What credit card should I get as my first?

[craigwatanabe]

Re: What credit card should I get as my first?

If credit rating isn't an issue and just paying things via a credit card is, then go for a debit card. I have an American Savings Bank Debit card that accesses my checking account. It functions and looks like a Visa Card but you're limited to what you have in your account.

[GeckoGeek]

Re: What credit card should I get as my first?

debit card

Ordinarily I tell people to avoid debit cards. Because when things go bad, it go much worse with a debit. The reason is if there's fraudulent charges, it will come out of your account and leave you with little to no money. With a credit card, you can dispute it when the bill comes and you don't pay it. Both way you'll eventually get your money, but with a debit card it YOU that's out the money until it all gets straightened out..

I've had checks forged on my account and I've had fraudulent charges on my credit card multiple times. I'll take the credit card problem any day. What happened with my checks is that they cleaned out my account. I couldn't even get $20 from the ATM. I had to borrow money to eat until the bank opened on Monday. Then on top of that, the bank made me change my account, so I was stuck with those "new account" checks that hardly anyone will cash and had to wait weeks for my new ATM card. For my credit card, I just sign some paperwork and mail it in. I've had to change the card once, but that was easy and I still had my ATM card so, no problem. A debit card problem is too likely to be like my forged check experience.

That said, I can understand the attraction of debit cards. You can't spend what you don't have, so you're less likely to go into debt. It's a psychological safety system.

[brianca]

Re: What credit card should I get as my first?

That's why it's a good idea to have a second account for your emergency savings that isn't used for overdraft on your primary account. That way the money is there when you need it.

[WindwardOahuRN]

Re: What credit card should I get as my first?

If credit rating isn't an issue and just paying things via a credit card is, then go for a debit card. I have an American Savings Bank Debit card that accesses my checking account. It functions and looks like a Visa Card but you're limited to what you have in your account.

I might be mistaken but I think Adrian has yet to establish a credit rating?

Using a credit card wisely is a good way to establish a good rating. Charge inexpensive items, pay them off quickly.

I realize that the people who are advising Adrian not to get a credit card mean well but how is a person of limited means ever going to establish a credit rating (FICA score) if he doesn't work on getting a record of borrowing and repaying debts?

I do agree, however, that he should probably not buy that laptop.

He's young but he's not a kid. I think he should take a dip in the water and prove that he can swim.

[Miulang]

Re: What credit card should I get as my first?

Credit cards are good for emergencies or when renting cars (you basically can't rent a car without one, unless you have like $800 cash).

For a first credit card, I would get a gas card rather than an all purpose bank credit card. For one thing, if you drive a car, you need to buy gas, and you're not going to be able to buy much more than gas on a gas card (maybe soda or snacks) so the amounts will be relatively small and easy to pay off every month and you will establish your credit rating fairly quickly.

One other thing I learned about charging gas on a regular credit card: the gas companies (no fools, they) will "preauthorize" (put a hold on your credit line) for an amount greater than the purchase price of the gasoline. They used to preauth something like $150, so you could bump up against the maximum limit on your credit line on your VISA or MC without knowing it (especially if you charged a lot of other things on that same card). That's one of the reasons I use my gas charge card to buy gas and not my Visa or Mastercard most of the time. Some restaurants will also preauth for an amount greater than the purchase amount, too.

Also, there used to be more of a "float" on Mastercard than on Visa cards (i.e., the amount of time it took for a credit purchase to show up on your statement). I learned a lot about what the credit card issuers do to make money off your account when I had to put an e-commerce payment system in place.

I don't have one, but I think a Discover card is easier to get than a Visa or Mastercard. Also, if you haven't established a FICA score yet, any issuer of bank credit cards will probably keep your credit limit low...like $200, which won't allow you to buy a big ticket item, anyway.

Miulang

P.S. GeckoGeek is correct about the liability difference between a debit card and a credit card. You have no recourse to dispute purchases made on a debit card (unless you buy extra insurance or your bank provides an overdraft/ID theft protection service) but you have the right to dispute charges on a credit card and your maximum liability for a stolen card if you don't notify the issuer within 24 hours is $50.

[GeckoGeek]

Re: What credit card should I get as my first?

You have no recourse to dispute purchases made on a debit card (unless you buy extra insurance or your bank provides an overdraft/ID theft protection service) but you have the right to dispute charges on a credit card and your maximum liability for a stolen card if you don't notify the issuer within 24 hours is $50.

I *think* most banks have a policy that make that a non-issue. My main point is what happens until the dispute is resolved. (However long that takes. At minimum you'll probably have to wait until the bank opens for normal business, which could leave you stranded over a weekend.)

If one doesn't have the self-control to avoid problems with a credit card (first symptom - not being able to pay off in full.), then a debit may be the way to go.

If you do get a debt card, you better have a backup plan in case that account gets wiped out or tied up for bit. I've had my credit cards hit on 3 separate occasions. To assume that one can go their lifetime without ever getting hit seems foolish.

[brianca]

Re: What credit card should I get as my first?

You can easily go your whole life without using credit cards to establish credit. Almost everything you pay on a regular basis will create a credit record. It's a credit card company myth that you need to get a credit card to establish credit. Almost all debit cards are now backed by visa or master card so that they give much of the same protections of the credit cards on theft. It used to be a big issue, and it may still be at some credit unions and smaller places, but it's really a non-issue now. Debit cards can now be used at pretty much all the rental car companies. That's all I've used for many years and I've had no issues.

[Palolo Joe]

Re: What credit card should I get as my first?

It's a credit card company myth that you need to get a credit card to establish credit.

Maybe it's a misconception, but it's no myth. Getting a credit card does in fact help to establish and build your credit rating faster than not having one.

Sure, you don't need a credit card. But if you can find one that has no annual fee and a low introductory rate, it probably wouldn't hurt to sign up.

Using debt wisely is the key. Don't let it get out of control.

[brianca]

Re: What credit card should I get as my first?

I was saying that the myth is that you need one, not that having one impacts your credit. I'm just saying there are better ways to build credit, and building credit isn't a good reason to get a credit card, IMO.

If you don't have the resources to build up a good emergency fund of cash (~6 months living expenses) then having a no fee card that will cover you in those instances is a good reason to have one but never use it. Other than that, there aren't many good reasons. Again, IMO.

[WindwardOahuRN]

Re: What credit card should I get as my first?

I was saying that the myth is that you need one, not that having one impacts your credit. I'm just saying there are better ways to build credit, and building credit isn't a good reason to get a credit card, IMO.

If you don't have the resources to build up a good emergency fund of cash (~6 months living expenses) then having a no fee card that will cover you in those instances is a good reason to have one but never use it. Other than that, there aren't many good reasons. Again, IMO.

So just what are the wonderful ways to build up credit?

Keep in mind the subject is a 20-something who, if I am not mistaken, does not pay rent nor does he have debts.

Perhaps I am steering Adrian in the wrong direction. As a person who has a FICA score of 830 and as the parent of children whom I have guided towards financial health, I somehow doubt it.

Apologies in advance, Adrian, if I have gotten this wrong.

IMHO, a wisely-used credit card is one of the best ways to establish a good credit rating. Gas card, store card, VISA or Mastercard---go for it.

We gotta kick the kids outta the nest at some point.

[WindwardOahuRN]

Re: What credit card should I get as my first?

Double post. Yikes.

[brianca]

Re: What credit card should I get as my first?

Those are all excellent ways to build credit, and if you don't have any of them, you don't need credit IMO.

[WindwardOahuRN]

Re: What credit card should I get as my first?

Those are all excellent ways to build credit, and if you don't have any of them, you don't need credit IMO.

Huh?

[brianca]

Re: What credit card should I get as my first?

If you don't need to pay rent or pay any regular payments or anything like that, what would you need credit for?

IMO credit cards are almost cultlike. For some reason people are always trying to talk others into getting them. If you suggest that they not, people always act like your crazy. It's a strange thing.

Just do your thing. Credit cards aren't evil, but they will hurt you long term 99 times out of 100. Pay your rent on time and all your bills when you get out and live on your own, and the credit will come. You don't need a good credit rating before that.

[WindwardOahuRN]

Re: What credit card should I get as my first?

If you don't need to pay rent or pay any regular payments or anything like that, what would you need credit for?

IMO credit cards are almost cultlike. For some reason people are always trying to talk others into getting them. If you suggest that they not, people always act like your crazy. It's a strange thing.

Just do your thing. Credit cards aren't evil, but they will hurt you long term 99 times out of 100. Pay your rent on time and all your bills when you get out and live on your own, and the credit will come. You don't need a good credit rating before that.

There is nothing inherently wrong about aspiring to obtain a good credit rating. It is part of life in the real world. In the long run, it can get you lower interest rates for such things as mortgages and car loans, among other things.

Credit cards will not "hurt you long term 99 times out of 100." (Wondering where Brianca has gotten his statistics from.)

I stand by my advice to Adrian. Establishing a good credit rating via using credit cards wisely is a good thing. It is advice I have given to my own children, with excellent results.