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[miyuru]

Hey guys,

I just applied for a credit card on my friend's advice, I'd just like to get my own for online purchases (rather than asking my bro or my parents). Plus it'd be better to build by credit rating now.

Anyway I was looking for some sites with just general advice on CC's, and how they work, but couldn't find any...any ideas?

I'd just like to know more about CCs before I really start using one. 3.9% APR? Annual fee? Balance transfers? I don't really know what these things mean...

Laugh at me!

 

[maharg]

APR is annual percentage rate, it's the rate by which your interest is calculated if you carry a balance month to month. That means if you don't pay back your entire balance at the end of the period. It's not a direct calculation, though. Usually with a credit card it'll be compounded either daily or monthly, which means the real rate is a little higher. Basically, if you keep a balance you'll pay interest on that balance at:
Balance * (1 + APR/12)^(months outstanding)
if it compounds monthly or:
Balance * (1 + APR/365)^(days outstanding)
if it compounds daily.
So if it compounds monthly and you carry a balance of $300 from one month to the next, at the end of that second month you will owe $300 * (1 + 3.9%/12)^1 = $300.975. Keep that balance for a year and you'll owe $311.91.

Annual fee is pretty obvious -- it's basically a fixed fee you pay every year. If you're smart, you'll get a card with no annual fee, never keep a balance, and never pay any fees at all (interest or fixed). Basically, to the CC company, this is a garaunteed interest rate for them. You could use a rearranged version of the formula above to figure out what the minimum interest you'd be paying if you kept the balance for the whole year by using the credit limit as your balance, but if you never keep a balance you're basically paying interest you don't have to if your card has an annual fee.

Balance transfers are when you turn credit into cash without an intermediate other than a bank. That is, you take cash out of the card with an ATM. Most CC companies seem to IMMEDIATELY charge interest on these rather than waiting for the end of the billing period, so you should avoid them. They may also carry other fees. However, they are useful if you have a card at a high interest rate and you want to transfer its balance to a lower interest credit card.

But really you shouldn't be doing that at this point. There are other kinds of credit that don't penalize you for treating it like cash (lines of credit in particular) and tend to have lower interest rates anyways.

 

[Dsal]

You should never get cash advances from a credit card ever, except in the most dire emergencies. For balance transfers, just ask the credit card company to do it for you and you won't get hit with the horrific fees.

Never get a card with an annual fee if you can help it.

All cards have a grace period, where if you buy something interest does not immidiately accrue. This is usually 28 days but varies from card to card. In other words, if you buy something on a credit card and then immediately pay the balance back to them, preferrably online to be extra fast about it, you will never be charged interest.

 

[Property of Jumpship]

Try not to get a card over 7%, try to get a card with no annual fee, and just watch yourself and your purchases. There is the tendency to go crazy when you first get a credit card because it does not feel like your spending money, then the bill comes and you are screwed. Just be responsible!

 

[Do The Mario]

Can’t you just shop online using direct deposit via internet banking?

 

[mrklaw]

The type to go for depends on your planned spending habits. Basically, try and fuck over the Credit Card company.

- If you plan to pay your card off in full every month, go for one with no annual fee. interest rate doesn't really matter, so have a look if any offer cashback or other incentives.

- If you will roll your purchases over each month and generally have an outstanding balance, then the lowest interest rate is the most important. Here, an annual charge may be worth paying if the interest rate is low enough compared to competitors. Do the math.

- Never take cash out, you get charged interest immediately.

- Check how the balance transfers work. It may be possible for them to write you a check, in which case stick it in a high interest savings account for as long as possible, then pay it back.

 

[Scrow]

credit card advice? yeah, don't get one.

Can’t you just shop online using direct deposit via internet banking?

ding ding ding! we have a winner.

you could also get a debit card (you can only spend money you actually have. there's no "credit") with credit card facilities (the widespread acceptance of VISA on the net for example).

 

[maharg]

Advising someone not to get a credit card is a very bad thing. Good credit should be built early, and proper use of a credit card is generally a really good way to build it. There are other ways, but they're not really any easier, and they tend to require that you risk someone else's credit rating (cosigning).

Abstinance is no more an answer with credit than it is with sex. It's about as much of a non-answer as you can give.

 

[ToxicAdam]

This is the most important thing no one tells you.


Once you are late for a few payments (and you will be) they will jack your APR up to 17-25 percent!


So, pay your shit on time. Look for a card that has on-line payments to make it easier on you (some will even send your statement through e-mail).

 

[xsarien]

You only need to know three things:

1) Pay your bills on time, and in full every month. A good rule of thumb is to treat your credit card as you would cash, don't spend more than you can afford.

2) Never, ever take a cash advance; if they send you random checks in the mail, shred them.

3) Use common sense when buying things online. Any dipshit can say his website is secure, but if it doesn't trigger a little lock icon in your browser, be wary.


Also, fuck shopping online with direct debit. Despite the dangers, a credit card does offer you an extra layer of protection. If you get charged for something that hasn't arrived and you dispute it, the company in question won't get their money immediately until it's all sorted out.

 

[mrklaw]

So, pay your shit on time. Look for a card that has on-line payments to make it easier on you (some will even send your statement through e-mail).

IAWTP x100

My main vice isn't affording my bill, its remembering to pay. I got stung by late payment charges on a 0% offer card. Stupid, and my fault. I now have it set up to automatically pay the minimum amount each month as a safety valve.

 

[Vandiger]

You gotta build your credit somewhere, ofcourse I was stupid to apply for any credit card that gave out free crap which I then started transferring balances from higher apr cards to lower cards finally once I paid off my initial credit cards I canceled them and kept the ones that were "convenient", built up my credit enough to get a good car and apartment. Don't know if I would do that again but its a learning experience manipulating stupid greedy corporations

 

[Escape Goat]

Credit card = magical goodies creator

 

[tedtropy]

Credit card = magical goodies creator

My room would agree.

I keed, I keed. I threw my recent Ikea romp on there, but mainly I've been using my Citi credit card for purchases I know I can afford in an attempt to build credit and make those hefty necessary purchases a little easier to swallow (need new tires soon, whee).

 

[miyuru]

Awesome advice, you guys truly rock.

I'm not really worried about going into debt or anything. I have $2Gs in my chequing account, and another $6.4 in my savings (going to start an RRSP once I finalise the details regarding my summer job and pay my taxes). I use my debit for everything, and that's not much in the end - food, gas, and the occasional article of clothing.

Regarding using a debit card for online purchases - I believe this is more a thing in the States than Canada where I am. Not sure how it works exactly though, but I'm 100% sure I can't use my debit here the same way you can in the States, as a CC of sorts.

Well in the end, I've applied for a card from MBNA. My brother has one from them, as do most of my friends. We're all students, so I guess that's why. I already applied at my bank (President's Choice) but was denied, I'm assuming they don't want to hand out cards to students, etc., people who don't make $35Gs or more a year.

Once my credit rating grows, I guess I'll look into other kinds of cards. I'm wondering about all those cards that give you points for something, like the eBay CC. I suppose these aren't really scams at all hey?

 

[maharg]

I'm not really worried about going into debt or anything. I have $2Gs in my chequing account, and another $6.4 in my savings (going to start an RRSP once I finalise the details regarding my summer job and pay my taxes). I use my debit for everything, and that's not much in the end - food, gas, and the occasional article of clothing.

You live at home, I take it? Believe me, once you move out the credit will look much more tempting and cash in the bank won't help you as much. You'll still have to be very vigilant.

 

[belgurdo]

Don't listen to the "you don't need a credit card" people, unless you plan to pay for a car/house/something else large and necessary by saving up quarters for 20 years or something. But don't buy little stuff with it-i.e., getting cash advances to buy a PSP, using credit to buy a pack of gum and then forget to pay the bill or whatever. Getting too much small stuff will take ages to pay off and adds to the cost of the item, and the penalty for not paying on time is killer

 

[miyuru]

You live at home, I take it? Believe me, once you move out the credit will look much more tempting and cash in the bank won't help you as much. You'll still have to be very vigilant.

Exactly man. I've pondered moving out, thinking about the costs of rent and food mainly, and I could afford it, though I wouldn't have *any* cash lying around like I do now. I'm 19, and my plan is to live at home as long as possible :lol Well, until it's really really unattractive to the opposite sex

But honestly, free food, no rent, no utilities, tons of amenities, and to top it off I can borrow a car when I (usually) want to? This place is GOLD :lol

Don't listen to the "you don't need a credit card" people, unless you plan to pay for a car/house/something else large and necessary by saving up quarters for 20 years or something. But don't buy little stuff with it-i.e., getting cash advances to buy a PSP, using credit to buy a pack of gum and then forget to pay the bill or whatever. Getting too much small stuff will take ages to pay off and adds to the cost of the item, and the penalty for not paying on time is killer

Ah ok. I don't really want to put small purchases on my card, rather just use debit for that. I just want to start buying more stuff on the internet, maybe like one item a month, though I don't want to spend more money/month than I currently am. I just figure I'll be able to find things for much cheaper (i.e. clothes) over the net than I can right now, buying stuff locally in-person.

But yeah, I totally see how I'll be able to fall into buying things like mad. Especially with services like eBay, etc.. Though two jobs, soccer, and flairing will keep me busy this summer! ^_^

 

[Diablos]

The best advice I can give you is don't get more than one credit card unless you make a lot of money. You may think that by spending $100 here, $50 there, $200 on something else that you'll be able to pay it off in a few weeks. It's not always that easy. I'm not saying that you should act like Uncle Bubba on welfare, but know that paying off your credit card will (at least initally) take longer than you first thought.

 

[alejob]

Can’t you just shop online using direct deposit via internet banking?

Elaborate please. I'd like to know more.

 

[Wellington]

Just don't be a goon about it, is all. Pay at least double the minimum payment every month, as I've found that lenders look favorably on a person that pays more than is required, hence my fat credit rating.

Few bits of advice:

If you do sign up for a credit card and get it, keep this one FOREVER. If you want to get rid of it, pay it off in full and cut it in half, do not cancel the account. It'll help build a credit history and from what it looks like (according to my own history) that even with no activity, it rox for you having a ton of 0 balances for x amount of months.

Don't go crazy with the plastic, and if you don't have cash on hand your first option should be your bank debit card.

Get a card with good incentives, like airline miles or something.

 

[teh_pwn]

I only use credit as convenience, and I pay it off before the grace period.

Advice: Don't get into actual debt. Instead invest everything young. While some people will be struggingly to pay off their debt over a few decades because they just had to have such and such car/whatever (just get a fing honda civic), you'll be on the other side and you'll retire early as a multi-millionaire.

 

[Wellington]

I only use credit as convenience, and I pay it off before the grace period.

Advice: Don't get into actual debt. Instead invest everything young. While some people will be struggingly to pay off their debt over a few decades because they just had to have such and such car/whatever (just get a fing honda civic), you'll be on the other side and you'll retire early as a multi-millionaire.

I agree, it's a good philosophy. Soon as I pay off my student loans I am in the green instead of the black.

 

[Pochacco]

Credit cards are easy.
I got one earlier this year - now I have 3 (best to have at least 1 Visa and 1 Mastercard).
I started with a pathetic $500 credit limit, but am now up to $4500 (still kinda pathetic, but meh).

Anyway, all my cards are of the no annual fee kind. They have points: dividend cash back, air miles, etc. but don't expect to get much in return for no-annual-fee cards: especially if you don't spend like crazy.

They're quite convenient. I'm the type of person who hates carrying change on me, so I use my card for everything: from pricey airplane tickets to a $1 loaf of bread.

I pay my CC bills online, and have access to online statements. Sometimes, I'll buy something with my CC, then go home and pay off that purchase immediately. It's really quite simple.

I guess I could stick with Interac, but there are a few advantages of Credit Cards:
- you look cooler when using it (ok, maybe not when you use it for $1 purchases like me)
- you slowly, very slowly, build up reward points
- *you build up your credit

Just use it wisely, and it's great.

Btw, everyone seems to have a fricking PC card in Canada!
If they don't accept you, try to specify that you are a student if possible. It shouldn't be hard. You'll just start off with a low credit limit.

 

[xsarien]

Credit cards are easy.
I got one earlier this year - now I have 3 (best to have at least 1 Visa and 1 Mastercard).

I (kindly) disagree:

Visa and Mastercard are both accepted damned near everywhere. So when I got "out on my own," I applied for a Visa and an American Express. That pretty much covers all of the bases, and now that Amex has Blue, you can't fall back on the annual fee excuse for not having one.

 

[miyuru]

By investing your money, any ideas?

Other than RRSPs, I don't think there's much I could do to invest my money.

 

[teh_pwn]

I know next to nothing about investing but I'm going to learn soon.

I'm 20, and I'm an engineering co-op student. I've still got to pay for my education. Depending on whether I continue to get scholarships, I could break even or make thousands.

As soon as I graduate, I'm going to look into IRAs, 401K, and mutual funds.

 

[Escape Goat]

Dont get too many cards either. That includes Target, Gap, grocery store credit cards because even if you dont use them it reflects on your credit.

 

[maharg]

As if a form of karma, this morning I discovered fraudulant charges on one of my credit cards. At least I caught it. Most likely they'll reverse the charges, but oy.

 

[ChumsGum]

Great replies. I'd only like to add about those cards with incentives like an Ebay CC or airline CCs; you eventually pay for those with annual fees or higher interest rates.

 

[darscot]

My advice, stay the fuck away from credit cards. That being said, modern society basically dictates that you have one. MBNA is a pain in the ass. The only good thing about them is they have the best goodies for applying. They will phone your ass constantly trying to get you to increase you limit or buy life insurance or some other bullshit. Credit Cards are not cool there evil dont be fooled by the bullshit.

 

[Apharmd Battler]

Best advice wasmentioned above, treat CC like you do cash. Don't spend more than you have. It's easy to get caught up in the 'minimum fee' mind set. The minimum fee will keep you chained to the CC company for a good part of your life. I know many who have learned the hard way.

Also keep in mind if you don't even want to deal with credit companies, you could get a debit card from your bank to satisfy your needs. But you don't build any credit that way. Keep your card paid off o r at the very least make MORE than your monthly payments. I try to get cards with little incentives/bonues. Like my Toy-R-US Visa gets me gift certificates to the store. Since I mainly use this as my gaming purchase card, and I'm insanely hardcore, I always have a bunch of credit to use to buy more games. Discover has excellent rewards programs as well. I'm carrying a balance on a card now because I'n saving up for my wedding, investing my money, and re-did my deductions. I usually pay this off tax and bonus time but I'm strapped this year and will kncok it down after I'm married.

Just be very careful and I'm glad you're smart enough to ask questions. I had to learn the hard way many years ago when I went to college, the companies basic give these things to students knowing darn well that they can't properly manage their finances, and that's how they hook you for life. I remember the happiness I had when I paid off, cancelled and cut my MBNA Visa (Stay the hell away from that bank). Who would've thought that I'd be paying for that order of buffalo Wings with interest for 2 years.

Be wary of retail cards as well. The interest rates are pretty high and it's easy to rack up a big balance. This is my issue with Best Buy, they have 90 days same as cash. So I had to stop myself form going in every Tuesday buying DVDs, because you can rack up pretty fast. It's easy to get out of control with those.

As you get older and earn more income and properly handle your finances, and own a home (equity), you'll be able to get anything you want. I have to turn stuff down all the time. I keep like 3 card with no balance just in case of emergency (i.e. burst hot water heater, plumbing, being sentenced to a Turkish prison), yo never know.


Sorry for the long post but I was wondering why there is really no education on the whole credit card system. I know many were lobbying for this years ago, but the CC banks shot it down. They love getting young people ignorant to nuances of the rules, and then hook them in for life.

 

[darscot]

I'm not sure were you sit finacially but trust me once you hit a certain income they will be all over you. I don't know how they found out but I've been looking into getting a new car. They call me up and offer to move my limit which is a few thousand to fifty grand. Just in case I needed to make a big purchse. Who the fuck is dumb enough to buy a car on credit card.

 

[Apharmd Battler]

My advice, stay the fuck away from credit cards. That being said, modern society basically dictates that you have one. MBNA is a pain in the ass. The only good thing about them is they have the best goodies for applying. They will phone your ass constantly trying to get you to increase you limit or buy life insurance or some other bullshit. Credit Cards are not cool there evil dont be fooled by the bullshit.

Good advice and it's partly true. My fiancee REFUSES to own a credit card. She uses her debit and manages her cash very well. I would say don't get a card if you don't have to, but when your young and starting out it's hard to get some things going without some type of credit record. I remember when I graduated from college it was an ightmare trying to rent a car or even get a BlockBuster account without some form of credit. Get one card and if you use it, opay off that balance or the majority of it. CC banks make there profit (a huge one off interest). I recommend Discover, it's accepted most places and has huge kickbacks, and excellent customer service (you don't have to be afriad to dispute a charge). Stay away form MBNA, I swear out of most people I know, including myself, they have horrible customer service and will jack you with fees and drama. They were sent to our plane form Satan to make thelives of many miserable. You have been warned.

 

[Vlad]

Another thing that should be mentioned is that once you start building up a credit history, you really should invest in a good paper shredder. The amount of credit card ads and junk that you can get in the mail is just insane, and as a rule, those should ALWAYS be shredded.

 

[DarienA]

One thing I'm not sure if it was mentioned... it's nice to have a credit card to you know start to build credit... in addition to that use it.. but I say DO use it for small purchases each month.

Each month make a few small purchases that you know you can payoff in full and then some each month.

That's a much better way to establish credit than to simply have a card... and never use it.

 

[Pimpwerx]

Err...if you haven't had a CC before, then good luck getting a good APR. You're gonna get the shit end of the stick on APR. Probably something close to 20% IMO, but who knows. They might offer intro APRs as low as 15% for CC virgins, but I wouldn't bet on it. I got a one card that's 13%, and another that'll go to 8% after the 0% intro rate expires in October.

I put my laptop on the 0% card, and have been paying $300 per month to pay it off by the end of Summer. The other card gets me frequent flyer miles, so I use that to put all my expenses on. I charge EVERYTHING but bills to it, so I can earn miles quicker, and I pay in full at the end of each month. Maybe sometime around Summer, I plan on paying most of my bills on there as well. Not the car payments, but everything else should be fair game at that point. That'll double my flyer miles since I got like $500 in bills save for my car payments. PEACE.