I have been told that I need to get a credit card.
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So that I can build up some sort of credit history.
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For the added security that comes with it when buying things over the Internet.
So what credit card company should I go with and why?
In my Family Resource Mangement Class (and this next semester I get to take Problems in Family Management…the lovely follow up), when we went over personal credit, my prof said do not get a Discover Card because of the way the billing cycles ran. You will end up paying more in interest.
Mastercard and Visa are issued through banks not through MC or Visa so that is something to keep in mind. Also depending on how you feel about different issues, you can get one that will make a contribution to a charity or one that gives you frequent flyer miles and about a zillion other possibilities.
If you are a student you can get a student mastercard or visa. But you probably won’t qualify for one if you have absolutly no credit history. (If you are a professional and make a good bit of money the bank may be willing to take the chance.)
Go get a gas credit card or a store credit card. Charge a little each month and then PAY THE WHOLE DAMN THING OFF! every month. This is an easy way to build a credit history. Do not mess up… Bad credit info will not be taken off your history for seven years. That is a long time, my friend.
If you are really set on a major bank card, go talk to your bank or credit union. They wil give you a ton of info on responsible use of credit and can give you advise based on your situation.
One more thing…find out your FICA score (can be done on the web…I forgot the website…google FICA) and contact Equifax to get a copy of your report. It is about $10. If you want one for free, apply for a card that you know you will not get (American Express platnium with no credit limit or something like that) and then you can get a free report. There are three major credit reporting bureaus in the US so you will need to check all three. And you might want to do this before applying. Mistakes are not uncommon. My old minister was turned down for a home loan (he has good credit). turns out that someone else’s credit history had been latched on to his because of a SSN problem.
It is hard to give good advise without knowing a bunch of personal info. But I hope I gave you some info to think about. I will try to find some more info and links.
Here in Australia at the moment Virgin is the one to get. Cheap rates and lots of “mates rates” discounts. The cinema I go to is $5 off if I pay on Virgin mastercard. I don’t know who it’s attached to I only got it for the discounts and have never bought anything else with it. No fees either.
Not knowing exactly how things work in California, I can only make a couple of suggestions…
Figure out how you will use the card. (super generalization follows)
Lower interest rate cards normally have higher fees. Cards with low or no fees have high interest rates. If you pay your card off every month, having a high interest rate is of no concern. If you won’t be able to do so, it might be better to pay the fee yearly for less interest.
Beware of cards that charge a large fee up front.
If you have a relationship with a bank, you may want to see what they can do for you - you may have less difficultly getting the Visa/Mastercard associated with your bank because they know you…at least a little.
And…last but not least…don’t go overboard. Even applying for a credit card can affect your rating. One or two cards is all you need.
Another word of warning (my dad always tells me this when we bring up me getting a credit card (don’t have one yet, debit card does me just fine.)) This doesn’y apply to you now, since you have no cards, but many give the offer of “switch now, and we can transfer all your debt on the current card with it’s high interest to a low intro rate of (insert rate between 0 and 5% here.)” While this part is true, and you can save money if you aren’t able to pay off completly every month, NEVER BUY ANYTHING WITH THAT CARD until you pay off your current debt. Why? Because that low APR is only for balance transfers, most likely. Purchases probably have the same, if not higher, interest as your old card. And they way they work the payments is also devious. Here’s an example:
Intro. APR for balance transfers: 0% (for sake if simplicity)
Purchase APR: 18%
If you transferred $1000 of debt, and then also bought $1000 worth of stuff on the card, you now owe $1000 at 0% and $1000 at 18%. Let’s say you pay $300 a month. Well, instead of subtrcting $150 from the transfer and $150 from the purchase, all $300 gets subtracted from the transferred balance. So in four months, all that transferred balance is gone, but you now owe an extra $540 (it’s actually more, since they charge interest on the interest.) And then, of course, still only paying $300/month you get even more interest.
So make sure to always read every bit of fine print on every credit card you apply for.
Huh. When I was a student, issuers fell all over themselves trying to sign us up to cards. There was even a table set up right outside the campus bookthieves (store, if you want to be pedantic about it) to rope in the freshmen. Granted, the cards themselves were rather lower-tier–annual fees, unforgiving interest rates, etc.–but that doesn’t matter much for simply establishing credit.
Basically, the major brands are interchangeable, MasterCard and Visa especially so due to some debatably-dodgy “co-branding” practices. Pick up any one–one!–of them, use it exactly as a debit card; i.e., pay off the full balance each and every bill, no less, so that you never even see interest hit you. Do this religiously for at least a year–this will likely boost your credit rating to the point where offers are flooding in from cards with less punishing APR’s and with no, or at least lesser, fees.
Keep paying off the full balances, anyway–you’d be amazed how fast debt can creep up on the little plastic devils.
Oh I am not talking about the ones that set up on a university campus. (Run for the hills with those) I am talking about a legitimate one through a legitimate bank (such as his bank). Remember, credit cards are not issued through mastercard or visa but through banks.
At my school, they are not allowed to offer gifts for signing up students nor are they allowed to hassle students endlessly, lie to them and they must hand out information on reponsible use of credit. They don’t like my school all that much.
Well, I like my American Express Blue card. I was in much the same boat you were earlier this year–I had NO credit, and had never had a credit card. So far, I haven’t had any bad experiences with it, and they offer a good online fraud protection deal.
Plus, it’s clear and I think it’s pretty.
Defenitely go for a card without an annual fee. There’s no reason to pay a fee unless you’re getting a card that will earn you rewards that are far greater than the fee you paid. In your circumstances I doubt that you would get your money’s worth out of it.
I like to reccommend MBNA bank Visa or Mastercards. Their customer service has been awesome every time I’ve called, which I find to be rare these days. I just filed a dispute with them a few days ago and I already have a credit to my account for the exact amount I asked for.
Plus, Visa and MC are accepted just about everywhere. Sometimes you find places that won’t accept a Discover or AmEx card, though that’s becoming less common.
I never said anything is wrong with AMEX. It is a good company. I said that if he wanted to get a free credit report, get turned down for a CC, AMEX Platinum was the example. Most people without credit are not going to get approved for a platinum card. Discover is a very bad card mainly because of how they figure interest.
MBNA is an outstanding company.
But chances are he is not going to get accepted because he has no credit. I still say go get a bank or gas card and start there.
Be wary if a bank asks for any money up front. I have never been asked for an upfront payment.
I tend to disagree with the lower interest equals higher fees. But on that note, a good credit rating can get you lower interest rates. Someone with excellent credit will be offered lower interest than someone with borderline or no credit. (Another kick butt reason to maintain good credit)
Also how you paid your utilities bills have an impact on your credit rating. So always pay those on time…
It is less than a credit card but still important I think.
I’m assuming you’re not planning on running a balance. Don’t - it is a sucker loan.
Given, that, my Discover and my MBNA World Points Visa both give cash back, and have no annual fee. I want to get money from my credit card company, not pay. I have some others, all no fee, but I use these. I have an American Express Corp card for work, but I don’t see the point in having one for home.
There are very few places that don’t take Discover these days, but if you are only getting one, the Visa might be better.
I just got a new card. It’s a chase card that gives miles through continnental airlines. These types usually have a fee. This one is high at $85 a year.
However, every year when the fee is paid you get 10,000 airline miles. If I start putting all my expenses on the card that is about 1,000 a month or 12,000 miles a year. If I pay my bills with the card online, that adds more still. All said, I should get a free ticket to the caribean or Alaska every year or so.
The important thing is to not carry a balance. Pay it in full and don’t pay interest unless you have to.
AFAIK, utilities will typically only hit your credit report if they take the bill to a collection agency. Sometimes, the collection agency won’t even report it until they’ve tried and failed to collect from you. I’d be curious if anyone has had contrary experiences…
As to the OP, I second the posters who’ve said to go to your bank and talk to a rep. If you’re a student, they may offer student cards (BofA did), if you’re not, they may offer secured cards. I’ll add the obligatory advice that I think it’s a good idea to never, ever carry a balance (i.e., not pay the full balance of the statement each month) on a credit card unless it’s a dire emergency. If you can’t pay for it now, you can’t afford it (unless it’s a car or home).
I have had no problems with MBNA. They have been very square. But I am wondering if it is possible to build up good credit simply by using your debit card. The money comes directly from my bank account, but the debit card is issued by Visa. I use it for ordering on line or from catalogs – just as I would use a credit card.
Whatever you do, keep a low limit and pay off your debt in full every month. Otherwise you can quickly end up in big trouble with a bad habit.
Zoe: Your debit card won’t build up your credit because you’re not borrowing any money, which is the whole point of credit. 
If you look at your credit report from one of the “Big 3,” you won’t see your debit-card checking account on it.
It’s a good idea to use a credit card (as opposed to a debit card) for on-line transactions (and in-person transactions, too) because there are much stronger consumer protections with the credit card: If someone steals your number and starts making charges, the aftermath will be much easier to deal with if it’s an actual credit card as opposed to a debit card.