Ok, it seems that i have no credit history at all and in the united states, you really need one.
First, let me get the background out of the way. I’m a male unemployed fulltime college student with a one year old ss# and a couple months old greencard. I have been residing in Florida for the past 3 years. I have never owned a credit card.
So far, i have been using my washington mutual checking card for my purchasing needs and while i’m reasonably happy with it (i still think overdraft fees are the devil’s work) there are some drawbacks.
a- I am not protected (cant’ charge back if something goes wrong)
b- it does nothing for my credit history.
I was talking to a friend today and he recommended I get a student credit card or a secured credit card from my bank to start building up my credit. I called the bank but they aren’t offering credit cards at the moment (they used to have some kind of partnership with citibank but that train left the station)
So, am I eligible for a credit card? What kind? Where should I get it from? Why? What’s the deal with APR and other acronyms? <insert missing questions here> ?
I know it’s asking much but I would appreciate detailed answers
Oh, you can get a credit card without any problems. As a fulltime student, there are lots of options for you – just look around campus. Credit card companies are happy to sign up more college students. Why? Because they’re great at running up big balances. So my advice is to avoid a credit card if you can, but if you do get one (to build a credit history), pay off all balances in full and on time. Don’t run up balances. This will give you the good credit history that you want without falling into the trap of the credit card companies. If you always pay on time, the APR is irrelevant. The APR is the annual percentage rate – the rate that will apply to balances unpaid by the due dates. It’s usually an outrageous rate, so pay off your balances as soon as you can.
Thank you both for your replies. It’s good to know it shouldn’t be problematic for me to get a student credit card and i have a wamu debit card with the visa logo which I have used many times as a credit card. This, however, didn’t do squat for my credit. I know, I tried to get a credit report from experian and equifax and they both said something like: “oh, you exist? we didn’t know…” It might be because my bank doesn’t have my social security number on file. I’ll call them and check on that.
Moving on:
I know credit cards are the devil. My SO had to file for personal bankruptcy and my father is a retired banker. I won’t go on spending sprees or anything. No need to caution me.
What i really need here are more…actionable facts?
I have been googling hoping to stumble upon a website with unbiased student credit cards reviews with a forum and whatnot. The grim reality is all I can find is basic advice, lots of commercial websites plugging their offerings, cautionary tales, general guides, etc.
I don’t actually know what credit card company / offer to get. Heck, I don’t even know what my choices are. Obviously, I want the best I can get. Lowest fees, longest grace periods, lowest penalties and APR just in case, good customer service, no hidden fees.
So that’s what I really need help with at this point.
The cards with the lowest fees and least hidden fees are the ones you get through your local bank. The drawback is that they often aren’t real competitive on their general terms, what with rebates and credit-line increases and so on. If you are totally-new to credit, it is pretty much guaranteed that you won’t get the best terms, and you may get nearly-the-worst terms but if you charge reasonable purchases on it for a year or so and pay them every month, in a year you should ask what kind of better deal they can get you, and expect to get one. If you started out with a secured card, request that they drop the security requirement. I’d also suggest going to your local bank for a secured card; some of the mail-offers for (very-low-limit, $100-$200) secured cards I’ve read had absolute loan-shark terms.
And “paying every month” doesn’t even mean “paying the card completely off”, it just means making more than the minimum payment, and keeping the balance under control. Carrying a balance isn’t bad, it is after all how the issuer makes their money–but to have a balance that stays high or creeps up slowly looks bad.
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This page lets you review different types of credit cards - those with low interest rates, low introductory offers and so on. You can pick the ones you want to see the basic information for and compare them on one screen.
I want the best card I can GET. I know I will have to pick from “bad cards” but surely, some must be less bad than others. I said before my bank doesn’t offer credit cards anymore so that is not an option.
And yes, i’m aware that it’s actually desirable to carry a reasonable balance while paying more than the minimum every month. I read that in one of the general guides I found. I can worry about that later, once I actually have a card.
You’d be surprised what you’ll be able to get. Go to the student union (student center or whatever they call it at your school) and look around where they post flyers and such. Or look in your bag when you buy books for this semester, things like that. Students generally are offered credit cards left and right, and a lot of times they’re acceptable rates - not as low as you’d be offered once you’re making more money in a full time job and have established a longer credit history, but I know that by the time I was 20 & a college junior, I had three cards - a Chase, a Citibank and an Amex (now, I have none of those, but that’s due to mistakes of my own that I’m correcting).
No one here will be able to tell you what you can get, because we don’t have your credit information and access to the systems of a credit card company.
Just sign up for any one card that accepts you. My first one came from an internet deal where you get a DVD for signing up for a credit card.
Once you do this, you’ll get pounds and pounds of mail advertisements from other companies and you can pick the one you like the best and cancel the first one if you so choose.
Consumers tend to keep the first credit card they ever get for sensationaly long times. Although students certainly do run up debt, they are also likely to be life-long customers because they have not ever had a credit card.
If that WAMU checking card has a Visa or Mastercard logo on it, you have 100% the same effective protection under your cardholder agreement as you would with a credit card. The only difference is that you don’t have the same LEGAL protections, but as long as the agreement between you and WAMU indemnifies you from fraud loses wherein you act responsibly, I would maintain there’s no difference.
I suggest you not get a card. You can just save for what you need to buy, and be much better off. When it coms time to buy a house, if you can come up with a 20% downpayment, you’ll get a loan regardless.
But, if you WANT to get one to boost your credit, which I believe is a marginal reason anyhow, don’t get a secured card.
Secured cards score differently than unsecured cards, and may hamper your credit rating at some points in your lifetime financial journey.
Good luck, whichever path you follow.
Know that the more cards you apply for, whether or not you get them, the more your score drops. If you don’t plan to apply for any credit in the next year, then fine.
But applying for credit more than twice a year hurts your score, and if you apply more than 10 times, I have no idea how big a hit you’ll take. It may be substantial.
This board has people who are knowledgeable about credit in general and credit reports in particular.
This board has more of an emphasis on different credit products.
Totally anecdotal: I had no credit. I applied for a (at the time, CitiBank, has since switched to BankOne) Sony rewards credit card. I received it with a healthy credit limit. I used it, I paid it down mostly, I got a credit limit raise and an interest rate decrease.
I use the rewards points. I just got a DVD player.
Apply for one with semi-good terms. Be good with it. It basically boils down to that. I know all about the pain of bankruptcy, luckily not me, but I’ve seen it.
FYI: just having a credit card does not make it possible to get a loan for a major purchase. I didn’t have any ‘deep credit’, and so was turned down for a car loan with my bank. I had to get a cosigner. I got a really good interest rate, but that’s because my credit scores are really good, and I have a responsible cosigner.
I’ve basically not had a balance on my credit cards for 25 years, and my credit is fine. Use it in moderation, and pay it off every month, and pretty soon they will be increasing your credit limit. I believe secured cards are for those with bad credit: you have none, and none is expected since you are in college. Carrying a balance is always a bad deal because of the high interest rates.
I’m suprised that you haven’t been innundated with offers already. I agree that going to the student center and looking for an offer is a good bet.
After you get your first there are cards, like Discover, which give cash back. I suspect their interest rates are higher, but since we don’t carry a balance this has not been a concern of ours.
Having credit card debt is NEVER desirable, ever ever ever. The sooner you get that thing paid off, the better off you’ll be. Any time you carry a balance you’re going to end up paying hundreds, if not thousands, in all of those hidden fees they’ll slam you with.
I’m surprised that you don’t have credit card reps sleeping out in the hall in front of your dorm room. They loooooooove college students, who have no self control, run up thousands in debt and then have Mom and Dad bail them out. I think the line they use most often is “Just get it, that way you can get the Free Gift today. You can always cut it up when it comes in the mail.”
If you are absolutely 100% metaphysically POSITIVE that you won’t get yourself in trouble, get a card. Any card you get is going to have an astronomically high interest rate and fees out the ass. You’re not going to find one with 0% APR … well you might, but the second you miss that first payment it’ll shoot up to 30%.
You don’t have a job, you’re a broke college student. If you have even the tiniest doubt as to whether or not you can handle knowing that you’ve got $2,000 or so at your disposal, don’t get one. I implore you: it’s just not worth it.
If you:
Get one and handle it responsibly
or
NOT get one because you know you can’t handle it
By the time you’re 30 I guarantee you’ll be WAY ahead of the game than most people your age.
Given that you’re a college student, I vote for #2. I’m not dissing you and saying that you can’t control yourself. I know what it’s like to be broke and in college and need necessities like clothes, etc. It’s just that when we are strapped for cash and really need something, it’s real easy to lie to ourselves and tell ourselves “I can pay it off within 2 months” – next thing you know you’re overlimit because of the interest and fees you’re being hit with and there’s no relief in sight. If there is ANY way you can avoid getting a credit card during these penniless years, do it.
I can’t second this strenuously enough. I am someone who got a card in college to “build credit”. After college, I was unemployed for 9 months. I paid for things like electricity with credit. When you are hungry, or they’re threatening to turn off your phone, or your last pair of jeans rips, it’s virtually impossible to resist the temptation to use credit if it’s sitting right there in your wallet. Especially if you are like me an too embarassed to ask friends/family. I was sure I’d pay it back as soon as I got a job, but by then I was already in over my head.
It’s very easy to just say I’m irresponsible and blow it off, but it’s hearbreakingly common among young people (I’m 25).
If you do get a card, I’d suggest putting something small and regular on it. A friend of mine does this will his cell phone. Cell company auto-bills to the card, the card autobills to his checking acount, and the actual plastic is somewhere hidden out of reach. He builds credit and pretends he doesn’t have a card.
Ok, so here is what I think I have learned from this thread:
1- Credit cards are not like headphones or graphic cards. Nobody will say “in your price range you want the asus geforce 6600 gt because bla bla bla”. I should just get whatever card because they’re all pretty much the same.
2- I can build credit by charging things to my credit card and immediately paying the balance off (as in, within minutes or hours, well before the 15-25 day grace period expires) .
I have my doubts about #2. See, my plan all along was to use the credit card in that fashion but it seems too good to be true. If I do that, the CC company doesn’t get any money from me other than the annual fee. How am I going to be a desirable customer then?
Someone I know recommended I deliberately keep a low balance (like $20 every month), wait until the grace period expires then pay it off along with the couple dollars in interest fees to build up my credit and repeat it every month.
I’m still wondering what the straight dope is on this.
Special thanks go to Lsura and Jonathan Woodall for their helpful links.
If you pay off your balance every single month without fail, before they charge you any interest, you will be a rare bird indeed.
You’ll be a desirable customer because you pay your bills on time, every month. This is what every creditor wants. Sure, CC companies would like to make a killing off of you in interest and fees, but with loans that have payments that don’t change, lenders want to know if you will habitually pay the entire bill every month. This is important when you go to buy a house. The mortgage company is going to make a fortune off of you anyway, because most of the time you’re going to pay the interest on your home loan before you pay off the principal. They’re more interested in seeing if you are going to be there with the check every month without fail. Same for a car loan, I imagine.
And let’s say that the CC company never makes a penny off of you except the annual fee. So? What are they going to do? Give you a bad report? Not hardly. What would they say? “Waah, he paid off his entire balance every month within a week of charging on his card, and doggone it we want to make more money off of him.”
And they certainly aren’t going to be losing any money on you if you do end up being one of their 100% perfect customers. With the annual fee, they’re still making a profit off of you. (Note: this is assuming you even FIND a card that charges 0% interest. You won’t. You’ll probably end up with one that charges 14% or so until you miss a payment, then it will double or something.) And here’s another hint: that annual fee we’ve been talking about? That usually goes on your very first statement. If the annual fee is $40, and it’s put on your card the day you open the account, guess what? You’re already carrying a balance, whether you charge anything that first month or not. And AFAIK, that annual fee, if paid late, is subject to the same interest and late fees as regular purchases (correct me if I’m wrong). This is not a good situation to get into considering you are wanting to make very tiny purchases and pay them all off. That very first month you’re out $40 or whatever: can you afford it?
Here’s the thing, tho. The chances of you being a 100% perfect customer are almost zilch. This is because things happen. And don’t think the CC company isn’t trying to trip you up every step of the way.
Some of them have a little habit of changing their PO box. Let’s say you send your payments to PO Box 6 in Podunk, Delaware for an entire year. All of a sudden, their new address is PO Box 15. Think they go out of their way to tell you that they’re changing their address? Hah.
See, if they switch the box numbers on you, your payment to them is going to be late. Never mind that they switched boxes on purpose for this very reason: you now officially have a late payment. Your 0% APR (if you ever had it) is gone. Your balance is now being hit with, oh, 25% APR, not to mention a $30-50 late fee every month.
What if you mail your payment to them 2 weeks in advance, there’s an enormous snowstorm and your payment arrives 1 day late? Same thing described above.
Sometimes it’s not even a due date: your payment may be due on a certain day, by a certain HOUR. And as always, the part about your payment being due at a certain time will be in the smallest printing possible.
If your CC payment is due September 1st by 1pm, and the mailman doesn’t get there until 3pm, guess what? Your payment is late. Pay up.
Let’s say you have an AmEx and a Visa card. Pretend that one month you’re ONE day late with the Visa payment. AmEx can find out about this and jack up your interest rates with THEM, even though you’ve never been late on your AmEx payments, ever. They are watching every move you make, just waiting for something to go wrong.
Someone I know recommended I deliberately keep a low balance (like $20 every month), wait until the grace period expires then pay it off along with the couple dollars in interest fees to build up my credit and repeat it every month.
Why would you want to do that? When you pay interest you are only helping them and hurting yourself.
Intentionally waiting so they can ding you with interest fees isn’t going to earn you brownie points with them or the credit reporting agencies. Your credit rating won’t get any higher just because you pay the CC company interest.
And grace periods are not guaranteed.
Let’s say that in August you charge $20, and let’s pretend that your payment is somehow late (change in PO box, natural disaster, whatever). That means you’d be carrying an outstanding balance of $20 into September, right?
Well, guess what? Many credit cards will take away your grace period. That would mean that as soon as you charge anything in September, you start getting charged interest. No more 25 days to pay it off in full before they start hitting you.
CC companies make money for basically one main reason: everything is in their favor. They charge high interest. They produce a product that is convenient to use and, sometimes, extremely addictive. Credit cards provide that instant gratification that we Americans want in every aspect of our lives. They change the rules in the hopes that you’ll screw up somehow so they can charge you even more interest and fees. They know that the average consumer doesn’t bother to read the fine print and thus doesn’t realize that by accepting their card, they are agreeing to all sorts of stipulations that tilt everything in the CC company’s favor.
Credit cards are a “them” deal, frankly. Unless you have the means to pay one off every single month, you are eventually going to have something happen that will bump you out of that “100% Perfect Customer” ranking. Yes, you may start with a teeny tiny baby balance of $20, but it can quickly grow into a monster. Seeing as you don’t have a job, I think you’re putting yourself at an extraordinarily high risk to end up in major trouble.
There is just no way that a credit card in the hands of someone with little to no income can end up on a positive note. The only people that win in the credit card game are people who have enough money to pay off ANY balance they might have, every single month, regardless of what happens, regardless of how much that balance is. These are people who don’t even need credit cards, they just prefer to carry them around as opposed to cash. These are people who had money before they even got the card.
Nobody who can barely pay their bills to begin with is going to win if they start trying to build credit. Once that snowball effect gets going, they are going to get eaten alive.
Your financial future will be just as good if you wait 2 years to get a credit card as it will be if you do it now. In fact, it’ll probably be even better. You’re still half kid, half adult. You have PLENTY of time to start fretting over your credit score.
Wreck your credit now, and you’re going to have a hard time getting an apartment after you graduate and get that first “real” job. You may not even get the job you really want if your credit sucks. Is the good feeling you’d get now for “building credit” worth the enormous risk you are taking? You may be one of those perfect customers, but the odds are overwhelmingly higher that you will end up screwed and have a big fat black mark on your credit report for 10 years.
Wait until your senior year to get a card, and only if you have a job. Make one purchase on it, pay it off immediately, then forget it exists until you graduate. You’ll end up graduating from college with pristine credit, while most of your peers will be up to their ears in debt.
Well, you’re right. If i have to actually mail the CC company a check or call them on the phone to pay off my balance, It’s very likely that I will slip.
The steps I want to follow go something like this:
1-Get a credit card
2-Log on on credit card website and fill in my Bank savings account.
3-Set it up so that whenever I’m supposed to pay my credit card balance, the money is automatically withdrawn from my savings account (without me having to do anything)
4-Whenever I purchase a $XXX item using my credit card, login into my bank’s website and transfer $XXX to my savings account from my checking account. That ensures that I know that money is no longer mine and that when the time comes, there will be money to cover my credit card balance.
5-Profit!
Is there any flaw to my thinking? Is it common for credit card companies to allow you to do that?
