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Scott,
I'm so lost! I'm about to obtain
my first credit card, and I do not know where to start or even how
many to take out. What deal is the best?
Do I look at the APR or the
nice rewards they have? I'm just trying to establish a good credit
history, because I am aware that you need one if you want to
eventually buy a house/car. It's so hard to get the ball to start
rolling--especially with the limited knowledge that I have. Thanks so
much for your help.
Meri
Meri,
I certainly understand how confused you
must be at this time in your life when it comes to credit cards. In
my last year of college, I had to turn to my credit cards for funding
in order to finish school. It was very expensive, paying high rates to finance
that year. But as expensive as this was, it was still a good spending
decision.
You're right about starting off with
a good credit history. Your credit report is your financial
résumé. Everyone looks at it--employers, landlords, insurance
agents, etc.
Note: I know this is obvious, but before
you can start applying for credit cards, you need to have a checking
account. Additionally, having a savings account will help.
The
way I started to establish my credit was by using gas and department
store credit cards because they are the easiest to get. The key thing to
remember is that when you get these cards, use them wisely. By
that, I mean use them to establish your credit. Do this by buying a few
items and paying the bill in full each month. There is no need to do
all your shopping at any one department store. Your goal is to show that you're using credit responsibly.
After obtaining a few of these cards,
and using them wisely, I applied for, and received, many unsecured
major credit cards. By following the same strategy of using them for
small purchases, I was able to build my credit history in the
positive.
This doesn't mean that you must
initially start, as I did, with department store cards. You can
start by going for it! Start by applying for a few good (low-rate)
credit cards. You
may not get them at first, but I would give it a shot. Credit
card companies are desperate to find profitable customers;
college students are their primary targets!
Some reward cards may also offer good
rates. You should only apply for the cards that have rewards you can use. It
doesn't make sense to apply for airline rewards if you don't fly
anywhere. Personally, I like my Regal Entertainment Group card that
sends me gift certificates for Regal theaters. I just took my
family of five to see a movie and it cost nothing (even with the
snacks).
Finding the best credit deal depends
on how you use the card. Ask yourself: "What is my
income?" "Do I have debt?" "Can I pay this off
in-full each month?" I hope that since you don't have any
credit cards, you don't have any existing debt. That being my
assumption, I suggest taking a look at my list of DebtSmart featured
cards. These cards are a great start!
Lastly, if you have trouble getting
reward cards, major credit cards, or department store cards, then I
suggest getting a secured credit card. This is a major credit card
where the bank uses your savings account as collateral. Visit your
local bank (where you have your accounts now) and ask about their
secured credit cards. If they don't offer these cards, then visit
other local banks.
Best,
Scott
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