Ok be afraid

[GSLeloo]

I... just got my very first credit card! You can all cower now.

[Sean of the Thread]

I hate credit cards.

[Tsa`ah]

Word to the wise ... don't use it.

Well, keep a sub $100 balance on it and pay no less than 20% and no more than 50% above the minimum payment. When your balance drops below $10, make another modest sub $100 dollar purchase.

This will give you a good credit rating and make you eligible for line of credit increases.

Never max the card; never use it unless you have to.

[GSLeloo]

Well I think the only time I'll need to use it is like now to pay for the e-bay ornaments since paypal sucks ass. I don't actually shop THAT much and I ALWAYS pay in cash so I don't fear ir.

[Tsa`ah]

E-bay ... if they don't accept a cashier’s check, I don't bother.

I only use the credit cards with established businesses.

[radamanthys]

I like my debit card. Used wherever Visa is, and it's direct to my checking account, which at this point is doing rather well, seeing how rent is only 275 a month, and I have few other expenses. Even pay for GS offa that thing, it's great.

[IntegraC]

Where is NY is rent 275.00 a month.

[Alarke]

Uhh.. my rent in Chicago will be about 600 dollars.. you suck!

Debit cards rock. If I don't have the cash, I hate buying things. Credit cards are only good for getting good credit.

- Arkans

[GSLeloo]

Well that's the whole reason I got one, to get credit.

[peam]

Originally posted by Arkans
Debit cards rock. If I don't have the cash, I hate buying things. Credit cards are only good for getting good credit.

- Arkans

Or creating bad credit. :D

[Shalla]

Just use your credit card for emergencies. Don't rely on them for all expenses, especially anything unecessary.

[radamanthys]

Upstate, student living. It's cheap and nice. We have a huge house that was once zones apartments. 15 guys, each with our own (pretty damned big) rooms, 4 kitchens, 4.5 baths. In great condition. Utilities <u>included</u>. It's a GREAT deal.

[imported_Kranar]

<< Well, keep a sub $100 balance on it and pay no less than 20% and no more than 50% above the minimum payment. When your balance drops below $10, make another modest sub $100 dollar purchase. >>

The best way to get a credit increase is to make use of it for as many purchases as possible, but to pay it off in full.

The credit card company makes more money off of you the more you use your card, and if you're a low risk borrower, then your limit is likely to increase so as to make the company even more money.

[GSLeloo]

Yeah they said if I'm good for three months they'll raise me to a 500 balance! Woohooo!

[Tsa`ah]

That really depends on the type of credit line and interest Kranar.

If you make a purchase and pay it in full, they get a one shot interest hit in.

If you maintain a lower balance and pay "better than agreed" hence the no less than 20, nor more than 50 above minimum, they make out better due to accrued interest, you make out just as well because you're paying off principle while maintaining a low risk status.

[Latrinsorm]

Originally posted by Tsa`ah
you make out just as well because you're paying off principle while maintaining a low risk status. But you have to pay more, because you're taking longer to pay it off, don't you? I don't get credit cards, maybe because papa raised a stingy/thrifty house.

[GSLeloo]

My parents never use credit cards except like my mom would use the sears card at sears and then pay it off at the store. They needed it to build credit but their belief is if you don't have the money you don't need it.

[Divinity]

Actually, making a lot of purchases all at once and paying it off in full will lower your beacon rating.

What you want to do is keep a small balance on there, depending on your limit. The ideal you want to keep on there is 30%. This way, you keep a balance on there but you are not maxing it out and/or paying it all off. It shows that you can pay your bills and keep enough interest on your card to where other companies would want to do business with you.

Paying it all off, not using it or maxing it out will hinder you. It will not raise your beacon score at all. Also, make sure you keep just one credit card. Multiple credit cards with no balances or maxed out balances will also hinder your beacon score.



Originally posted by Kranar
<< Well, keep a sub $100 balance on it and pay no less than 20% and no more than 50% above the minimum payment. When your balance drops below $10, make another modest sub $100 dollar purchase. >>

The best way to get a credit increase is to make use of it for as many purchases as possible, but to pay it off in full.

The credit card company makes more money off of you the more you use your card, and if you're a low risk borrower, then your limit is likely to increase so as to make the company even more money.

[Divinity]

Make purchases that you know you could pay off with cash. Keep that cash in your savings and keep it for your bill. That way you know you have the money to pay it off and you won't ruin your credit rating.

You want your beacon score to be 600+. The highest you can get is 850, which is near impossible. If you can get it to 600 or more, you can pretty much be approved for anything.

Also, if you're going to be getting your rate limit increased, don't let it go past 1k. You can have them keep it at 1k once you get there. That way you can maintain your 30% balance of the limit of your card and you won't be paying a lot to keep it that way. Also, it helps your credit rating as well.


Originally posted by GSLeloo
My parents never use credit cards except like my mom would use the sears card at sears and then pay it off at the store. They needed it to build credit but their belief is if you don't have the money you don't need it.

[Tsa`ah]

Originally posted by Latrinsorm
But you have to pay more, because you're taking longer to pay it off, don't you? I don't get credit cards, maybe because papa raised a stingy/thrifty house.

Let's do some math then.

Say you have 500 dollar limit. Let's not assume service charges or anything else, just interest. Let's say interest is rather high, 21%.

You max your card out the day you receive your card, no matter what ... you will pay 21% interest on the 500 dollars at the very least.

So your first statement comes and you have a balance of 605. 500 for the credit you used, 105 for the interest.

You pay that off and max the card again.

So on month 2 you have once again paid 500 dollars for the amount borrowed, and 105 in interest.

We're at 210 bucks in interest.

Let's say you decide that spending $1210 in two months is a bit much and you lay off for a few months. Maybe charge a cd here, a pair of jeans there, each time paying the balance off in full.

Let's assume 3 months later you have, aside from the $1210, charged and paid off $200 bucks in credit and paid another 42 bucks in interest.

So in 5-6 months you have paid $1452 to visa. $252 of that is interest. Yet your credit rating hasn't really improved despite paying $252 for the credit.

Let's take that $500 dollar credit line and do something else.

Month 1

Charged $100 bucks

Month 2

Bill comes showing a $100 dollar charge, with $21 bucks worth of interest.

The minimum payment is 20% (varies from service to service, could be 5%, could be 10%), so the bill is for $24.20.

You could pay 24.20 and reduce your debt by $3.20, or pay $36.30 (50% over minimum). $21 of that took care of the interest, $16.30 of went toward the principal.

So month 3 comes:

Your principal is $83.70, the interest is $17.58, total debt $101.28

Minimum payment - $20.26
You pay $30.39 ... $12.61 toward principal.
Your new balance is $70.89

Month 4 rolls up soon.

Your bill is $85.79, $14.89 is interest.

Minimum payment is $17.16
You pay $25.74, again $10.85 is toward principal. Your new balance is $60.05

Month 5:

Bill $72.66, $12.61 is interest.

Minimum payment $14.53
You pay $21.8, $9.19 is paid toward principal.

So in 5 months, 4 of that is payment history, we have a total of $66.08 paid in interest and 50 bucks toward principal.

To get a better credit rating, what would you rather pay? $66.08, or $252 in the same time span?

Divinity suggests 30%, I suggest 20%. It depends on what kind of credit rating you want/need.

Maintaining a 20% balance with occasional large purchases here and there, I have +600 rating. That is with 13 years worth of credit history, and the first 3 not all that good.

The best lesson I learned in the first 3 years is to never purchase anything with a credit card that you normally could not afford. Stay within your means.

[Wezas]

When I was first getting credit I got a secured credit card with a limit of $500. Secured, for those who haven't heard that term before, means you pay the credit card company first - and then you make your purchases. It's a win-win situation - you gain credit - and they don't have any risk.

Had that for about 4 months when I opened a savings account at BofA (already had a checking acct) and they asked if I wanted a credit card. I asked them what the limit would be, and they said $4600. The rest is history. A history of that limit going up and up - even when I didn't ask for it.

[Tsa`ah]

I still have the secured card I used to fix my credit.

Secured is great not only for the reason Wezas pointed out, but also because it's an interest bearing savings account. While the interest isn't much, it's nothing to sneeze at. I have 10,000 in secured anytime I want it.

It's a great starter/repair method.

[Amaron]

ugh ...

my husband lost his job on the day I had our second child.
We had a morgage and two car payments
Plus two kids.

We paid alot of bills on the credit card.

We are both employed full time as teachers now but we never could get those cards paid off....

we are adding an addition to our home and adding in the two almost maxed cards as part of the morgage.

We do not use the cards now but are making no headway in the debt.

Don't start using the card unless you can pay it off. Its a pain.


J

[GSLeloo]

I just thought of something. If I moved my GS bill to my new credit card would that be good? Then it'd constantly have a charge that's low enough for me to pay off immediatly.

[JadeScarlet]

I like credit cards. I have 3. I use one for Gemstone, and miscellaneous things, one for paying for hotels (its a hilton amex so I get points, which I can use to stay in a hilton hotel for free. I used it to stay 5 nights in london once...sweet sweet deal). And a mastercard which I use for gas because it gets 3% cash back each year.

If you pay your bills on time you never have to pay any interest so its not a big deal at all. I use them like I would use a debit card, only buying something if I know I can afford it.

[Tsa`ah]

Originally posted by JadeScarlet
If you pay your bills on time you never have to pay any interest so its not a big deal at all.

This is not true with every credit card.

As stated, if you're trying to improve your rating, paying off the monthly balance is not a preferable means of achieving this.

Keep a small balance on the card and pay above minimum.

[JadeScarlet]

Yeah I know, but I wouldn't get a credit card that charged interest straight away. I also don't do credit cards that charge annual fees.

I rarely overpaid my bills and I have excellent credit (I've had a credit card for about 7 years).

-Jade

[Edited on 4-12-2004 by JadeScarlet]

[Divinity]

I would suggest something like this to start off with. That way you know your billing date and you know that you have the funds to pay it off. Good idea Leloo.


Originally posted by GSLeloo
I just thought of something. If I moved my GS bill to my new credit card would that be good? Then it'd constantly have a charge that's low enough for me to pay off immediatly.

[Toxicvixen]

Its not the credit cards fault I like to pretend they are free money. I owe Visa my first born. :no:

[GSLeloo]

Mine is a Capital One Visa. I had no choice no one else would give me a card.