Credit Limit Increases With A Low Apr?
Q: I have a job which pays about $4,000 in the summer. In the past I've always paid for everything in Cash. Now I'm wondering if it would be better to get a credit card to begin getting a good credit rating and to make paying for online purchases easier. All the credit card companies seem to be sending me offers for absolutely terrible cards with onerous late fees and high interest rates. If I get a debit card (Something where I could just put money on it and it would be impossible to accure major debt) would it build a credit rating too or I do I need to get a credit card for that? Any suggestions on which company makes fewer billing errors and doesn't constantly give unwanted credit limit increases with a low APR? Right now I'm looking into local credit unions.
A: -You say 'in the summer', implying you are a student. If so, and if your university has a credit union, that is the place to start. Talk to somebody there that actually has a desk, and see if they will issue a low-credit limit card, say $1000 or so, and pay off the bill every month till you graduate (don't buy anything big, just use it for normal purchases, so you don't get overextended.) If they don't do credit cards, get a small signature loan, say 1k or so, and arrange for it to be paid from your CU account. No muss, no fuss, and it will show as a good loan in the credit report. Forget about secured cards, or a card from one of the giants. The key factor is to not ever get in over your head, and pay the bill every month. A few years of that, and your credit will be fine. -No. All a credit card does is make it easy to get trapped into high interest credit card debt. You would be far better off to use more conventional money management tools like cash and a checking account. And any money that you have should be budgeted. People will not leave their house on a road trip without a map, but they let their most important asset, their money, go years at a time with absolutely no plan. Do be one of those dopes. -I just got my daughter (high school senior) a student credit card from First National Bank of Omaha. I'd never heard of a card for pre-college students, but we got a mailing and I checked into it and it seemed legit. You can only get a $500 or $1000 credit limit, and they agree not to try and raise it for something like 6 months. I had to co-sign the application, but that's ok, and I only took the $500 limit. The card has a 0% APR for the first 6 months, although personally I think that is a very poor way to teach kids who are new to credit how to handle it. This particular card is offering a 1% cash rebate on all purchases in 4/06 IF you've made all payments on time, and not had any returned payments, and not gone over the credit limit. I don't expect that she will use the card very much, as I got her a stored value debit card, but she discovered that she can't use that in pay at the pump gas stations, so the credit card is more useful for that. I'll need to figure out how to set up automatic payments on their web site, hopefully from her bank account.
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