Credit Cards

[MaChao]

So this is kind of a weird question, but I'm looking for a credit card to build up credit with, just small purchases mostly. I'm a college student and it is always nice to have good credit, so why not build it up now. I'm curious if anyone has any good recommendations of a provider that will offer good benefits, mostly frequent flyer miles , as I would love to be able to travel more ,and airlines are expensive.

[KillerGriller]

where do you live?

[msuroo]

Unless you are already a relatively frequent traveler, airline cards are mostly a big waste of time and money (and I say this as someone whose primary CC is an airline card).

 

For a first CC to build up credit with, you want something with 1) no annual fee, and 2) cash back*.  I usually recommend either the American Express Blue Cash or the Capital One Cash Rewards.  Just save up the rewards, and if you want to use them to travel, you can!  If you want to use them for something else, you can do that too!

 

When you see Steve (and others) talk about seeing the world on the cheap via credit card miles, they are almost always talking about churning signup bonuses and promotions to accumulate large portions of miles.  Doing so requires established credit and the ability to meet spend requirements.  Certainly something to shoot for in the future, but for a first card, it's hard to beat a plain vanilla cash back card. 

 

(Edit to add: KG has a good point - all of my advice is US centric).

 

*I intentionally did not list the interest rate as a criteria for choosing a card.  I personally hold the opinion that if you aren't financially responsible enough to pay your card off in full every month, then you shouldn't be getting a credit card in the first place.  No amount of miles or cash back rewards is worth paying 25% interest for.

[Caution]

Amazon Rewards credit card!

[PrincessHeather]

Amazon Rewards credit card!

 

I have several credit cards, each with thier own perks, including the ones Roo mentioned, but if you are a frequent Amazon user, this card is great! You earn points anywhere you use it, but you earn extra on purchases made through Amazon. One nice thing about it is that your points are available to use monthly, rather than quarterly or yearly like my other cards, and can be used easily when ordering.

 

Also as a student, you can sign up for Amazon Prime Student for a free trial and then its about half off the normal cost to continue after that while in school. I purchase all my textbooks through them, and mostly sell them right back for credit.

[MaChao]

I do live in the North East US, So thanks for all of the advice

[ellystar]

Unless you are already a relatively frequent traveler, airline cards are mostly a big waste of time and money (and I say this as someone whose primary CC is an airline card).

Which one do you have? I have a JetBlue American Express card and I use it to pay for my CrossFit membership each month (then pay it off) and when I travel on JetBlue, which is two or three times a year. I get bonus points for using it at a gym and I'm racking up points very quickly.

 

I second CapitalOne though, especially for rewards.

[Loren Wade]

Unless you are already a relatively frequent traveler, airline cards are mostly a big waste of time and money (and I say this as someone whose primary CC is an airline card).

I disagree. I used to think this... but I mean, look at what Steve did! He flew around the world with those cards. I think if you're debt free and smart about it, it will pay for an airline ticket (or many) to other countries you've never seen before.

[msuroo]

Which one do you have? I have a JetBlue American Express card and I use it to pay for my CrossFit membership each month (then pay it off) and when I travel on JetBlue, which is two or three times a year. I get bonus points for using it at a gym and I'm racking up points very quickly.

 

I second CapitalOne though, especially for rewards.

 

I carry a Delta Amex.  Pretty hefty annual fee, but I get enough status miles from it to move me from Gold to Platinum status every year - that's worth a lot to me.  Also, I have the flexibility to use miles for tickets when it is advantageous to, and cash when it's not.  I usually get about 2 cents per mile on a redemption, so earning 1.5 miles per dollar of spend, it's about a 3% return.

 

I disagree. I used to think this... but I mean, look at what Steve did! He flew around the world with those cards. I think if you're debt free and smart about it, it will pay for an airline ticket (or many) to other countries you've never seen before.

 

Pretty sure I mentioned this.

 

When you see Steve (and others) talk about seeing the world on the cheap via credit card miles, they are almost always talking about churning signup bonuses and promotions to accumulate large portions of miles.  Doing so requires established credit and the ability to meet spend requirements.  Certainly something to shoot for in the future, but for a first card, it's hard to beat a plain vanilla cash back card. 

 

I totally agree that gaming signup bonuses, or travel hacking, or whatever else you want to call it is awesome.  I do it.  I don't ever remember saying not to do it.  But for a college student signing up for a first credit card, an airline card is almost assuredly a horrible idea.  He won't have the credit worthiness for the best cards/bonuses, and it doesn't sound like he has the spend capacity to meet the thresholds anyway.

 

Maybe I should clarify my statement:

 

Unless you are already a relatively frequent traveler, using an airline card as your primary credit card is mostly a big waste of time and money

[Loren Wade]

Pretty sure I mentioned this.

Yup. You did.

 

I was on mobile and didn't see the whole post. It was kind of jumbled. Yeah, I agree with you.

[maegs]

Check out what your bank has - I have a no-fee credit card through my bank that still gets me points that I can use to buy stuff, rent cars, etc. (although sometimes buying the thing is a better deal than using points)

 

ETA if you want to use it for international travel, Visa and Mastercard are the best ones. Most places outside of the US don't take Amex 

[Zorch]

ETA if you want to use it for international travel, Visa and Mastercard are the best ones. Most places outside of the US don't take Amex 

 

Not really true - most significant places around the world(hotels, anyways) take Amex - the only exceptions may be little backwater places that don't cater to international travelers so much - but these are the exception rather than the rule in my experience - and I've generally only been in such places for a night or two, and had the ability to pay cash.

 

Yes, there are some places that take Visa but not Amex - but that's not strictly an international thing; certain domestic companies don't take Amex as well. However your big-ticket parts of travel (hotel, airfare, etc.) almost always take Amex, regardless of where you're going(again, little remote places excepted).

[maegs]

Hotels and airlines might take Amex, but FWIW, in my experience a lot of other places don't. I live in Canada and a lot of places don't take Amex, even major retailers. While I was in Australia & NZ a couple years ago many places either didn't take it or added a surcharge/had a minimum transaction. It's because Amex charges merchants higher transaction fees than Visa/Mastercard so merchants are less likely to have it/more likely to surcharge.

[Zorch]

Hotels and airlines might take Amex, but FWIW, in my experience a lot of other places don't. I live in Canada and a lot of places don't take Amex, even major retailers. While I was in Australia & NZ a couple years ago many places either didn't take it or added a surcharge/had a minimum transaction. It's because Amex charges merchants higher transaction fees than Visa/Mastercard so merchants are less likely to have it/more likely to surcharge.

Yeah - the weakness of Amex is that while most hotels/airlines/restaurants do, a lot of retailers don't take it - though this is more a function of the type of business than a weakness for international travel.

 

For a general purpose credit-card that's usable pretty much all the time, a visa/mastercard is probably the way to go.  For something travel-specific - well, it really depends on the specific perks the card offers.  I probably wouldn't recommend one of the travel-specific AMEX cards for someone just getting, unless they... well, plan to do a lot of travel, simply because when NOT traveling/for general purpose stuff the Visa/Mastercard has greater usability.

[JediNickD]

So this is kind of a weird question, but I'm looking for a credit card to build up credit with, just small purchases mostly. I'm a college student and it is always nice to have good credit, so why not build it up now. I'm curious if anyone has any good recommendations of a provider that will offer good benefits, mostly frequent flyer miles , as I would love to be able to travel more ,and airlines are expensive.

 

 

When I was in college, I signed up for the Amazon Chase CC.  Everything purchased at Amazon.com is x3 points, which is tough to beat when you are buying $300-500 worth of textbooks a year.  You get x2 on dining, gas, pharmacy and x1 on everything else.  Some months they offer double points or x5 points on everything with no catch.  

 

The Reward points can be used for almost anything with the best value being the international flights (90,000 points for a $1600 flight, where 90,000 points = $900 in the Amazon store).

 

I have other rewards cards with no annual fee, but my Amazon Chase card is easily my best deal year round. 

[manav95]

How do I manage the payments on credit cards?

[JediNickD]

Well, the best way is to never spend more than your income in a month.  That way you can pay the entire balance and never pay interest.  Mint.com is a great way to track income and expenditures for all your bank and credit accounts while budgeting multiple categories. 

 

If your income isn't stable monthly, then I recommend developing a yearly budget, then breaking it down to monthly.  Mint will also allow you to set goals for income not applied to your monthly budget.  I believe debt or Credit Card payoff is one of them.

 

Do you already have a large debt balance?

[manav95]

well no but I don't want to get screwed over in the future.

[Kristen]

I second a basic no-fee bank card. Without a solid credit foundation, you may not qualify for some of the cards with really great rewards. And you don't want to go opening a ton of cards for sign-on bonuses, either. A sudden, major increase in open credit can actually damage your score rather than help it, as can opening and closing accounts often.

 

If you need guaranteed approval, there's also a secured card. You borrow against your own money in a savings account. These are really only necessary if you have severely damaged credit or no credit at all, but it's a good entry into building solid credit card habits.

[NicoleCanoes]

I'm also a college student with limited credit history. I started with a store card. Best Buy offers 0% financing on a lot of purchases. So while I had the money in my account to buy my laptop I used the financing offer to pay it over 12 months. I also did that for my cell phone over 3 months and was finally able to save up for an Xbox and did that over 9 months. Then when I buy things like games or refills for my cell, I pay that off monthly so I don't get charged interest.

[Nicca]

I started off BADLY with credit, being a college student and being thrown offers like candy and having no financial education.  Since working back up, I've had the chance to find a few really great options for building credit:

 

- Discover IT

- Capital One Platinum 0% offer

- Amazon Rewards

 

The idea is to maintain a small balance while making regular payments, which shows creditors that you're able to manage debt.  Amazingly, paying debt off in entirety every month doesn't do too much to build your credit... it doesn't hurt, but it doesn't build.

 

Other solid ways of improving credit are making regular payments on car loans, cell phones, etc.

 

Good luck!

[msuroo]

The idea is to maintain a small balance while making regular payments, which shows creditors that you're able to manage debt.  Amazingly, paying debt off in entirety every month doesn't do too much to build your credit... it doesn't hurt, but it doesn't build.

 

Other solid ways of improving credit are making regular payments on car loans, cell phones, etc.

 

Oof, couple things I've gotta disagree with here.  Keeping outstanding credit card debt is a terrible idea and doesn't do anything extra to build your credit.  Pay that balance off every month - the fact that you have an open account (hopefully for a long time) and make all of your payments on time - that's what creditors want to see.  (As an added bonus, you won't pay 24% interest, or whatever the going rate on CCs is these days).

 

Also, paying your cell phone bill (or utilities, or rent, or whatever "non-debt" bills you have) doesn't do anything to improve your credit, unless you define "not screwing up your credit" as improving your credit.  Your cell phone company doesn't loan you any money, so they don't report regular payments to the credit bureaus.  The only time they report is if you go into collections (which is obviously bad).

[Kristen]

Yeah, a little misinformation there.

 

Your attractiveness to lenders is determined based on (each with varying levels of importance to different lenders or agencies)

-Your debt to credit ratio--ALL debt payments vs. take home pay. This should be below 20%

-Payment history--doesn't matter if you pay minimum or in full, as long as you pay on time.

-Available credit--not carrying a balance is better than having a balance. High limits are good. Maxed out is bad.

-Account history--long term relationships are good. New accounts and frequent applications are bad.

 

As for service accounts reporting or not--some do, most don't. I suppose Sprint does actually loan me money every month--I am billed and pay for phone services I have already used, not in advance. In that sense, it is a revolving credit account, and (in my opinion) should be reported, but it's not.

[Kristen]

Yeah, a little misinformation there.

 

Your attractiveness to lenders is determined based on (each with varying levels of importance to different lenders or agencies)

-Your debt to credit ratio--ALL debt payments vs. take home pay. This should be below 20%

-Payment history--doesn't matter if you pay minimum or in full, as long as you pay on time.

-Available credit--not carrying a balance is better than having a balance. High limits are good. Maxed out is bad.

-Account history--long term relationships are good. New accounts and frequent applications are bad.

 

As for service accounts reporting or not--some do, most don't. I suppose Sprint does actually loan me money every month--I am billed and pay for phone services I have already used, not in advance. In that sense, it is a revolving credit account, and (in my opinion) should be reported, but it's not.

[interceptsignal]

Another vote for the Amazon rewards credit card. I got my in college. At the time it gave me a pretty low spending limit ($500) which helped me not go over at all. I was diligent to always pay it off, often about once a week as soon as payments were no longer pending.

 

I am also a hardcore amazone user with prime, I sold all my college books there for credit and I now buy everything there from games, to household things like paper towels and even my bicycle shipped for free via prime!