Advice For Young Men: Credit Cards

[JBH3]

Re: Advice For Young Men: Credit Cards

Why? If you can pay for it, pay with a credit card, get the points, and pay it off when you get your statement.

Yea...I get that...I guess my thinking is that people will fall into a trap. Life happens, and sometimes one can be overzealous with something like credit. If you've got cash in-hand to purchase something there's no real need to even put it on your card. Also, what is the card's policy? Finance charges etc apply on all purchases, or all purchases over a certain amount?

If you have cash to pay something, but use your card and your card has finance charges...now add that finance charge to the cost of the item you bought and you now paid that much for that item. When you wouldn't have had to do that paying cash.

People need to read the fine print...

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

Yea...I get that...I guess my thinking is that people will fall into a trap. Life happens, and sometimes one can be overzealous with something like credit. If you've got cash in-hand to purchase something there's no real need to even put it on your card. Also, what is the card's policy? Finance charges etc apply on all purchases, or all purchases over a certain amount?

If you have cash to pay something, but use your card and your card has finance charges...now add that finance charge to the cost of the item you bought and you now paid that much for that item. When you wouldn't have had to do that paying cash.

People need to read the fine print...

You only pay finance charges on what isn't paid off for the period. If you pay your balance off monthly, you will never ever see a finance charge. So your argument about paying cash and accumulating interest over the course of that time doesn't hold merit in this case. I'm 99.9% sure all credit cards work this way. I've used a dozen or more in my life and they all have worked this way.

If you rack up $1000 in the month and pay off only $200, then you will start to accumlate interest on the remaining $800 at a rate of APY/12 per month.

All I know is because I pay for everything with a credit card, I will be getting $500-$550 back from the credit card company next month, which will be great for Christmas. I pay no annual fee and haven't carried a balance in about 3 or 4 years.

Sounds like a great deal for me.

If others are not as responsible, then I agree with you, but those with fiscal restraint and responsiblity, it's a no-brainer to me. The convenience of making one payment a month is awesome instead of writing several different checks or making several different online payments from my bank and the cash back is a huge bonus.

Also, good luck to anyone trying to purchase a home or a car without a solid credit history as they will never get near the best rates available. They will be paying 8-10% on a car note instead of the promotional 0% or 0.9% that are regularly offered to only those with top tiered credit.

It's really like alcohol or drugs...not good for the irresponsible, but not a problem for the responsible.

[WazzuRC]

Re: Advice For Young Men: Credit Cards

Just curious, who do you guys have credit cards with? Any good cash back, perk programs?

My two CC's are a joke, and I'm looking to get rid of them and get a new one.

[JBH3]

Re: Advice For Young Men: Credit Cards

You only pay finance charges on what isn't paid off for the period. If you pay your balance off monthly, you will never ever see a finance charge. So your argument about paying cash and accumulating interest over the course of that time doesn't hold merit in this case. I'm 99.9% sure all credit cards work this way. I've used a dozen or more in my life and they all have worked this way.

If you rack up $1000 in the month and pay off only $200, then you will start to accumlate interest on the remaining $800 at a rate of APY/12 per month.

All I know is because I pay for everything with a credit card, I will be getting $500-$550 back from the credit card company next month, which will be great for Christmas. I pay no annual fee and haven't carried a balance in about 3 or 4 years.

Sounds like a great deal for me.

If others are not as responsible, then I agree with you, but those with fiscal restraint and responsiblity, it's a no-brainer to me. The convenience of making one payment a month is awesome instead of writing several different checks or making several different online payments from my bank and the cash back is a huge bonus.

Also, good luck to anyone trying to purchase a home or a car without a solid credit history as they will never get near the best rates available. They will be paying 8-10% on a car note instead of the promotional 0% or 0.9% that are regularly offered to only those with top tiered credit.

It's really like alcohol or drugs...not good for the irresponsible, but not a problem for the responsible.

Reading is fundamental.

I guess my thinking is that people will fall into a trap. Life happens, and sometimes one can be overzealous with something like credit.

^Above Translation: You could have the money to pay a purchase off, then something come up, and now you cannot pay off that purchase because you don't have the cash-in-hand to do so.

Your whole bit on fiscal restraint is nice and all, but the creator of the thread perhaps doesn't share your same wherewithall, hence the CREATION of the thread.

EDIT: Regarding your points on housing...haven't we learned that the American dream is not attainable for all i.e. foreclosure after foreclosure. This is advice for young men right...so young men need not saddle themselves w/ credit card debt.

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

Just curious, who do you guys have credit cards with? Any good cash back, perk programs?

My two CC's are a joke, and I'm looking to get rid of them and get a new one.

I said it somewhere earlier, but I have the Chase Freedom card. We were just upgraded from the Chase Rewards card.

I get 1% back on everything. And 5% on certain purchases that meet their quarterly criteria. For Q4, it's 5% on grocery stores, department stores and movie theatre tickets. And then on top of that I get an extra 10 points per purchase and an extra 10% increase. The last two parts get confusing .

I think it will end up being like 1.25% or so for this quarter.

[thaima1shu]

Re: Advice For Young Men: Credit Cards

I have an Amazon Visa Rewards card. 3 points for Amazon purchases, 2 for gas and restaurants, 1 for everything else. Basically comes out to 3%, 2%, and 1% cash back respectively.

As long as you pay off your balance the same month, it's like the credit card companies are giving you free money. I'm 22, had credit cards since 18, and never once carried a balance. It all depends on whether you think you will be financially responsible enough to understand how credit works and that you shouldn't spend more than what you actually have. A $10,000 limit doesn't mean you should spend $10,000, especially if you only have $1,000 in your checking account. Just be smart and logical. I find it amazing that so many people are in debt. I guess I'm just lucky that my parents gave me sound financial advice and taught me about money from a young age.

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

I guess I'm just lucky that my parents gave me sound financial advice and taught me about money from a young age.

Yep. Me, too. My parents were tight and it drove me crazy, now I apprecaite it. My dad had a Discover card back in the day and the only way he would get his cash back was if he paid off his balance in full.

When I was in college, I never got into bad debt, but sometimes I would make a large purchase and pay if off over the course of a few months. I signed up for a Target Card to get an Xbox and World Series Baseball and another controller for 10% off at Target and it took me a few months to pay it off.

I got a card at a jewlery store that was 0% interest for 6 months and paid it off over the course of time.

As long as you understand it and can keep it under control, it will be a good learning process for most.

[JBH3]

Re: Advice For Young Men: Credit Cards

I got a card at a jewlery store that was 0% interest for 6 months and paid it off over the course of time.

The wife and I did this for a JC Penny card for furniture. We paid it off within a month. I've heard conflicting reports that leaving the account Open w/ no balance, or closing it altogether can be good or bad.

I think it was like for my Credit Report it was good, but for my Mrtg loan it reflected as bad and our advisor told us to close the account; which we did.

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

Reading is fundamental.



^Above Translation: You could have the money to pay a purchase off, then something come up, and now you cannot pay off that purchase because you don't have the cash-in-hand to do so.

Your whole bit on fiscal restraint is nice and all, but the creator of the thread perhaps doesn't share your same wherewithall, hence the CREATION of the thread.

EDIT: Regarding your points on housing...haven't we learned that the American dream is not attainable for all i.e. foreclosure after foreclosure. This is advice for young men right...so young men need not saddle themselves w/ credit card debt.

That assumption seems to be that everyone with a credit card is a shopaholic who can't contain their spending and isn't smart enough to reap the benefits that are available to them if they use the tool that is available to them wisely. Learning this and having a few problems at 18 or 20 years old is a much better lesson to learn than at 30 with a family a foreclosure.

To the OP's credit, he is asking the right questions instead of blindly signing up for a card without properly knowing how they work, which is a positive.

It's nice to say not to live beyond ones means, but how many of us truely do? I'm sure the majority of us all finance our homes, vehicles, boats, and other large items.

Buying a $2,000 TV and paying it off over the course of 18 - 24 months at a moderate rate of interest is no different than the debit incurred and the interest paid from purchasing a $25,000 car and paying it off over 5 years. The process is the exact same, just the item and price are different.

It's when that $2,000 TV becomes a TV, plus an enteratinment center and a surround sound system and a PS3 and a Blue Ray Player, and 25 movies and 5 games etc. that it becomes a problem.

The bottom line comes down to responsiblity. Some can handle it and some will be buried by it. Like drugs and alcohol, really. Some people can drink in moderation and some people lose control. Debt is very similar.

I guess our views are different. Essentially your POV seems to be to try and stay away from credit cards to avoid the pitfalls that many fall into. Mine is to test the waters, learn how they work and learn how to use them responsibly as they, as well as the process of using them, will benefit you down the road.

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

The wife and I did this for a JC Penny card for furniture. We paid it off within a month. I've heard conflicting reports that leaving the account Open w/ no balance, or closing it altogether can be good or bad.

I think it was like for my Credit Report it was good, but for my Mrtg loan it reflected as bad and our advisor told us to close the account; which we did.

Yeah, that part is always a bit tricky.

A low ratio of debt to available credit is good and shows dicipline, but having too much available credit is a risk for the lender as potentially you could suddently go on a shopping spree and turn that available credit into actual debt.

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

Interesting point for those trying to build a credit history and a strong credit score:

Your credit score is a number that is calculated with a formula that lenders use to predict how much risk you are as a borrower. This score is one of the most important factors used when determining whether or not to lend you money and at what interest rate.

What’s In a Credit Score?



There are five categories that go into your credit score:

• Payment History – 35%
• Total Amounts Owed – 30%
• Length of Credit History – 15%
• New Credit – 10%
• Type of Credit in Use – 10%

As you can see, the bulk of your credit score comes from your payment history and the total amounts that you owe. This means late payments and high balances have the greatest impact on your overall score.

50% of your score is based on a postive debt history (length of history and payment history).

That means half your score is based on you having debt and managing it properly for a lenghty period of time, which is why I think it's better to start early and make a mistake or two before things get serious (rent/mortage, car payments, student loans, etc.)

[JBH3]

Re: Advice For Young Men: Credit Cards

That assumption seems to be that everyone with a credit card is a shopaholic who can't contain their spending and isn't smart enough to reap the benefits that are available to them if they use the tool that is available to them wisely. Learning this and having a few problems at 18 or 20 years old is a much better lesson to learn than at 30 with a family a foreclosure.

To the OP's credit, he is asking the right questions instead of blindly signing up for a card without properly knowing how they work, which is a positive.

It's nice to say not to live beyond ones means, but how many of us truely do? I'm sure the majority of us all finance our homes, vehicles, boats, and other large items.

Buying a $2,000 TV and paying it off over the course of 18 - 24 months at a moderate rate of interest is no different than the debit incurred and the interest paid from purchasing a $25,000 car and paying it off over 5 years. The process is the exact same, just the item and price are different.

It's when that $2,000 TV becomes a TV, plus an enteratinment center and a surround sound system and a PS3 and a Blue Ray Player, and 25 movies and 5 games etc. that it becomes a problem.

The bottom line comes down to responsiblity. Some can handle it and some will be buried by it. Like drugs and alcohol, really. Some people can drink in moderation and some people lose control. Debt is very similar.

I see homes and cars different from credit cards. Cars and homes are depended upon items which HAVE to be financed. Credit cards, not so much.

Perhaps my journey in life sways my experiences much different than most here? I was in the military. So I built my credit history based off of my job. When I applied for a car loan w/ NavyFed, I had no credit history. Just the fact that I was a Lance Corporal in the Marine Corps, NavyFed knew I had a paycheck coming on the 1st and 15th, and my father was co-signing for me.

Buying my Mitsu Galant and making payments in-full and on time greatly built my credit history. Like most on here may have done I didn't start building a credit history from college, so I cannot share in those experiences.

I didn't get a credit card until AT LEAST a year after I had been paying off my car, and the credit limit was only $500 (now $3,000); I got that credit card 8yrs ago.

[Trevytrev11]

Re: Advice For Young Men: Credit Cards

This should all be covered in a mandatory High School class taught to seniors.

I don't care if an elective has to be dropped or a math/science/history/foreign languate class has to be shortened to one semester.

Every student should have a fundamental knowledge of how this stuff works when they leave school. It's nice to have a well rounded education, but learning how to live in the real world, should take precedent, IMO. It's obviously not being taught in the majority of homes.

[JBH3]

Re: Advice For Young Men: Credit Cards

This should all be covered in a mandatory High School class taught to seniors.

I don't care if an elective has to be dropped or a math/science/history/foreign languate class has to be shortened to one semester.

Every student should have a fundamental knowledge of how this stuff works when they leave school. It's nice to have a well rounded education, but learning how to live in the real world, should take precedent, IMO. It's obviously not being taught in the majority of homes.

I agree. Great thing about the Marine Corps is you get all kinds of "Personal Finance" training/classes. There was even an MCI (Distance Learning-type-thing) that you could read through, take a test, and use the passing grade towards your promotion score (cutting score).

[TMagic]

Re: Advice For Young Men: Credit Cards

Trev...JBH...

You guys have both brought up "APR"?

Trev...You said something about APR being divided by 12 months. So are you saying that if a card says it has 20% APR, that you'd only be paying about 1% from month to month on any balance? I've always just assumed that if it said 20% APR, that meant 20% interest added every month on your balance.

And JBH...You mentioned something about fixed APR's. Would you mind going into a little detail about the different types there are.

Basically, if you guys dont mind, I would like to know about all the additional monies I'd be spending by using a credit card. Such as APR and anything else that may be charged to a user. I just would like a good understanding of what I could be spending ON TOP OF any purchase I make using a credit card.