit of extra interest if you forget a payment is far cheaper than a $40 charge and a negative report on your credit file.) Citi's may be similar -- I've not used them lately.
posted by kindall at 9:05 PM on March 20, 2007
Chase and Citi currently have the best rewards cards (3% on common household items). Chase has a great Web site; you can schedule your minimum payment to be made automatically so you never have to worry about missing a payment. (You should pay more, but setting that up will make sure you never get dinged with a late charge. Paying a bit of extra interest if you forget a payment is far cheaper than a $40 charge and a negative report on your credit file.) Citi's may be similar -- I've not used them lately.
posted by kindall at 9:05 PM on March 20, 2007
Against the call of 'needz rewardz': how much are you planning on spending on the card?
I have a Wells Fargo credit card and account and they charge for their rewards program. The rewards haven't been enough to cause me to spend more money... for something that I don't use enough to make it worth it.
What I will say is that building that credit is key. You're a college student, you can learn online banking and remember to check on it every two weeks or so..
Plus, use that 'free credit report' to make sure that the man thinks you're doing alright as well.
Then when it comes time to find a 'real' credit card, that credit will make it possible to get the card you want. This amazing card used to be Alaska, because the air miles were great, but flights now cost a lot more in airmiles.
posted by lilithim at 9:32 PM on March 20, 2007
I have a Wells Fargo credit card and account and they charge for their rewards program. The rewards haven't been enough to cause me to spend more money... for something that I don't use enough to make it worth it.
What I will say is that building that credit is key. You're a college student, you can learn online banking and remember to check on it every two weeks or so..
Plus, use that 'free credit report' to make sure that the man thinks you're doing alright as well.
Then when it comes time to find a 'real' credit card, that credit will make it possible to get the card you want. This amazing card used to be Alaska, because the air miles were great, but flights now cost a lot more in airmiles.
posted by lilithim at 9:32 PM on March 20, 2007
Pick a card with a well-known brand. You don't have to, but the big names (Visa, Mastercard, American Express, etc.) tend to be accepted at more merchants. Most big merchants accept pretty much any brand, but you do come across the occasional "Visa only" store.
If you're sure you can be financially responsible, by all means a credit card is a good thing. Sure, people say "DON'T USE THEM! ZOMG SINKHOLE." Credit cards can be sinkholes, but they can also be useful.
I'm a college student too, and there's been times where I've needed some items that I didn't have all the money for at the time. For example, the shocking total price of textbooks, even when bought used online. I had half of the amount necessary, and the other half coming in the following month. Used my credit card to buy the books, paid the half I could afford to my credit card company... and the following month, paid for the rest of it. As long as you only use your credit card for things you know you can eventually pay off, you should be okay. There is a fine line between buying things you can pay off eventualy, and buying things you *might* be able to pay off eventually. College students have all sorts of expenses flooding in - food, entertainment, etc., it's hard to keep track of costs.
[number-crunching ahead]
I never really cared for the 1% or 3% cash rebate thing going on. Woo-hoo, I get a $1 rebate for every $100 I spend. Dollar menu time!
For 3%: Assuming I spend $600 a month, that's $18 in rebates a month, or $96 a year out of $3200. $96 is a nice amount of money, but it's not much out of $3200. But then again, that's just me. But I suppose it is a nice plus in comparison to not getting any rebate at all. If you get a nice percentage (5% at Shell, above, sounds nice. But do your calculations and consider if it's worth it for you.)
I do carry balances on my credit cards. Some things can't be paid off in 30 days or less. Personally, I make it a rule to pay off my credit card balance before using it again (or if I have to use it, I use it sparingly). While paying off that cursed amount, I go back to my debit card.
At this point, with no credit history whatsoever, your best bet is probably a student credit card. You're pretty much guaranteed that card. The rate won't be that great, though - somewhere in the teens. In my case, I had 2 years worth of student loans on my credit file when I was approved for a (somewhat) regular, nonstudent 7% rate card. The only things I had on my credit file were two years of unsubsidized Stafford loans, and a year of a federal Perkins loan. Then there's the debit card too, but I doubt that counts in the credit score? Since I'm still in school and not defaulting on them (because I don't have to pay them yet!), they're listed as being in good standing, and had my credit score in the mid-700s. Which, I'm told, is a very good score.
Also - it's nice to have your photo on your credit card, although not necessary. Citibank offers this option (mail in your photo), and I believe Bank of America does, too, as do other places. It's just convenient to have, instead of having to whip out your drivers license/ID card every time. You won't have to worry about having the last-minute discovery that you forgot your photo ID at home, and the store won't take your credit card without the photo ID. And speaking as a former cashier, it's surprising, the number of people who have their credit card ready to go and think they won't have to do any wallet-diving, but forget the ID and have to fish around for it. Again, credit card photo is not necessary, but it still is a big plus.
Alright, I've rambled long enough. But for the first time, I've finally said everything I've ever wanted to say about credit cards.
posted by Xere at 9:50 PM on March 20, 2007
If you're sure you can be financially responsible, by all means a credit card is a good thing. Sure, people say "DON'T USE THEM! ZOMG SINKHOLE." Credit cards can be sinkholes, but they can also be useful.
I'm a college student too, and there's been times where I've needed some items that I didn't have all the money for at the time. For example, the shocking total price of textbooks, even when bought used online. I had half of the amount necessary, and the other half coming in the following month. Used my credit card to buy the books, paid the half I could afford to my credit card company... and the following month, paid for the rest of it. As long as you only use your credit card for things you know you can eventually pay off, you should be okay. There is a fine line between buying things you can pay off eventualy, and buying things you *might* be able to pay off eventually. College students have all sorts of expenses flooding in - food, entertainment, etc., it's hard to keep track of costs.
[number-crunching ahead]
I never really cared for the 1% or 3% cash rebate thing going on. Woo-hoo, I get a $1 rebate for every $100 I spend. Dollar menu time!
For 3%: Assuming I spend $600 a month, that's $18 in rebates a month, or $96 a year out of $3200. $96 is a nice amount of money, but it's not much out of $3200. But then again, that's just me. But I suppose it is a nice plus in comparison to not getting any rebate at all. If you get a nice percentage (5% at Shell, above, sounds nice. But do your calculations and consider if it's worth it for you.)
I do carry balances on my credit cards. Some things can't be paid off in 30 days or less. Personally, I make it a rule to pay off my credit card balance before using it again (or if I have to use it, I use it sparingly). While paying off that cursed amount, I go back to my debit card.
At this point, with no credit history whatsoever, your best bet is probably a student credit card. You're pretty much guaranteed that card. The rate won't be that great, though - somewhere in the teens. In my case, I had 2 years worth of student loans on my credit file when I was approved for a (somewhat) regular, nonstudent 7% rate card. The only things I had on my credit file were two years of unsubsidized Stafford loans, and a year of a federal Perkins loan. Then there's the debit card too, but I doubt that counts in the credit score? Since I'm still in school and not defaulting on them (because I don't have to pay them yet!), they're listed as being in good standing, and had my credit score in the mid-700s. Which, I'm told, is a very good score.
Also - it's nice to have your photo on your credit card, although not necessary. Citibank offers this option (mail in your photo), and I believe Bank of America does, too, as do other places. It's just convenient to have, instead of having to whip out your drivers license/ID card every time. You won't have to worry about having the last-minute discovery that you forgot your photo ID at home, and the store won't take your credit card without the photo ID. And speaking as a former cashier, it's surprising, the number of people who have their credit card ready to go and think they won't have to do any wallet-diving, but forget the ID and have to fish around for it. Again, credit card photo is not necessary, but it still is a big plus.
Alright, I've rambled long enough. But for the first time, I've finally said everything I've ever wanted to say about credit cards.
posted by Xere at 9:50 PM on March 20, 2007
When I was 18 and had been working for four years AND had $10k in my bank account, I was denied a student credit card. The bank told me they only gave them to students with student loans, not to students with jobs or savings. (How many 18-yearolds have saved every penny they've ever earned, except for that spent on tuition? Character meant nothing.) I agitated and the bank decided to give me a secured card that was about enough to cover my books for the semester. I've always had stellar credit.
In comparison, the same bank handed out big credit limits to my friends who had student loans. They all defaulted on their loans, went on welfare and, in one case, declared bankruptcy.
So, if you don't have loans, be aware that the bank may not give you a card.
posted by acoutu at 11:05 PM on March 20, 2007
In comparison, the same bank handed out big credit limits to my friends who had student loans. They all defaulted on their loans, went on welfare and, in one case, declared bankruptcy.
So, if you don't have loans, be aware that the bank may not give you a card.
posted by acoutu at 11:05 PM on March 20, 2007
Current college student here. I have three credit cards, though I mainly just use one. Personally I am fiscally responsible (as far as not spending more money than is actually in my name) and I pay off the balance each month. If you do plan on using the card, that's what you will want to do. If you think having the card may entice you to spendspendspend, then think about getting a card and just cutting it up and never using it.
I've been very happy with my Blue Student Card from American Express. I've had great experiences using their extended warranty (they reimbursed me $600 for a laptop repair) and getting charges reversed. Their rewards program is free, though I wouldn't get the card just for that program. I also carry a Citi Dividend, which gives cash back on purchases.
Whatever you do, remember that the credit card does not give you carte blanche to spend frivolously.
posted by roomwithaview at 12:14 AM on March 21, 2007
I've been very happy with my Blue Student Card from American Express. I've had great experiences using their extended warranty (they reimbursed me $600 for a laptop repair) and getting charges reversed. Their rewards program is free, though I wouldn't get the card just for that program. I also carry a Citi Dividend, which gives cash back on purchases.
Whatever you do, remember that the credit card does not give you carte blanche to spend frivolously.
posted by roomwithaview at 12:14 AM on March 21, 2007
acoutu, I also didn't have loans and BofA gave me a student credit card. Apparently, OP, YMMV.
posted by crinklebat at 2:21 AM on March 21, 2007
posted by crinklebat at 2:21 AM on March 21, 2007
Join a credit union and get your card through them. In my area, the credit unions offer much better rates than any of the big national cards.
posted by Thorzdad at 4:48 AM on March 21, 2007
posted by Thorzdad at 4:48 AM on March 21, 2007
If you are stuck getting a secured card, there are two things to look for.
1) Will on-time payments and such show up on your credit report? Some companies don't report anything for their secured cards, since you're not really borrowing anything — they're "lending" you back cash that you gave them as collateral.
2) Will a year or so of on-time payments qualify you for a real credit card from the same company?
If it's "yes" on both, then a secured card is worth considering. Otherwise, it's a waste of your time.
posted by nebulawindphone at 5:17 AM on March 21, 2007
1) Will on-time payments and such show up on your credit report? Some companies don't report anything for their secured cards, since you're not really borrowing anything — they're "lending" you back cash that you gave them as collateral.
2) Will a year or so of on-time payments qualify you for a real credit card from the same company?
If it's "yes" on both, then a secured card is worth considering. Otherwise, it's a waste of your time.
posted by nebulawindphone at 5:17 AM on March 21, 2007
I shall promptly ignore everyone else's comments about rates et. al. since that doesn't seem to be your interest at all. And I know from experience that there are things that having a(n existing) credit rating are useful for. Like, say, being able to get utilities and leases without pain and suffering, or cell phone contracts.
I know a lot of people I interact with have the Chase Amazon visa card. If you're a person who uses Amazon a lot, it seems to work in your favor--getting random $25 gift certificates as you reach the appropriate level. Most cards don't have rewards at much better rates than 1 cent per dollar, so I think it depends on what you want. My parents depend on AmEx as their main credit cards--but they also don't tend to keep a balance--and they rack up rewards quite remarkably.
Having a history of a good balance at BoA might help you get a card with them--even if you don't have credit, they'll be more likely to try you out, since you have a history with them and they can see that you keep a positive balance and seem financially responsible. They probably offer card rewards (it seems like everyone does). I would go to a bank branch, say to them, "Hi, I'm a college student with an account with BoA and I'm looking into getting a credit card--what can you offer me?" That's what those people sitting at desks are for.
My generic passed-on advice is to buy things with your credit card monthly, and don't go over half your credit limit. If you have a monthly bill you can have automatically charged to credit (I have my cell phone bill), it will keep your card active with minimum effort.
posted by that girl at 5:41 AM on March 21, 2007
I know a lot of people I interact with have the Chase Amazon visa card. If you're a person who uses Amazon a lot, it seems to work in your favor--getting random $25 gift certificates as you reach the appropriate level. Most cards don't have rewards at much better rates than 1 cent per dollar, so I think it depends on what you want. My parents depend on AmEx as their main credit cards--but they also don't tend to keep a balance--and they rack up rewards quite remarkably.
Having a history of a good balance at BoA might help you get a card with them--even if you don't have credit, they'll be more likely to try you out, since you have a history with them and they can see that you keep a positive balance and seem financially responsible. They probably offer card rewards (it seems like everyone does). I would go to a bank branch, say to them, "Hi, I'm a college student with an account with BoA and I'm looking into getting a credit card--what can you offer me?" That's what those people sitting at desks are for.
My generic passed-on advice is to buy things with your credit card monthly, and don't go over half your credit limit. If you have a monthly bill you can have automatically charged to credit (I have my cell phone bill), it will keep your card active with minimum effort.
posted by that girl at 5:41 AM on March 21, 2007
you get better credit by carrrying a balance, yet making all the payments, than by paying off the whole balance every month.
Technically, your credit score improves more if you carry a low balance and pay it every time than if you carry a zero balance
These statements are wholly false. Please do not heed this advice. Carrying a balance does absolutely nothing for your credit.
Do you really need a credit card? I wonder if you'd be better served with a normal savings account - you can sock away some money in there after every paycheck, you won't be deducting from the "real money" if you swipe your savings-account-only-linked debit card for a smoothie or movie tickets or a trip to Paris for spring break, you'll look responsible to future lenders, and you won't actually be able to incur any debt.
This isn't true, either. If you use only a debit card, you will look nonexistent to future lenders. Savings accounts are totally invisible to anyone who pulls your credit report.
the store won't take your credit card without the photo ID
If they take Visa or MasterCard, they have to take it without photo ID, unless it's obvious fraud. They can't ask for photo ID as a blanket policy.
posted by oaf at 6:27 AM on March 21, 2007
Technically, your credit score improves more if you carry a low balance and pay it every time than if you carry a zero balance
These statements are wholly false. Please do not heed this advice. Carrying a balance does absolutely nothing for your credit.
Do you really need a credit card? I wonder if you'd be better served with a normal savings account - you can sock away some money in there after every paycheck, you won't be deducting from the "real money" if you swipe your savings-account-only-linked debit card for a smoothie or movie tickets or a trip to Paris for spring break, you'll look responsible to future lenders, and you won't actually be able to incur any debt.
This isn't true, either. If you use only a debit card, you will look nonexistent to future lenders. Savings accounts are totally invisible to anyone who pulls your credit report.
the store won't take your credit card without the photo ID
If they take Visa or MasterCard, they have to take it without photo ID, unless it's obvious fraud. They can't ask for photo ID as a blanket policy.
posted by oaf at 6:27 AM on March 21, 2007
Agree with Thorzad: get ye to a credit union. Your college probably has one for students/employees. Take advantage.
posted by dpx.mfx at 6:34 AM on March 21, 2007
posted by dpx.mfx at 6:34 AM on March 21, 2007
All you need a no annual fees, and a low interest rate. Even the later is not that important, because you should make it a point to not carry a balance.
posted by chunking express at 6:59 AM on March 21, 2007
posted by chunking express at 6:59 AM on March 21, 2007
I'm with chunking express. You sound like you have a good grip on your finances, and that you will pay off the balance every month, so I agree that you need the following in a card:
- No Annual Fee
- Visa or Mastercard, so it's accepted at a wide range of locations
- Low credit limit; this can also be helpful in case of identity theft
That's about it. If you're going to pay it off on time every month, and some college students really truly do, then the interest rate doesn't matter so much.
This is something you don't see much in AskMe credit-card-advice-filter:
Have fun choosing a card! Get a Shell card, to earn money towards gas! or a Bank of America card so you can pay it off from your BoA account online*! or whatever, a Gund card so you get points towards a teddy bear**!
Just remember that if you ever EVER start carrying a balance, you'll have to get a for-realsies credit card, based on practical things like APR, etc.
*I don't have BoA, but I assume you can do this, I do it with my USAA accounts.
** I don't know if that exists.
posted by Sprout the Vulgarian at 7:12 AM on March 21, 2007
- No Annual Fee
- Visa or Mastercard, so it's accepted at a wide range of locations
- Low credit limit; this can also be helpful in case of identity theft
That's about it. If you're going to pay it off on time every month, and some college students really truly do, then the interest rate doesn't matter so much.
This is something you don't see much in AskMe credit-card-advice-filter:
Have fun choosing a card! Get a Shell card, to earn money towards gas! or a Bank of America card so you can pay it off from your BoA account online*! or whatever, a Gund card so you get points towards a teddy bear**!
Just remember that if you ever EVER start carrying a balance, you'll have to get a for-realsies credit card, based on practical things like APR, etc.
*I don't have BoA, but I assume you can do this, I do it with my USAA accounts.
** I don't know if that exists.
posted by Sprout the Vulgarian at 7:12 AM on March 21, 2007
If your family is military, look at USAA, or one of the military credit unions. They tend to have very friendly terms.
Really, the important thing is you want to make sure you get a lender who doesn't have abusive practices (e.g. mailing a bill 7 days prior to the due date, and having no grace period, etc.)
posted by Tacos Are Pretty Great at 7:47 AM on March 21, 2007
Really, the important thing is you want to make sure you get a lender who doesn't have abusive practices (e.g. mailing a bill 7 days prior to the due date, and having no grace period, etc.)
posted by Tacos Are Pretty Great at 7:47 AM on March 21, 2007
Sprout: A Gund rewards card sounds hilariously wonderful.
posted by that girl at 8:12 AM on March 21, 2007
posted by that girl at 8:12 AM on March 21, 2007
I wouldn't get one at 18 (independent for 5 years, where'd you work when you were 13?). Just pay cash, use your debit card or write a check. Someone will always give you credit.
Your small purchases will not be enough to build up rewards. Especially if you have to pay a fee to qualify for the rewards. Or have to spend a bundle to get the rewards.
There is not much of an advantage of having decent credit unless you plan on getting a little better of a deal on a lease for a car. They won't give you a loan to buy property anyway until you have a job or that trust fund kicks in.
Instead of making small purchases to build credit, why not build a high risk portfolio? Your young enough where it doen't matter.
Get a card when you about to graduate. Seriously, ask people how much credit card debt they had before they graduated. And how if they thought they were financialy responsible enough to handle it.
posted by thetenthstory at 8:42 AM on March 21, 2007
Your small purchases will not be enough to build up rewards. Especially if you have to pay a fee to qualify for the rewards. Or have to spend a bundle to get the rewards.
There is not much of an advantage of having decent credit unless you plan on getting a little better of a deal on a lease for a car. They won't give you a loan to buy property anyway until you have a job or that trust fund kicks in.
Instead of making small purchases to build credit, why not build a high risk portfolio? Your young enough where it doen't matter.
Get a card when you about to graduate. Seriously, ask people how much credit card debt they had before they graduated. And how if they thought they were financialy responsible enough to handle it.
posted by thetenthstory at 8:42 AM on March 21, 2007
If you want to rent an apartment when you graduate (or before), especially in a major city, you will need good credit. Even if you have a cosigner on your lease, you will need good credit. If you plan to rent an apartment any time soon, don't listen to the people saying you don't need to build your credit yet. Better to do so early, with purchases you're going to make anyway, than to realize later that you don't have enough credit to do something you want to do.
You sound cautious and responsible, so just pick something with a good APR and pay it off on time every month. The Shell gas card sounds like a pretty good bet for you. If you do any traveling, especially overseas, I highly recommend American Express. I once developed a major dental problem in the Czech Republic, and they were much more helpful in finding me care and getting me home than the American Embassy was. You can get an AmEx student card with no annual fee, and they gave me one when I had no existing credit.
posted by decathecting at 9:16 AM on March 21, 2007
You sound cautious and responsible, so just pick something with a good APR and pay it off on time every month. The Shell gas card sounds like a pretty good bet for you. If you do any traveling, especially overseas, I highly recommend American Express. I once developed a major dental problem in the Czech Republic, and they were much more helpful in finding me care and getting me home than the American Embassy was. You can get an AmEx student card with no annual fee, and they gave me one when I had no existing credit.
posted by decathecting at 9:16 AM on March 21, 2007
I definitely say get a CC or two now for the simple reason of building credit. I've had one since the day I've turned 18. I'm now 24 looking for a motgage and have an awesome credit rating because I use my CCs AND pay them off monthly. They key is to treat the CC like a debit card- only put on it what you can spend. I had plenty of friends and family who rung up enormous debt through CCs. You have to ask yourself if you have the will to hold to a budget. It's not a, "I think so." It's either you can or can't; else, you'll be paying off 10k+ of debt while accumulating 20%+ each month. No bueno!
Anyways, I used the American Express for students when I turned 18 with a $500 limit at first. By the time I was 20, I had a Visa Platinum which started out around $4,500 with no annual fees. Partly because my college tuition was so low, I had enough credit to put everything on my CC. I didn't use my debit card during college except at ATMs. It is very possible to use CCs now and be a good spender.
A word about APR: The issue with getting a good APR is it assumes you won't be paying off your bill monthly. If this is a issue, I would suggest not getting one because it become increasingly difficult in college to pay of a CC debt because you can only work so many hours for so much money. Earning enough money to pay off interest, regardless of rates, can be quite a bear.
IF you know you'll pay monthly, I would go for a no annual-fee card with cash-back rewards. They do exist, though I haven't done my homework in over a year so I don't have many suggestions for specific brands.
posted by jmd82 at 9:33 AM on March 21, 2007
Anyways, I used the American Express for students when I turned 18 with a $500 limit at first. By the time I was 20, I had a Visa Platinum which started out around $4,500 with no annual fees. Partly because my college tuition was so low, I had enough credit to put everything on my CC. I didn't use my debit card during college except at ATMs. It is very possible to use CCs now and be a good spender.
A word about APR: The issue with getting a good APR is it assumes you won't be paying off your bill monthly. If this is a issue, I would suggest not getting one because it become increasingly difficult in college to pay of a CC debt because you can only work so many hours for so much money. Earning enough money to pay off interest, regardless of rates, can be quite a bear.
IF you know you'll pay monthly, I would go for a no annual-fee card with cash-back rewards. They do exist, though I haven't done my homework in over a year so I don't have many suggestions for specific brands.
posted by jmd82 at 9:33 AM on March 21, 2007
You know, the credit unions are pretty much the epitome of Big Brother these days, outside the NSA (and our phone companies, apparently). They watch everything we do and assign us numbers based on it. So why, when yes, it -is- possible to live life -not- based on your credit score, do we fall in line and support this rather oppressive system which capriciously denies us access to a home, car, utilities, etc.?
posted by po at 11:17 AM on March 21, 2007
posted by po at 11:17 AM on March 21, 2007
You mean credit reporting agencies, I think.
Credit unions are a good thing, generally.
posted by kindall at 2:35 PM on March 21, 2007
Credit unions are a good thing, generally.
posted by kindall at 2:35 PM on March 21, 2007
Also, I should point out that without credit reporting agencies, a lot of people wouldn't be able to get credit at all because they would be considered too risky. "Denied access" to a car? How about having to pay cash for it because you can't get a loan -- how's that for denial? Nobody has to lend you their money.
posted by kindall at 2:37 PM on March 21, 2007
posted by kindall at 2:37 PM on March 21, 2007
er, right. Credit reporting agencies/bureaus. *embarassed now*
posted by po at 7:00 PM on March 22, 2007
posted by po at 7:00 PM on March 22, 2007
This thread is closed to new comments.
posted by SeizeTheDay at 7:26 PM on March 20, 2007