Credit Cards

[ramrod]

Ok can someone break down to me how credit cards work? Cause im thinking bout getting one im just t sure exactly how the work. I dont know anything about rates so i figured why not have someone thats mroe on my level explain it to me.

[RobbieNelson]

Pay it off every month! Thats all you need to know. Its been working for me for the past 9 years. I have a 5 figure limit and excellent credit.

Other than that, get one that "pays" you something.... and get a VISA.

[ramrod]

so u mean pay off everything, every month or make sure u keep making payments every month im confused :-(.

[RobbieNelson]

so u mean pay off everything, every month or make sure u keep making payments every month im confused :-(.

Pay off everything.... every month!

Interest sucks, unless you want to constantly switch CCs to use the introductory rates.

[axemansean]

Pay them off just as Robbie said. Remember its NOT free money. I use mine to buy food or groceries, and at the end of the month I pay the balance in full. Those interest rates will hurt if you make payments.

[ramrod]

so liek sayi bought somthing that cost 495 dollars at the beggining of the month id have all month to save that 495 t pay it back?

[axemansean]

so liek sayi bought somthing that cost 495 dollars at the beggining of the month id have all month to save that 495 t pay it back?

Yes, your statement will have a due date and what you purchased and what is the minimum. Always pay what you purchased, so if you brought something for $500 then pay that $500 and not the $10 or $15 minimum.

I have a Discover which has cashback and a Mastercard which is a Platinum card.

[ramrod]

cashback ? and platnium ? i think i have some research to do lol

[axemansean]

cashback ? and platnium ? i think i have some research to do lol

Cashback - you get paid a small percentage for using their card. Some people get over zealous and spend more than they can afford. I usually get about $20 back every 6 months.

Platinum - has fringe benefits. Don't know the exact details.

[Feedman]

Everyone should really have 1, and only 1 credit card...

Any more than that and you WILL get yourelf into trouble...

Be careful....

Emergencies only. If you don't have the $$, then save until you do....

8)

[axemansean]

Oh and you want to get one with no annual fee.

My first card was a Capital one, nice clause that said "No annual fee" turned out to be a $50 fee a year. Told them to shove it where it belonged. Also things like payment protection, etc are big money making schemes that you really should read the print on. Got burnt on that one on my Discover, they told me I had payment protection and it was no fee. Well every month I got charged a $5 fee. So I call them up and they explain my balance at any given time on the card has to be $0. I tell them well that really defeats the purpose on a card doesn't it? If I buy something today ofcourse I'll have a balance until the next bill cycle.

[RobbieNelson]

Stores get charged a fee everytime you use a CC. It's some percentage of the total sale. The credit card companys basically give you some of this back as an incentive to use their card. This is how the GM card and cach back cards work.

My Sigma Pi VISA gives a percentage of everything that I put on the card to my International Fraternity. RSHAESP!!! I really need to get a new card that gives ME something!!!

[axemansean]

I believe Discover right now has 5% back on gas until Aug 31.

[Davis Silver Sti]

Yep, its actually good to get a CC. However, the trap that most people fall into is that they don't pay it off at the end of the month. CC are also good for emergency purposes.

Example:

Let's say you just bought something thru your VISA card and it costs $500. At the end of the month (unless you bought other things) you'll get a statement from VISA saying there is a BALANCE of $500 on your account...you can either pay in full or pay something like $30 to just hold off till the next month. However that next month will have that $500 still on it. That's the trap! Its way too easy to just put it off into the next month, but doing so will only dig you a deeper hole. Don't do it...you'll be thankful later on.

CC have interests too. Its wise to get a CC that has VERY low interest rates. (8% or so). Almost all of them have 15-20% which is just crazy and will get you nailed if you don't pay in full. Shop around for the lowest interest..usually its one w/o all the frills, mileage plans, cash back etc..
(however, those cards ARE good if you pay off every month...I've had a few free trips to Calif because of that)

Credit 101 for all movfasters
I don't mean to sound like an old poop here, but its is really important to get your finances straight from the very beginning and when you are young. Don't mess up with ANY overdue payments or credit cards that have too much balance. Your credit gets lower and lower if it shows that you can't or forget to make simple payments (doesn't matter how much $$$ you have in the bank). This includes credit cards, electric/water bills, car payments, other monthly payments or simply things that you keep putting off to pay. Its not worth it. If you are behind in payments or have a high credit card balance, the first MOD you need to do is get those balances taken care of first. Painful yes, but well worth it. (car mods will always be there and can wait)
Its wise to get a credit report ($25) done every 12-36 months to see what your SCORE is, to make sure there are no mistakes, and to help protect against identity theft which will kill your score and take lots of time to repair.
So let's say you pay off your bills on time, credit card/s are in good order and there are no outstanding payments...what does a good score do for you? A higher credit score shows you are a finicially responsible person. This title tells any and all lending agencies that you are AOK and will get approved for a loan if you can make the payments. While this might not mean much to someone right away, its very handy to have when you go to buy a house! (or a new car). You can save tens of thousands of $$ if you can make a house loan at a lower "risk" point. Also know that when you get married you will share/fuse your credit score with your new better half.

I've had decent credit to now very good/perfect credit. (thanks to my wife who does lots of the finnancial stuff too) However it takes good habits in order to not fall into traps. I finish with this:

Ask yourself this question... (I'll give the answer little later on)

What is your most important asset?
(family/friends or emotional property doesn't count)

[ramrod]

alright heres what im wandering u said the thing about he balance what if u only have like 300 of the 500? can u pay that then the next month it would be 200 but would htereb e intrest on that 200?

[Davis Silver Sti]

alright heres what im wandering u said the thing about he balance what if u only have like 300 of the 500? can u pay that then the next month it would be 200 but would htereb e intrest on that 200?

yes. There would be interest on that 200. However that's where it begins. Do it if totally necessary but really try to make sure its paid off fully and fast.

[RobbieNelson]

What is your most important asset?

A real asset is something that appreciates in value i.e. Stock. Most of us don't own any real assets, we own liabilities. A house might be considered an asset.

Are you speaking in the above sense or not?

[superchargedgsr]

What is your most important asset?

A real asset is something that appreciates in value i.e. Stock. Most of us don't own any real assets, we own liabilities. A house might be considered an asset.

Are you speaking in the above sense or not?

my most important asset is nude pictures of Jay...

[Davis Silver Sti]

What is your most important asset?

A real asset is something that appreciates in value i.e. Stock. Most of us don't own any real assets, we own liabilities. A house might be considered an asset.

Are you speaking in the above sense or not?

Asset can be a physical one (nude pics of Jay for example) or a non tangible asset. Answer coming later. (however there are many good answers, really only 1 real one)

[axemansean]

I would say house, like Robbie said most of everything we own is a liability and you said something tangible. A house will appreciate in value over time to a certain extent, if you take care of it it will reap its reward.

Something like that or am I way off.

[Davis Silver Sti]

I would say house, like Robbie said most of everything we own is a liability and you said something tangible. A house will appreciate in value over time to a certain extent, if you take care of it it will reap its reward.

Something like that or am I way off.
Actually I said it can be a non-tangible asset.

[axemansean]

Ooops sorry missed that part. I saw the non emotional on page 1.

Then I would say intelligence. Its the greatest asset a person can have.

[Davis Silver Sti]

alright heres what im wandering u said the thing about he balance what if u only have like 300 of the 500? can u pay that then the next month it would be 200 but would htereb e intrest on that 200?
the interest would depend on what card you have. But it shouldn't be much and would only happen that next month since you'll be paying it off.
Also when you see 8, 15, 20% interest on CC's that is usually the APR annual percentage rate.

PLease see here for spcifics on credit card stuff. http://www.federalreserve.gov/pubs/shop/default.htm
(they say it much better than I could ever do it)

[MnAiXsImMoA]

your house is of course an asset :P

assets come with 2 in 2 kinds liabilites(what you owe) and capital(what you offically own)

thats the way i think of it 8)

[Davis Silver Sti]

oh yea...another thing...be extremely careful when you give out your -personal finnancial information.
-social security numbers should rarely be given out orally,
-make sure your info cannot be seen thru an application letter,
-verify the person you are talking to,
-once you have a CC, never give the number over a wireless phone,
make a photocopy of your CC and put it in a safe place.

[Davis Silver Sti]

I might just make a poll of it....

PLease see post in OT for asset question and answer

[Feedman]

Definatly some good info Davis....

Might help out a few of the "younger one"....

Something you can actually do, that people never think of.....

Is call the credit card company up and ask them to lower your rate, you will be surprised they will actually do it....

Every % helps....

8)

[Davis Silver Sti]

Definatly some good info Davis....

Might help out a few of the "younger one"....

Something you can actually do, that people never think of.....

Is call the credit card company up and ask them to lower your rate, you will be surprised they will actually do it....

Every % helps....

8)

good point! ive heard of them doing this..never tried it.