Credit Cards...

[Hookemdown.]

I'll be entering my Sophomore year of college this fall, and I'm looking for a little advice on credit cards.  I want something for emergency purposes only (I live a considerable distance from home).  I doubt I'll even use it.

This will be my first type of credit...all I have right now is a checking and savings account.

Any help is appreciated

[preach4bass]

If you plan on paying off the balance at the end of each month (which you sound like you would do) why don't you just use a debit card linked directly to your checking account?

But, if you are going to get one anyway, I'd suggest a Schawb card.  You earn 2% on every purchase.

[Tin]

Just do what most other people do, get 8, max them out, then make the minimum payments. You will be fine.

Seriously, use it a bit and pay off most of it every month. Just not using it will do nothing for your credit.

[Hookemdown.]

I do use a debit card most of the time.  And this is a little off topic...but I was thinking that it could possibly help raise my credit score.  (I don't know anything about this).  I've got my first 4 years paid for with scholarships...but I'm definitely going to have to take out loans for grad school.

[b.Lee]

Honestly just apply for one through your bank.

That way you have one place to manage your account and pay your bills.  Once you get your card whatever the limit is, for instance if you think 500 is enough, ask them to never raise the minimum. Or if they give you a 1000 limit, ask for 500. It is very easy to get in trouble with credit cards. So start slow and work your way up as you get a job or what not.

[SirSnookalot]

I do use a debit card most of the time. And this is a little off topic...but I was thinking that it could possibly help raise my credit score. (I don't know anything about this). I've got my first 4 years paid for with scholarships...but I'm definitely going to have to take out loans for grad school.

Now you are on the right track, debit cards are ok but do absolutely nothing to raise your FICO score, nothing more important than having good to excellent credit. If I were you, and this is exactly what I do, I would have 4-5 credits cards, as the more credit available to you the higher the FICO score. That said I would make nominal purchases on each one monthly to keep credit history current and always pay in full, never pay interest.....YOU MUST BE DISCIPLINED !!! As a young person I know it's easy to get over extended, make sure it doesn't happen, this is a life decision.

Why use a debit card when most credit cards pay some sort of reward, miles for example, maybe debit cards do too but personally I never saw the need for one. FICO has everything to do with credit history, payment history, available credit but little to with income, ideally you want over an 800 score. Just because a card gives you $1000 credit doesn't mean you have to use it all, never reduce the amount of credit, if not used they will automatically reduce it for you, you don't want that.

[done]

What me and my wife did a while back. Find a card with points that you will actually use. Then route all your normal expense through it. We run nearly all our monthly bills through the card. This is money we would normally be spending and includes insurance, utilities, etc. We then pay the balance in full every month. So we earn a pile of points for it (I usually get $100 Home Depot gift cards every 2 months from it), we have a positive effect on our credit rating, and our card provides a layer of protection between our checking account and the retailer. if someone hijacks my CC I am limited in the scope of damage I am liable for (vs. if someone gets the keys to your bank account), because of that a lot of cards have extra protections for you to dispute charges.

You need to be sure of your impulse control. If you have any reason to think you would abuse it, don't get it. I had a couple friends who got in serious trouble in college because they ran up retarded levels on their cards that they had no ability to pay off. You need to be disciplined with it, or you do not need to have it.

[firefightn15]

Read the fine print when and ask questions, with the new cc laws going  into effect certain companies are instituting some new and creative ideas (costs/penalties) to keep you on your toes.  Just read this the other day.

[Nice_Bass]

Only get one through your local bank or credit union you already use.  Dont have more than a 30% balance/available credit ratio and you will only need one credit card.  I am 26, one credit card, and have great credit....

The one credit card allowed me student loans, car loans, boat loans, and the ball and chain mortgage.  I still only have one credit card.

[tyrius.]

I do use a debit card most of the time. And this is a little off topic...but I was thinking that it could possibly help raise my credit score. (I don't know anything about this). I've got my first 4 years paid for with scholarships...but I'm definitely going to have to take out loans for grad school.

Get a credit card and use it.  The activity WILL help your credit score and when you want to get a personal loan for anything (even a mortgage) it will help.  I would start out with a small card (say $500 limit) from the bank you already use.  Do whatever  you can to get a card with NO annual fees. 

Make sure you pay your balance in full every month because the interest costs will rapidly become greater than any other benefit you would gain from the card.

[Siebert Outdoors]

I do use a debit card most of the time. And this is a little off topic...but I was thinking that it could possibly help raise my credit score. (I don't know anything about this). I've got my first 4 years paid for with scholarships...but I'm definitely going to have to take out loans for grad school.

Get a credit card and use it. The activity WILL help your credit score and when you want to get a personal loan for anything (even a mortgage) it will help. I would start out with a small card (say $500 limit) from the bank you already use. Do whatever you can to get a card with NO annual fees.

Make sure you pay your balance in full every month because the interest costs will rapidly become greater than any other benefit you would gain from the card.

I completely agree.  Always, and I mean always pay the card in full.  I use a capital one and a cabelas card.  Mostly capital one now.  They have better rewards.  You are at the age where credit is going to mean everything in about 2.4 yrs.  If you do not have outstanding credit your loans will be higher because you will be higher risk. 

[SPEEDBEAD.]

I'm a little biased because I work there part time, but I have a Gander Mountain Mastercard.

1% on everything, 2% on store purchases. I have earned back over $200 with it just buying things I would have used my debit card for (which gets me nothing).

As was said before, pay it off every month. There are no fees associated with the card mentioned above.

Don't fall into the trap that Tin alluded to. Many students come out of college saddled with a ton of credit card debt.

[BrianinMD]

If the idea is to build up a credit score it is best to keep a little balance going month to month. Yes it will have some interest doing this but will build you credit better then paying it off each month.

[tyrius.]

Reward cards are great, but as a 20 year old with no credit history you may not be able to get a good one without paying for it.  And if you have to pay an annual fee for the rewards then you REALLY have to use that card to make sure that the rewards are greater than the fees.

My advice would be to not worry too much about getting rewards, you're likely not going to be using this card all that much anyways (a couple hundred a month will only give you a few dollars a month in rewards).  If you know that you can be disciplined enough to pay it off every month then dont' worry too much about the interest rate either.  The biggest thing you want to worry about is fees.  Find one with zero and use it.  After college you can worry about finding a good card with rewards that you'll use.

I use my cards like M Starr does.  I put everything that I possible can on it.  2% of all purchases goes to funding my kid's college education (529 plan).

[FishingBuds]

Advice, pass on credit cards and keep a savings for emergencies. FICO scores are hype, this all comes from the media convincing working people can't make it these days without a FICO score, BULL!

save your own working money for purchases.

Credit is for running a buisness not life.

[BrianinMD]

FishingBuds, good advice only if you make enough money to buy a house without a mortage, or the vehicle/boat without a loan.

In todays world running your life is akin to running a business.

[tyrius.]

Advice, pass on credit cards and keep a savings for emergencies. FICO scores are hype, this all comes from the media convincing working people can't make it these days without a FICO score, BULL!

There aren't many people that this advice will help.  If you ever want to get a mortgage or borrow money for a car then your FICO score matters a LOT, especially on a mortgage.  Saving just 0.5% on your mortgage rate on a $200K mortgage will save you around $75 a month times 360 months which is around $27,000.  Even with the loss of the tax write off for this mortgage interest you'd still be saving over $22k over the life of the mortgage.  On a 150K mortgage you'll save around $50 a month with a 0.5% drop in rates.

Insurance companies now check your credit scores and those scores affect your insurance rates (particularly home and auto).  Life insurance rates will likely follow this trend in the future.

He also specially said that he will need to borrow money for grad school.  Establishing GOOD credit will only help facilitate that process and will likely result in a lower rate.

[NateFollmer]

Advice, pass on credit cards and keep a savings for emergencies. FICO scores are hype, this all comes from the media convincing working people can't make it these days without a FICO score, BULL!

save your own working money for purchases.

Credit is for running a buisness not life.

Tell that to the bank when you need a car loan, or you want to get your utilities hooked up after you move...

I had to pay fee's on my gas and electric because I had almost no credit at all. Oh, AND I haven't finished school yet because I can't get school loans because, again, almost no credit score.

It sucks, but the world revolves around your credit score now... Heck, it's better to have BAD credit than it is NO credit. I'm very anal about my bills and I have a pretty good score now (I think?), but guess what's keeping it from being real good? OH! All those school loans that aren't being paid (some of them they won't let me defer, and I cannot afford to pay them).

Ok, I'm done venting...

[bigfruits]

get a credit card. you will need a good credit score eventually (you will save money on future loans with a lower interest).

make sure the card you get does not have a yearly fee!

use it for gas, food etc. use only half of your limit. pay it off in full every month.

[SoFlaBassAddict]

Honestly, there is nothing wrong with a credit card.  Just don't go do stupid things like most younger people do (myself included), and go out and buy stuff that you don't need.  Supposedly, the best way to build your score is to leave a small balance at the end of the month.  My credit score was very good last time I checked.  I pay my CC bills in full at the end of each month.

I've got two.  An Amex, which I love.  They actually called me a few days ago about some fraudulent charges on my card.  No problems.  Cancelled it on the spot and overnighted me a new one.  The other is a Visa/Mastercard through my bank.  For the most part, they are for emergencies or very large purchases only.  If you're smart about how you use them, they can be very handy.

[Hookemdown.]

Thanks for the input guys.  And another thing...what is the difference between a "student" card and a regular one?  Rewards and points don't really mean much to me.  I'm mostly doing this for the credit score and emergencies.

[NateFollmer]

Thanks for the input guys. And another thing...what is the difference between a "student" card and a regular one? Rewards and points don't really mean much to me. I'm mostly doing this for the credit score and emergencies.

I'm pretty sure student cards are the same. They just have lower credit limits (like $250). I have never seen a student card that didn't charge a yearly fee though, so watch for that. Yearly fees are stupid and NEVER get a card that has them.

[done]

Advice, pass on credit cards and keep a savings for emergencies. FICO scores are hype, this all comes from the media convincing working people can't make it these days without a FICO score, BULL!

save your own working money for purchases.

Credit is for running a buisness not life.

Tell that to the bank when you need a car loan, or you want to get your utilities hooked up after you move...

I had to pay fee's on my gas and electric because I had almost no credit at all. Oh, AND I haven't finished school yet because I can't get school loans because, again, almost no credit score.

It sucks, but the world revolves around your credit score now... Heck, it's better to have BAD credit than it is NO credit. I'm very anal about my bills and I have a pretty good score now (I think?), but guess what's keeping it from being real good? OH! All those school loans that aren't being paid (some of them they won't let me defer, and I cannot afford to pay them).

Ok, I'm done venting...

There are also jobs that will check your credit score and pass on you if you do not have a good one. it sucks...but it is a necessary evil. Using the credit card as suggested on here (not ever carrying a balance) is the lesser of the evils, IMO.

[FishingBuds]

Guys I know what we all have been taught, and its in a way understandable, this country/world is operated on credit, BUT you really should sit down and think about it, Why lend my money out? Why pay more in the long run?

And does any old timers here remember underwriters?

Here's a little something I agree with.

"The truth is that the best way to build a great credit score is not necessarily a great way to build wealth. There are plenty of people who are completely unprepared for retirement, living paycheck to paycheck with negative net worths who have fantastic credit scores.

A high credit score means that you tend to manage money in a way that makes you a good person to lend money to.That's very different from managing money in a way that will help you build wealth.

Ah, you say, but wait! "If you don't have a high FICO score, you won't be able to buy a house or, if you can, you'll have to pay a higher interest rate."

Actually, that isn't necessarily true. A high FICO score can certainly make getting a mortgage easier -- but the trade-off isn't worth it if car loans and credit card payments limit your ability to save. And with FHA loans available to first-time buyers, you only need a credit score in the 600 range -- which you can acquire pretty easily with very occasional credit use. Also, talk to an FHA counselor or loan officer at a small local bank about qualifying for a home loan through manual underwriting."

YOU are a free man and you run your own life, but there is ALWAYS another side to the story to HELP you decide whats right.

Just My 2cents

[SPEEDBEAD.]

Your two cents or Dave Ramsey's?