etben | adulthood: how does it?

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adulthood is overrated

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.

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Find a credit union. Get a card with no annual fee. Always pay it off at the end of the month. It will be great for your credit rating and necessary if you ever need to rent a car or hotel room. Good luck!

Gppd luck! I'm 36 and I don't have one. They terrify me. *g*

Er, GOOD.

if you have a costco card, you can get an american express with them for a semi-low interest rate.

BEWARE of bank 'starter' credit cards, especially 'pre-approved ones', they often have very high interest rates, and you don't want to get stuck with those!

Also, do your homework. check out your credit history and your credit score, stuff goes on there you may not think of. :) (student loans, etc); your credit score has a *lot* to do with what card you can get

Hi! I have MANY THOUGHTS AND FEELINGS ABOUT THIS.

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)

Edited 2012-10-08 23:33 (UTC)

I would say the most important factors in choosing a credit card are:

1. no annual fee
2. rewards (if you don't plan to carry a balance)
3. interest rate (if you do)

I generally find rewards to be weird and opaque and impossible to compare across cards. I suppose that might be an argument to have your rewards be cashback, which is at least predictable. Mine come in points, which somehow get converted to gift card values, which works for me, and I know people who are very happy with earning miles (though they tend to be people loyal to a particular airline).

There are sites that will let you compare all these factors - ie, 'give me all the cards with no annual fee and cashback, sorted by lowest interest.' Unhelpfully, I do not know what any of them are, though google probably does.

This runs contrary to a lot of advice, but if you've got a bank you know and like, and they offer a credit card that isn't terrible, there's probably no harm in taking it if you're feeling otherwise overwhelmed. I think the difference between various rewards programs etc is probably pretty small, especially if you're only putting small amounts on it. (Then again, I am a strong believer in Good Enough for my financial life.)

As for using it, I'd start by putting a small but regular purchase on it, maybe gas or groceries or work lunches, if any of those are predictable for you (or if they're a good match for your rewards), and then pay it in full when you get the bill. (I put basically every single expense except for rent and utilities on my credit card, but I suspect that is a non-standard usage.)

Thanks! This is one of those "basic adulthood" things that I somehow never learned to do, despite knowing that they're important and worthwhile.

I know, right? but J made the (valid, valid, totally valid) point that credit cards offer way better protection for online shopping and stuff, which...I do some of! So if for no other reason, it's probably wise.

I don't have Costco, but thanks for the heads up! And, yeah, I was figuring that anything that came in the mail was probably a bad bet, but it's good to have that confirmed. Thanks!

Hiiiiii! I super approve your thoughts and feelings! Thank you so much for sharing with me - the thing is, I knew or had guessed most of those things? but I was less clear on how they stacked up in terms of relative importance, so your comment is super helpful. And, yeah - I have fuckloads of student debt, ahahahahaha what, but no actual consumer debt, which I hear is better than the other way around? So there's that.

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?

nerdwallet.com is a good site for sorting things and having it pretty spelled out and let you really customize it.

I like rewards, and have a hard time finding stuff without an annual fee, so the best way to do it is to get like an annual reward (so that $50 for the southwest annual fee comes with 3000 points).

I got the Capital One Venture card and am pretty pleased with it - especially if you can spend enough to get the 10K bonus points (so $100 to spend on travel). Each point is with $.01, you get 2 pts/dollar spent and then you just buy plane tickets/book a hotel/take a taxi and go online and are all "boom, points wipe it out". And just being able to eye the number of points and slide it over 2 decimal points to know the $ amount is good.

and seriously, if you shop online and fly southwest, rapidrewardsshopping.southwest.com (even with your debit card!) and rapidrewardsdining.com for eating out.

I generally find rewards to be weird and opaque and impossible to compare across cards.

OH GOOD IT'S NOT JUST ME. Now that you say that, I'm realizing that part of my "oh god how do you credit card" damage is my general tendency to want to make the ~*~absolute best choice~*~, and having a really hard time doing that when there are so many different aspects of credit cards to comparison-shop through. Which is in no way surprising, given that I used to regularly get flustered in the Paper Goods aisle, trying to figure out which package of toilet paper was most cost-effective. GOOD ENOUGH, GOOD ENOUGH. *takes deep cleansing breaths*

Any chance you're a USAA member? If you've had family in the armed services in the last couple generations you might be eligible. I've had a card from them for literally about 20 years, and they're a nice financial institution to be attached to (good loan rates, discounts, financial planning, etc). We also have an Amex Blue, which we applied for because we had other credit card debt and the balance transfer rate was very low and fixed.

ahhhhhhhh I love the fucking internet. *_____* gonna be here comparison shopping all night! Good point about point conversion rates - I don't fly southwest a ton, but that's mostly because I...haven't flown southwest much? like, if I built up points, I probably would think about it. *hands*

I am leaning towards bank of america - 2% rewards on groceries and 3% on gas, which together are probably 60% of my non-rent spending, so.

I am, actually! Or, well, I am and I am not - I have a savings account with them, but apparently my family's military service is far enough back that they won't insure me directly (as I found out this spring! whatever, my local company has a better rate anyway). Still, that's one of the things I'm considering - they're generally really reliable, and have excellent online banking!

Way back when the dinosaurs were young and credit cards harder to come by, I ended up getting cards from department stores like Sears and Macy's. I used them occasionally, then after having them for 6 months or so, tried applying for an Actual Credit Card. You probably don't need to jump through these sorts of hoops, but just in case....

Yeah, a lot of this really IS common sense, but it can feel really intimidating to just ASSUME that when no one really teaches you it! And yeah, in terms of both your credit score AND your ability to obtain more credit, having student loans is much much better than having credit card debt. Paying back your student loans will actually improve your score over time, too!

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!

Whichever one you choose, pay it in full every month without fail. If you do this, you will never, ever pay any interest on it.

If you fail to pay one month--let's say you overspent and you decide to pay the minimum "just this once"--you will be paying interest on every single thing you purchase the next month from the moment you buy them. This is not good.

that totally makes sense! I am a constant traveling kind of person (lol 2000 miles from family that I like to see regularly) so being able to be double dip with credit card points and rapid rewards points means less having to pay for tickets home and can save some serious cash that way.

is there any limit on the amount of cashback you can get? I mean, I don't know if you'd ever really spend enough to hit the cap, but it's something to think about.

man, i am totally going to stalk the comments of this for when i'm a real grownup o___o

Hi! As someone who got their first credit card (Capital One) at 16 from one of those pre-approved in the mail things (right after I got my first job), and have gotten most of my cards since then the same way, I can say that as long as you are willing to read all the fine print and pay them off each month, they are not necessarily a bad way to go? I got rid of the Capital One card because I didn't like their customer service after about five years, but by then had built up my credit rating and had the three cards I like now: the main one I use all the time is an HSBC Mastercard that I got the offer for unsolicited in the mail that gives me 2% cash back on everything. (I also have a Costco AmEx and a United Visa I just have in case.)

Something I didn't see mentioned, is that you will want to think about what cards are accepted in your area. I live in Oregon and can only talk about here; Visa and Mastercard are accepted pretty much everywhere, but some places will not take AmEx and more places will not take Discover, so think about that when choosing what card to get, especially if you are only going to have one.

/going back to lurking.

One of the hardest things for me to understand about credit cards is the balance I have on it versus the due date. What I mean is, I prefer that when I buy something, I see that money taken out of my account, like, boom, that money is SPENT. So putting something on a credit card, I know the money was spent a week ago, but it's still in my account and doesn't withdraw until the auto-pay date I've set up etc. But once I wrap my mind around it, I like using credit cards for larger purchases, for security, and to earn rewards. I have an LL Bean card, which earns LL Bean coupons (great for xmas time!) and a Gap one, which actually produces huge amounts of rewards in the form of coupons to use at Gap/Old Navy etc - which has been AMAZING for all the kids in the family who need gifts, those greedy fuckers. (Srsly, baby gap is THE SHIT.)

Ooh, I have Thoughts! And take it from one who has been through the oh-god-oh-god-i'm-an-adult stage of credit card usage (i.e. "what the hell am I doing? don't they know they shouldn't give me credit?") and also the oh-god-oh-god-why-am-I-so-bad-at-money stage (sigh).

1. I got my credit card by being an approved user on my dad's card, and then when I was ready for my own, he called up that company and asked them to give me a good deal. They did—I had 5.9% interest for ages (I still might, I'm not sure), which is near unheard of, these days. Basically this only worked because he'd had his account for ages, and always paid it off, and was generally an exceptional credit risk. But they wanted to keep him happy, so they did.
2. As everyone says: pay it off in full each month. But. I'm the first to admit I don't always do this. And as I understand it, part of what impacts your credit score is how much of your credit limit you actually use. If I am right (which I might not be, but think I am) then I think it's supposedly ideal to not use really high percentages of your potential credit.
3. And following on the above: the best advice I have is to set up an automatic payment each month. How much depends on how much you use the card, but I think I have mine set to $25 right now, and it was $50 a month when I used the card more. This came straight out of my bank account, and ensures that I always pay the minimum amount. Ideally I'd pay it off every month, but between a) finances and b) my tendency to procrastinate and not get to bills on time, this means that at least I pay the minimum. I apparently turned this auto-pay off one time and missed one payment and it really hit my credit score hard. Which sucked. So much as I wish I were the kind of person to never miss a payment and always do my bills on time, I'm not, and this is a good safeguard.

Good luck!

Suggestion for a card: If one of your back accounts is through Bank of America, their credit card is not a bad way to go. 3% cash back on gas purchases, 2% back on groceries, 1% cash back on everything else. And if you set it up to have them send your rewards to your BoA account, you get an extra 10% (so a $25.00 cash back becomes $27.50.)

If you shop at Target, the Target credit (or debit) card gives you a 5% on all Target purchases.

This comment has nothing to do with this post, really; I just wanted to say hi! I am that random person who was at that important thing that happened at Tracey's place and also at the election party. HI.

Um, as for things that are ACTUALLY related to this month-old post, I got an Amazon rewards card first thing when I got to college and it's still the one I use the most. No annual fee, I basically use it as a debit card, and I get free money to use on Amazon. Win.

ALSO YAY OBAMA IS STILL PRESIDENT.

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adulthood: how does it?

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