EPTSaying that you should cut your card is retarded
The power of credit cards - Page 3
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KOFgokuon
United States14910 Posts
Saying that you should cut your card is retarded | ||
ilovecats
United States265 Posts
The idea is to have 2-4 credit cards with a combined balance of roughly 20-40% of their limits. This builds your credit score. Nobody knows the exact inner workings because the FICA calculations are trade secret. Again, the 20-40% utilization ratio is completely false. The ideal utilization should be below 10% for maximum score benefits. And the industrial standard score is "FICO" (Fair Issac Co.). The 20-40% false figure I constantly see among consumers is most likely to be purpopsely advertised by certain lenders. Remember, just as previously mentioned, credit card issuing banks are in business to make money. They do NOT want everytone's score to be high. This is because credit card interest (APR) is often calculated based on one's score. In most cases, the higher your score is, the lower APR you'll most likely qualify. It's a bad idea to receive credit advice from banks. There are some very good consumer groups out there that provide much more accurate information such as creditboards.com. 2-4 is plenty for most young adults who are new to the financial world. As a mature adult with steady income it's usually considered a better idea to have a "more diversified" credit portfolio. It basically consists of a healthy mix of prime credit cards issued by different prime lenders. This is because banks are notorious for some dirty tactics these days such as rate jacking. You do not want to put all your eggs in one basket. At the same time, more cards with higher limits helps your utilization. There is no proof that FICO penalizes purely based on the number of credit cards one has. So there is no strict rule on the this department. It should be based on one's needs and income, given that the portfolio is deversified. For instance, it's a much better idea to have a couple of cards from Citi, a couple from AMEX, a couple from BOA/MBNA, a couple from a reputable credit union, than all 8 cards from let's say Chase. As for the concern about "too much available credit", I have explained it in my previous posts. | ||
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Jonoman92
United States9107 Posts
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DarkYoDA
United States1347 Posts
On December 23 2006 17:03 KOFgokuon wrote: don't buy what you can't afford, simple as that Saying that you should cut your card is retarded Well true but, you know, some people could never resist that card hanging around their wallet day and night and have enough self control to buy what they can't afford, it's true with drugs, it's true with smoking and other vices, it's true with spending - Even if they sincerely intended to put a stop to it. The user should know himself well enough if he can be tempted to use it while in his wallet or he needs to "uninstall" the game all together. | ||
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Ilvy
Germany2445 Posts
On December 24 2006 01:09 DarkYoDA wrote: Well true but, you know, some people could never resist that card hanging around their wallet day and night and have enough self control to buy what they can't afford, it's true with drugs, it's true with smoking and other vices, it's true with spending - Even if they sincerely intended to put a stop to it. The user should know himself well enough if he can be tempted to use it while in his wallet or he needs to "uninstall" the game all together. Yes it means you have to grow and controll yourself, a creditcard does not do things by itself, it just a way to pay things more easy if you order online or avoids to run arround with lot paper in pocket and it´s a must if you travel a lot. In Norway its the usual way to pay for everything and you get a Card with every bankaccount. But the only things where you loan money for should be house and car and not random fun shit or you soon get trouble. Trashing the card would never help, if you are a weak person, you will fail on a other way | ||
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decafchicken
United States20155 Posts
- Peter Ustinov | ||
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artofmagic
United States1951 Posts
On December 24 2006 10:43 decafchicken wrote: nice! hahah!The only reason I made a commercial for American Express was to pay for my American Express bill. - Peter Ustinov I actually prefer AMEX because of their cool offer.. iron clad protection and amex wishlist :> | ||
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MaNNeRDex
United States169 Posts
 [Says something intelligent about credit cards here] | ||
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oshibori_probe
United States2934 Posts
On December 22 2006 23:45 Wasabi wrote: I just got my own credit card today. My mother helped me apply for one. It's got a limit of $20,000, but I heard that some people have insanely low credit limits, like $1000 or less when they're too young to make serious amounts of money or when they have bad credit. I'm currently 18 right now, at a full-time college in U.C. Berkeley, so there's no way I can fill that limit anytime soon. In fact, I don't even have a job, but I have soem skills that would make me quick freelance money (Photoshop CS 2, Java language, web design, and one experince as an administrative assistant). I know, it's quite aggravating for me to be this naive about credit cards. Can you guys fill me up on where I should start, how to use it, some general tips to not get scammed? Also, a few years ago I always hear about these referral deals. Are they a scam? Have you had experience with it? Did you get anything at all after fulfilling their conditions (example- getting 20 people to sign up for it successfully, then they ship an electronic of your choice, such as a laptop)? dont leave it in your car, someone broke into my moms car, took her credit card, and racked up about 800$ in gift certificate purchases in a few hours. | ||
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KOFgokuon
United States14910 Posts
Leaving your card in your car is asking for trouble though | ||
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decafchicken
United States20155 Posts
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Eduardo!!
United States86 Posts
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jinorazi
Korea (South)4948 Posts
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lightman
United States731 Posts
Who the hell's your mom ? Jennifer Lopez ? | ||
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collegeBored
United States1524 Posts
to the OP: how did you get a 20K credit limit on your first credit card? unless its not really your credit card but simply you mom's second one with your name on it. ive had a card since early high school (~7 years now) and my first one had a limit of $250. i believe my current highest one is around 6K | ||
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Wasabi
United States3085 Posts
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Rekrul
Korea (South)17174 Posts
I use a Visa Check Card...I have never had debt and a lot of $ goes through that account. This is good for credit history even though its not a credit card? | ||
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ilovecats
United States265 Posts
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ManaBlue
Canada10458 Posts
On December 25 2006 12:04 Rekrul wrote: Question I use a Visa Check Card...I have never had debt and a lot of $ goes through that account. This is good for credit history even though its not a credit card? It's still credit. You write the check and you get your monthly statement to pay off the credit check use. So yes, it helps your credit. Particularly if you're carrying over large balances, consistently over a long period of time, and consistently paying them on time. As far as newbsaibot's analysis, I still don't agree. Paying interest on a credit card means you're late on a payment, and that has never helped anyone's credit score, ever. Trust me. Late payments are the first red flag creditors look for and a consistent history of missing payments will hurt you badly. Let's get something straight about your friend. He might have gotten the loan because a parent cosigned on it. This essentially means that the bank/car dealership is basing the loan on the cosigners credit score, not his. You say he has a "phat house"? Is it his? Does he own it? Is it partially paid off? Where did he get the mortgage? There is a lot about your friend that we don't know. The reality is, he did not improve his credit by buying a car on a credit card and making late payments to incur interest. I would be willing to bet that he got financing from the dealership. As I've explained before, that is different from credit card debt, as the lender works the payments out over a long period of time and expects regular interest payments with the principal. It has nothing to do with the fact that some of the payment is titled "interest". It's because it's a larger debt and because the regular payment structure is more restrictive and long term than a credit card. Bottom line, the nature of a debt effects your credit score differently. This post is long and most of you won't read it, so here are some truths that I'd like to outline for you guys, as a graduating business student specializing in finance. This is my bread and butter. -Credit cards do not build a credit score as well as structured debt like a car or home loan, but they do help create a profile. Everyone's got to start somewhere right? We're young people and this is the best we can do this early in our lives. -Paying interest in itself does not help you. If you incur interest on a credit card, you are late and this is bad. ALWAYS bad. Paying your credit card bills, in full, every time will only help your credit profile. IT WILL NEVER HURT IT, EVER! -Credit checks are viewed in a similar manner to credit cards. Most intitutions don't bother differentiating between them at all. Using a check rather than the card is user preference. It's still debt, so they don't care either way. -Cosigning is a big part of many people's first big debt. Chances are, your parents will cosign on the loan for your first car, and once you've paid it off and worked full time for a while living in a rented apartment, etc. you'll become more and more elligable to carry a mortgage. We're all people in our late teens, early twenties, so this is more than likely something that you'll need to work forward to for a good number of years. -As a young person, using a credit card for personal purchases and paying them on time is good. Being late is bad. This is always the case. That was very repeticious and boldly worded because I want you guys to have the truth. For those of you who bothered to read it all, I hope you take it to heart and talk to a lender yourself to get all the information that is relavent to you. If you go to a bank, they will be happy to sit a representative down with you to talk about credit scores and strategies for a young person who is thinking ahead. I encourage you to do that. | ||
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ManaBlue
Canada10458 Posts
On December 25 2006 12:25 ilovecats wrote: To answer your question, no Rekrul it does not build your credit if it's a debit/check card. Debit cards are different from Credit checks. A debit card directly withdraws money from a bank account. You are correct, this is not debt and won't effect a credit rating. Visa checks show up on a monthly statement, just like when you swipe the card to buy something. You are carrying debt, so it is the same. In fact, most visa credit cards allow you to use some credit checks and the regular card simultaneously. All of the card and cheque transactions show up on the same monthly credit statement. | ||
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