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adulthood: how does it?
So, okay: I have never in my life had a credit card. This is something that baffles a lot of people, but it's true! My name is technically on my parents' card - it was supposed to be one of those "use it WISELY, pay it off, build credit" things parents do, but I have literally never once used it. Because...idek, paranoia? Being stuck in my ways? Failure to Adult? I have a debit card, I have a checkbook, I am FINE.
Except, okay, I'm 25, having a credit card is not actually an unimaginable thing to do, and possibly actually a good idea. Except...where do I even start? I have five accounts with four different banks (...don't even ask, my family does savings in a way that is the most special), do I talk to one of those? Except the bank that is local doesn't offer credit cards, so that's out. I get mailers from Southwest and stuff, but I feel like that is...somehow not a good plan? AUGH THIS IS SCARY AND BEWILDERING, GIVE ME ADVICE, I seriously have no idea what the fuck I am doing with this nonsense.
Except, okay, I'm 25, having a credit card is not actually an unimaginable thing to do, and possibly actually a good idea. Except...where do I even start? I have five accounts with four different banks (...don't even ask, my family does savings in a way that is the most special), do I talk to one of those? Except the bank that is local doesn't offer credit cards, so that's out. I get mailers from Southwest and stuff, but I feel like that is...somehow not a good plan? AUGH THIS IS SCARY AND BEWILDERING, GIVE ME ADVICE, I seriously have no idea what the fuck I am doing with this nonsense.
no subject
Getting a credit card and using it responsibly is absolutely something that you should do, for building your credit in preparation for potentially purchasing a home, primarily. There are three main things you should focus on when getting a credit card:
1. Don't pay FOR the card (i.e., avoid cards that charge a yearly fee for the privilege of having one).
2. Get a card that gives you stuff for using it (i.e., points or cash back or miles).
3. Get a card that has a not-crazy interest rate, although this point is actually much less important than the first two, believe it or not, as long as you pay it off every month.
There are fancy shiny cards that charge an annual fee that CAN actually be worth the price, because of what they give you in exchange. However, unless you intend to become someone who charges EVERYTHING you buy every month on a card and then pays it off each month, you probably won't use it enough to actually make that fee worth it.
Lucky for you, there are cards that give you cash back or reward points that don't have an annual fee! These are the two that I have:
Citi Dividend Visa (https://creditcards.citi.com/credit-cards/citi-dividend-card/)
American Express Blue (http://www304.americanexpress.com/getthecard/learn-about/Blue)
The first is a cash back card, the second is a points card. I like the cash back one a bit better because it pays you back a higher yield on what you spend (1% of all purchases, whereas the items or gift cards you can use Amex points for end up being more expensive (i.e., it would cost you 20,000 points for a $100 gift card rather than 10,000)), but there are a ton of concert and theatre ticket deals and presales for Amex card users, so that's worth it to me. (You can also use points on ticketmaster to buy tickets directly, which is what I usually end up using my points for.)
The interest rate for both of these cards is about average, and like I said, you don't actually need to pay attention to trying to get the lowest interest rate IMO, because you should NEVER be looking at a credit card as something you'll actually use as a line of credit loan. All credit card rates are higher than you'd ever want to use for that.
You have a stable job, you're educated, it sounds like you have no consumer debt at the moment - you should be able to apply for and obtain either of these cards with no problem. I've been a cardholder of both of these for seven years and never had any problem in dealing with their customer service at all.
So that's the FIRST section of advice. The SECOND section is how to USE them.
IMO, the best way to use credit cards, especially for establishing your credit, is to set up ALL your set monthly expenses to be paid by your credit card - your utilities, cell phone bill, etc. And then instead of sending checks or transfers from your bank account to THOSE accounts, you're just shifting the payment over to your credit card. It's very low risk, because you're not changing how you generally spend money at all, but you build credit.
The other thing to use a credit card for is big purchases that you already have the cash on hand for, because most credit cards (I know this is true for the Amex) offer better purchase protection in the case of defects or something like that than stores do, so you have that added benefit. Ditto for buying plane tickets or hotel reservations. As long as you monitor your spending as you currently do, using credit cards will actually pay you back, and will build your credit score.
Good luck! Please let me know if you have any questions. ♥
ETA: Someone else mentioned checking your credit report. This is indeed a good practice to establish! In your state, you are entitled to a free credit report from EACH of the three major national consumer reporting companies annually. They won't tell you your credit score (that only gets pulled up by entities like banks or landlords or jobs when they do a check), but you'll want to check these to make sure that the information on your report is accurate. It's a fast process to request them, and you can do it here. (https://www.annualcreditreport.com/cra/index.jsp)
no subject
I'm defffffinitely not planning on actually changing my spending - the impetus for all of this was that we have to get plane tickets to visit my family in Oregon this Christmas, and J pointed out that if (as is always a possibility) my family flakes and we need to change plans in a hurry, we're a lot better off having purchased tickets on a credit card than on a debit card. And that's one of my "level up as an adult" tasks for this academic year, anyways, so I figured I would consult Aunt Internet for advice!
One question: I get that the pre-approved mailer offers are probably mostly bullshit, but what is the deal with applying through a (legit) bank's website? Also bullshit, or not a complete disaster?
no subject
And yes, those are exactly the sort of purchases that having a credit card is good for. The one thing to keep in mind that in order to increase your available credit over time, you'll need to actually USE them some, but like I said, that will happen naturally over time (and as your salary presumably increases and your debt load decreases as you pay down the student loans).
I actually have no idea! I applied for both of the cards I linked to above online, directly from the credit card companies themselves. I would imagine that applying via a legit bank's website would be totally fine though!