OT: picking a credit card

[UConnTrumbull]

So, the BY is basically where I go to learn about everything. Does anyone have any suggestions or recommendations for picking a credit card? I'm 23 and need to build credit (or so I'm told) but I don't want to get a random one for the sake of having it. I always pay things on time, in fact, I probably won't ever buy something on a credit card unless I know I have the money already in my account.

A few things I've already been told (correct if untrue)
1. Get one from a bank
2. Get ONLY one
...and that's about it. Any advice would help.

Cheers

P.S. I was/still am tempted to get the Webster Bank credit card for the sole purpose of having the husky logo on it.

 

[Minicoop69]

I have multiple ones, but the one that i use the most is my Sams Club Mastercard. It gets me into the door at Sams, and gives me 5% cash back on gas, 3% back on dining and travel, and 1% on everything else. It adds up rather quickly. But in order to get the credit card you need to be a Sams member and then just sign up. Only downside.

 

[Leebo]

There's no harm in having more than one as long as you aren't treating them as long-term loans.

 

[DaveHuskiesFan]

I'm about the same age (24). Basically there are a number of things that determine your credit:

Payment History (are you paying on time, any problems, etc(Loans + Credit Cards)
Amount Owed (The amount of debt you have)
Length of Credit History (The average length youve held each credit card)
New Credit (Opening up a new credit card/debt)
The Type of Credit Used (Aka how many)

With that being said I have two Credit Cards. And i put almost every purchase I make on those credit cards to fully reap the cash back bonus each provides. With that being said, only buy things you can afford and pay off at the end of the month. The tow cards I have are:

A DiscoverIT Card
Chase Freedom

Both signup bonuses for these cards are great. The Discover It card provides 5% cash back on quarterly rotating categories(Gas, Department Stores, Grocery Stores, Restaurants, etc), 1% cash back on everything else, as well as having a Discover Deals section online where you can find 5-20% cash back on specific online stores/retailers. At the end of your first year they double the cash back that you've earned. (I'll probably end up with around $600-700 cash back this year.)

Chase Freedom has the same rotating categories but they tend to be different quarters than Discover which works out because I end up getting 5% cash back on Gas 6 months out of the year as opposed the 3 months. They also provide 1% cash back on everything else. Their signup deal is if you spend $500 within the first 3 months you have the card they automatically give you $200 cash back. SO your first $500 worth of purchase is only $300.

In regards to Cash Back, it accumulates every pay period (once a month), and you can cash it out as a check, apply it to your credit card statement, or buy giftcards. This is the same for both cards.

Chase tends to be a little bit more stingy on their limits which isn't a bad thing. My limit with chase is 15% of what my Discover limit is. You can apply for both cards easily online and find out within the day if you're approved.

My opinion is, if you're going to be buying things on your debit card anyway, you should put them on your credit card and reap the cash back rewards, as long as you have the funds to pay it off at the end of the month and not carry a balance.

Let me know if you have any more questions!

 

[ScottBonz]

Don't stray from the one's with fees. They have the best rewards. There are plenty of sites that will calculate the amount you need to spend per month to make the fee pay for itself and many come with the first year free.

I've been putting absolutely everything on a CC since I was 18. I just pay the bill off every month. If you can afford the fee, I would look at the Chase Saphire, Starwoods Preferred, Southwest Card, or Capital One venture card. They fee ranges from 35-100 a year on those. If you are confident you can pay the bill, get one with a better rewards program and if you are worried that you need to make a purchase that maybe you can't pay off then use the one from the bank.

Having multiple cards improves the credit score as the line of credit is larger. Also, they most likely start you of with a low maximum due to your limited credit history. I still can't get behind opening up multiples and multiples as it just scares me but there is little to say that it ruins your score.

After I cash out my Capital One Venture for my honeymoon, I am going to switch to a the SPG and/or the Chase Sapphire only because my fiancee already has a southwest card.

 

[imno1]

I like Amex. They are very consumer friendly when it comes to any dispute and they double manufacturers warranties. Have used this benefit a few times. Here's a good story. Bought a washing machine and a year and 1/2 later it stopped working. Submitted a claim to Amex and they reimbursed for the original price of the machine. But we got to keep the original and had it fixed for $157. I was hoping more stuff would breakdown. The one drawback is not everyone accepts American Express.

 

[uchusky32]

Whichever you pick be able to pay it off monthly or quickly. Debt is a B itch!

 

[BUHusky]

I'm a big travel/points guy so I'm pretty well versed in the credit card world. My advice for a first timer like you is to get a Chase Freedom card. DaveHuskiesFan already hit the relevant reasons. And always pay the balance off in full. Can't stress that enough.

As an aside, it's shocking to me the lack of personal finance understanding/common sense people have nowadays. Perhaps @ScottBonz and I were lucky that our parents taught us that stuff at a young age and allowed us to be authorized users on their accounts so we could starting building credit histories as teenagers. It absolutely kills me every time I see one of my friends pull out a debit card to pay for something. So terrible for so many reasons...

 

[BUHusky]

I like Amex. They are very consumer friendly when it comes to any dispute and they double manufacturers warranties. Have used this benefit a few times. Here's a good story. Bought a washing machine and a year and 1/2 later it stopped working. Submitted a claim to Amex and they reimbursed for the original price of the machine. But we got to keep the original and had it fixed for $157. I was hoping more stuff would breakdown. The one drawback is not everyone accepts American Express.

I loooove AMEX, but I doubt a first timer like OP would be approved for an AMEX card.

 

[OkaForPrez]

Have you gone here?

http://www.creditcards.com/

 

[DaveHuskiesFan]

I'm a big travel/points guy so I'm pretty well versed in the credit card world. My advice for a first timer like you is to get a Chase Freedom card. DaveHuskiesFan already hit the relevant reasons. And always pay the balance off in full. Can't stress that enough.

As an aside, it's shocking to me the lack of personal finance understanding/common sense people have nowadays. Perhaps @ScottBonz and I were lucky that our parents taught us that stuff at a young age and allowed us to be authorized users on their accounts so we could starting building credit histories as teenagers. It absolutely kills me every time I see one of my friends pull out a debit card to pay for something. So terrible for so many reasons...

My parents did as well BU. The moment I turned 18 they made me an authorized user which helped a ton in building credit. Im always surprised to hear that I'm the only one of my friends who's parents did this for them.

 

[huskiesnyc]

Unfortunately for me I just fell victim to identity theft and had 3 new credit cards opened under my name and purchases made (not sure how since the cards were mailed to me and I obviously never activated them). Now I have to deal with the nightmare of getting these closed and removed from my credit report which I'm told takes up to 90 days according to their fraud departments. Good thing I just closed on some real estate last month or this would've been a huge problem. Do any of the BY lawyers know if I have a case against the credit card companies here?

 

[temery]

First thing you want to do it go to credit Karma, or something similar.

https://www.creditkarma.com/auth/logon/

 

[TasteofUConn]

Do any of the BY lawyers know if I have a case against the credit card companies here?

The clear answer is "yes."
The better question, however, is, "do you have a case worth pursuing?" to which the clear answer is: "No."

Regarding credit cards and credit in general, my advice to all of my recently discharged Chapter 7 clients is this: "pay for everything with cash and your credit score becomes much less important."

The concept that, "you need to have a good credit score" is, in part, a trap.

It's kind of like advising people to always carry excellent shark repellent rather than advising to avoid shark infested waters.

 

[8893]

Unfortunately for me I just fell victim to identity theft and had 3 new credit cards opened under my name and purchases made (not sure how since the cards were mailed to me and I obviously never activated them). Now I have to deal with the nightmare of getting these closed and removed from my credit report which I'm told takes up to 90 days according to their fraud departments. Good thing I just closed on some real estate last month or this would've been a huge problem. Do any of the BY lawyers know if I have a case against the credit card companies here?

I don't know and I don't do this, but here are two CT lawyers who do. I don't know either one of them, but I have seen others refer people to them for these types of problems:

http://www.sarahporiss.com/
http://consumerlegalservicesllc.com/

 

[KingOPancakes]

@temery nailed it with the creditkarma suggestion. Get your free credit score estimate and base your credit card search off of that. Certain cards won't approve you with a lower score. Personally I have a Visa through Webster and American Express Blue Cash and end up using the AMEX 90% of the time. 3% back on gas and groceries, 1% everywhere else.

 

[EdgewoodNHV]

I spent a bunch of time looking at credit cards with good rewards. So I'll give you my favorite two. I don't think there's anything wrong with having two cards if you can spend responsibly.

American Express Blue Preferred: 6% back on groceries (Big Y, Stop and Shop, etc.) up to $6000, 3% back on gas, 3% back on department stores, 1% otherwise, free travel insurance, $75 annual fee
Chase Freedom: Rotating quarterly 5% cash back (currently Amazon.com, but also rotates Restaurants, Gas Stations, Grocery Stores (I don't use this since the Amex is better)

They're both pretty huge rewards for things you're going to spend anyway. However, they are not cards you want to keep a balance on -- they have introductory rates but will eventually bump them up. So if you're carrying a balance, Rewards cards will do you no good. I pay them both down every month so I basically just get free money for using them as my main expense, but your mileage may vary.

 

[8893]

The clear answer is "yes."
The better question, however, is, "do you have a case worth pursuing?" to which the clear answer is: "No."

Regarding credit cards and credit in general, my advice to all of my recently discharged Chapter 7 clients is this: "pay for everything with cash and your credit score becomes much less important."

The concept that, "you need to have a good credit score" is, in part, a trap.

It's kind of like advising people to always carry excellent shark repellent rather than advising to avoid shark infested waters.

I disagree and I don't think that's good advice here. There are lots of good reasons to use credit even if you have the cash, and it is absolutely true that those with the best credit scores get the best rates. As but one example, a new car purchase. Even if you have the cash, if you have great credit right now you can get up to six years for as low as 1.9%. Personally, I'd rather keep my cash and pay the 1.9% interest.

Not to mention that "pay for everything in cash" is simply not reality for many people. Not saying to take on more credit than you can pay, but I avoided credit for many, many years based on advice like yours, only to regret it when I really needed the credit.

 

[jibsey]

Costco is coming out with a card to replace their AMEX one, and if history is an indication as on their products, it will be a good deal.

 

[BigErnMcCracken]

There are lots of good reasons to use credit even if you have the cash, and it is absolutely true that those with the best credit scores get the best rates. As but one example, a new car purchase. Even if you have the cash, if you have great credit right now you can get up to six years for as low as 1.9%. Personally, I'd rather keep my cash and pay the 1.9% interest.

Day one stuff. Paying cash when there's cheap $ to be had is just not prudent advice.

 

[jleves]

So, the BY is basically where I go to learn about everything. Does anyone have any suggestions or recommendations for picking a credit card? I'm 23 and need to build credit (or so I'm told) but I don't want to get a random one for the sake of having it. I always pay things on time, in fact, I probably won't ever buy something on a credit card unless I know I have the money already in my account.

A few things I've already been told (correct if untrue)
1. Get one from a bank
2. Get ONLY one
...and that's about it. Any advice would help.

Cheers

P.S. I was/still am tempted to get the Webster Bank credit card for the sole purpose of having the husky logo on it.

There is a lot of good advice and a little bad advice in this thread. Your credit rating is based on several criteria. The most important is not having late payments or worse defaults. So even if you don't pay them off, pay the minimum on time.

One big thing in terms of credit rating is amount of available credit vs. amount of balance. So if you have a lot of available credit and little or no balance, that helps. Having several cards can help here but there's a cool trick. Pay your balances about 5 days before they are due so when they are reported, you have say $2,000 in credit and a 0 balance. Reports happen on closing dates, so if you pay before the closing date, there is no balance reported and that helps your credit rating.

Also, you want to show activity every month on every card. Non use of credit doesn't help as much as use and payment. As long as you can pay everything off, charge on different cards when you have multiple cards and pay them off a few days early.

Certainly refund programs or points earned to use later are benefits to you personally, but don't effect credit - it just gives you a little bonus for spending money.

The 'only use cash for things' is short sighted if you're looking to build credit for better rates on cars or homes in the future. As long as you can pay everything off, put everything on a card and pay it off. It shows you can pay your debts and you get those bonuses which add up.

I have no idea if fee cards are better than no fee cards - I guess that depends on the rewards programs, fees, and how much you intend to spend.

Whatever you do - pay your bills - don't carry credit card debt if you can afford not to. Credit card debt is the biggest money suck outside of kids you'll have in your life. The only debt I'm comfortable with in my life is on a home. It tends to go up more than debt drains money over a significant period of time. Debt on cars is second to credit cards - pay cars off as quickly as possible because even though you may have a 1.5% or even 0% loan from the manufacturer, the car is depreciating far faster than the money you owe.

Just my 2 cents.

 

[80shusky]

I agree with jleves assessment above. Pay everything off as soon as you can, always pay your balance off early and if you have to carry debt pay at least the minimums but more if you can. If a credit card charges you 18% interest and your savings is paying you 1% interest it is better to use your savings to pay off your balances. Without leaving yourself zero emergency cash of course. I started as a college student with a VISA. I carried some big balances on it and missed a few payments here and there in my 20s. My credit sucked. I finally paid it off and then got an American Express basic green card. I still have that old VISA and I use it once in a while to keep it active. My American Express however trained me to pay my balances on time because I had to. Now I have a Chase Freedom Visa and a Citi Mastercard as well. Both earn points. I alternate between the two but always pay them off. I also use my credit cards for basic purchases that I know I will pay off anyway like groceries and gas. This helps build a credit history but it only works if you pay them off and don't miss payments. Now in my mid 40s I have an 800+ FICO score and credit and can get approved for any loan I want, within my ability to pay of course. I can't stress enough how important it is to build a good solid credit history. It will haunt you your whole life if you don't. Once you get in deep, it is very hard to get out.

 

[8893]

My partner put it this way: Borrow the money when you don't need it, or else they won't give it to you when you do.

I didn't listen to him because I was raised to be credit-averse. He was right.

 

[progrocks]

Everyone has different requirements for what they need in a card. For me the Chase Sapphire Preferred card is worth every penny of the $95 yearly fee, but my usage is different than what most 24 year olds deal with. The Chase Freedom is likely to be a good bet for you.

Paying cash is stupid if you have money. Unless it is a small mom and pop shop where I feel guilty using it for a small amount, I am pulling out my card for everything when I am in the USA. $1.23 at the supermarket? Swipe that card. I pay no interest so why would I pass up free perks that credit provide? That said, this is the attitude only if you are discipline enough not to spend more than you can pay each month. Transaction fees suck. Do not pay them unless you absolutely have to.

 

[TasteofUConn]

As but one example, a new car purchase. Even if you have the cash, if you have great credit right now you can get up to six years for as low as 1.9%. Personally, I'd rather keep my cash and pay the 1.9% interest.

I should have differentiated between using short term credit and taking on debt, which are very different things.
Certainly money management is a very personal thing.
Here's one recent example. Just bought a CRV. 25k. Wrote a check. At your 1.9%, I pay an additional $1,226 for the vehicle. That's almost a 5% up charge for the privilege of not using my cash. Figure inflation is running at 3%. The devaluation in your cash sitting in your bank making 0.008% (thank you Fed) over those 5 years is about $3,500. Further, even people with "good" credit are likely going to pay a higher interest rate, not the 1.9% dangled out.

Not to mention that "pay for everything in cash" is simply not reality for many people.

Disagree. Most people, in fact, could do this. The problem is the early life training to live beyond their means. Why save the money and buy a serviceable used car for 8 or 9 grand when you can take 15 grand in credit and buy a brand new, shiny 25,000 car with heated seats?

Not saying to take on more credit than you can pay . . .

To clarify my advice, I definitely recommend using credit cards and lines of credit. I pay for 80% of expenditures with a Capital One card that gives me 1.5% on everything. Of course, I pay it off each month and never pay interest. I also have a HELOC that I use for things like buying cars. The truth is, the 1.5% cash back on the credit card is a tax on people who are carrying balances every month and paying 20% interest. Just like when I pay my property taxes early and get a discount - that's just a tax on the people who pay late and get hit with a fee.

My thought on this is that debt is generally bad, and should be avoided. That is a drastic over-simplification, to be sure. But for a thread on a basketball message board, I err towards simplicity. Certainly taking on debt now to improve financial status later usually makes sense. Examples include loans for education. Also, improving standard of living now by taking on debt sometimes makes sense. For example, taking a loan to get to a house in a better school district.

Ultimately, however, debt is a life choice, not an obligation with which we are born. The United States is a cultural echo chamber on this. It is beaten into your head from a very young age, directly and through suggestion, that taking on debt is normal, expected, and a tonic for your life.

Fundamentally, debt is the process by which you improve your standard of living today by lowering your standard of living tomorrow (excepting some education loans, business loans, and other debt taken to increase earning potential). Further, the amount that you improve your standard of living today is substantially less than the amount you lower your standard of living in the future, and that really is the thesis here; taking on debt is the process of making yourself a little wealthier now at the expense of removing multiples of that wealth from your future self. People think they "need" things that they really just want, and they end up paying 24% interest on a steak they bought at Outback that wasn't that good anyway.