diet site
 

My ex wife while we were married had signed up for of all things an internet wieght loss site which she charged to my credit card. As she usually hid the bills it was over a year before I noticed the charge after I had moved out of the house. It cost me a total of about $150.00 for a site she visited maybe twice and didnt bother to cancel because hey, she wasnt paying for it was she? She used my credit card because no bank trusts her with one. She is still as fat as she was before joining.

Thrilling.

That's why I don't have a credit card. Keeps me out of these kinds of situations. I only pay for what I can afford, and if I absolutely need a credit card, i just use my debit card.

and you build such great credit that way! That way, when you need to get a cell phone or a home loan or an auto loan or a signature loan, you don't have to make $800 payments that you get back after your first year or have 18% on your fucking card.

I hated credit cards, until I realized that since I am not independently wealthy, I NEED to have credit in the future. And that's how you build it.

Plus, if you lose a wallet full of cash, you are FUCKED. If you lose your debit card, you CAN be fucked (check with your bank). If you lose your Visa... you can only be fucked out of exactly $0.

Enjoy it while it lasts, my friend. You will, in all certainty, need a credit card one day.

Credit can rule, if you are responsible.

It can get you into an apartment with little or no money down.

It can get your utilities turned on or get you a cell phone contract with no deposit.

It can get you 0% financing on a car.

It can also be the difference between getting a particular job or not (especially since many companies now do credit checks).

We use our credit card for almost all our purchaces. Its useful because we get a spending breakdown once a month that we can pump into Microsoft Money or Quicken. We can crank out all kinds of graphs telling us where we're being stupid with our money. It helps for setting long term goals and getting there. However, you have to pay it off every month or you're screwing yourself. We've built a house on our credit card and carried a balance over a few times but we always change our spending when that happens and slow down construction. Right now we have no balance and no morgage, easy credit is a tool like any other. "An idiot with a shovel will cause more damage than a wise man with a bull dozer." Gene Logdson

You can also fly to Europe on your accrued air miles like we'll be doing next fall.
juju is being smarter about it than a lot of students, if you have little chance of paying down debt, you shouldn't take it on.

Syc can tell you more about this, but basically, it's better to keep money on your card - but have enough money that you could pay it off if you absolutely needed to. Your credit rating goes up quicker that way.

My credit advisor at my credit union told me the same thing, so... I didn't just hear it from one person.

I try to keep about a $500 balance on my card and make payments whenever I need to. My credit is going up, which is a good thing (and I've gotten two cell phones now without the ridiculous deposits most companies charge - anywhere from $200-$800, which you get back with no interest after the first year).

That depends on what your goal is. We already have good credit so it would be pointless to pay 18% (warning number pulled out of ass, may reek)on whatever the carried over balance was. To us, thats just shoveling money into the furnace when it could be used elsewhere. If you're going to stay on the credit treadmill then you have to play the game, but we're getting off.

In 8 years, I've only been late on one payment (my Mobil card this past summer, and I was only late b/c I forgot about it...it arrived a few days late).

When you carry a balance, and make the appropriate payments, it shows creditors that you know how to use a card. Over time, it gives you bargaining power for higher limits or lower interest rates.

I don't know how many of you have a May Department Stores credit card (Robinsons-May, Famous-Barr, Filene's, Hecht's, Strawbridge's, Kauffman's, Foley's, etc.), but if you carry a balance on it, and pay it off in installments (on time of course), they bump your limit up without even telling you. I had a F-B card when I was in St. Louis, and I only used it here and there to buy clothes. My credit limit went from $200 to $800 to $2000. When I moved to DC and got my Hecht's card (you couldn't use one May card between the various stores at the time), it was "open-ended," as in no limit. Not that I would ever use that much credit, but that was pretty cool.

Well, I dunno. That sounds like a pretty bold statement. Do you really think a person just can't get by without a credit card? I mean, I seem to be doing pretty well so far.

I don't know much about the home loan stuff. Am I to understand that you're paying interest..eh..i mean, "building credit", just so you can take out a bank loan in the future?

In the US 2002, no, you almost can't. Oh sure...you can. But it just makes your life 50 times more difficult.

My parents had incredibly bad credit for many years, and have only rebuilt it in the past 5 years to where it's actually good now. Here are some things that they couldn't do (and what you can't really do either) w/o a CC:

--Rent a car (b/c most places demand a CC to secure a deposit...and even with a MC or Visa logo on a debit card, many places will either not accept it if it's just a debit card, or their card readers may be unable to properly read the card).

--Rent a hotel room (same thing).

--Shop easily online. (What a lot of banks fail to mention is that even though your debit card may be a Visa or MC debit card, they don't always work as well as a Visa or MC credit card does...for whatever reason, the cards don't always read properly.)

--Actually get a MC or Visa debit card. (Most banks actually check your credit now before they'll issue a debit card with either logo. If your credit sucks, you'll only be able to get a plain ol' debit card.)

You gotta pay to play, my friend.

Why on earth would a mortgage company want to give you a loan for $200,000 if you have no credit history? Why would a bank want to give a car loan for $15,000 if you have nothing that shows you've paid back anything in the past?

That's why you start small. JCPenney will give anyone a CC...that was the first card I ever got. I'm sure you have plenty of folks on campus trying to get you to sign up for a CC. Go ahead...sign up for one. It won't be the best...it'll probably be like 18% interest, and will probably only have a credit limit of $500. Use it sparingly, wait a year, then ask for a lower interest rate, or get a new CC.

Wow.. rich white men are really playing you folks for all you're worth, aren't they?

Oh, of all the times i've been completely fucked because I couldn't rent a car or a hotel room! Seems like a travel thing if you ask me. I'm content with borrowing my mom's card for such occasions.

As to buying things online, I do it all the time with my debit card, and have never had any problems.

I have paid off my car loan, so I can only hope that gives me good enough credit to buy a house.

You might get by on your good looks and a handshake in Arkansas...unfortunately, it doesn't work like that in much of the world anymore. :)

And how is that going to help YOUR credit?

That'll help, but you (and your wife) are gonna need a solid credit history...one car loan ain't gonna cut it.

uh, it may not be the same across the country (although i dont know why it would be different) but i can and have done all these things having only a debit card (visa logo). i do agree that a credit card goes a long way to establishing credit, i dont have one simply because my credit isnt good enough (yet). my wifes credit has improved immensely since gettting a couple low-limit credit cards and using them responsibly.

~james

Are you guys (Dave/Terry) talking about recovering from a bad credit rating or establishing good credit initially? It seems like those are two different issues. Either way, I don't buy paying for money I don't need. You risk being a tool of the credit card company rather than using their card as a tool. Folks need to look at their own financial circumstance and act accordingly. CC companies rely on people screwing up, if you're living on the edge of financial disaster and are carrying balances so you can get a reasonable loan rate you are getting screwed and need to change banks or maybe join a credit union.

It's more of a place-to-place deal, from what I've seen.

I've used a Visa debit card for 5 years now, and have never had a problem with it. I do know of people that have experienced problems in trying to use such a card though. Some websites I've shopped at in the past warned of possible problems with them as well.

The company for whom I used to work constantly had problems in processing orders using a Visa/MC debit card. Then, the customers would either wind up on the hold list (if we hadn't sent the order yet) or the collections list (if we had). Apparently, there was no problem with the system we used for processing, and I seriously doubt that all these customers were broke.

I don't know exactly how the systems work, but they should work the same for either type of card. If I buy a $100 item, the system should be able to read the card, note that I either have the $100 available or not, and proceed accordingly. Perhaps debit cards are on a different system...*shrugs*

Obviously, I don't buy anything that I can't pay for that day. I used to go and pay off my credit card as soon as there were charges on it. Then, when I applied for a phone with Sprint, they ran a credit check and said "eh, you're getting there"... I talked to my credit advisor (I am a member of a credit union, not a bank) and she advised me that it was best to keep a balance on there - one that I could pay off any time, so I should keep the money in the bank. As it is, I try to keep a "buffer" of $5,000 in the bank in case I need it (and I have needed it recently, which means I'm considerably off that $5,000 right now :) ), but I still have enough money to pay off <b>all</b> of my debt (which amounts to a few thousand dollars in computer loans and a few hundred dollars on my credit card).

Anyway, the point is that since I have been keeping a balance on my card and making payments, my credit has gone up. I have never had bad credit - I just had <b>no</b> credit, which is almost as bad. I'm now working my way up, which means good things - the better your credit, the lower rates I'll pay on car loans and mortgages in the future. That translates to real dollars that I can save, which I put into my 401K and milk for all it's worth. I'm only 21; if I can put away an extra $50/month (saved from mortgage, since I got a lower interest rate), over 10 years, that's $6,000. So we'll just say that all starts tacking on interest when I'm 31 (which it won't) - by the time I'm 60 and ready to retire, how much do you think that will be worth?

My dad put away some $3,000 when he was 26 and forgot about it. It's worth about $50,000 right now, and that's with the market in the shitter. He's almost 53 so you figure it out.

You got it right though - you do <b>not</b> want to become a tool of the credit card company. You want to use them. I am using them to get good credit and save me money now so I can have more to retire on. You just have to be smart about it.

How dare you use my real name! People are supposed to figure that out on their own. ;)

I'm primarily talking about establishing good credit initially.

If you've already ruined your credit, it's going to be nearly impossible to get another CC for a while (unless you jump through a kabillion hoops and sell your soul). My parents started off slowly: renting-to-own many of the items in their home, then a new car loan, then buying the house...now their credit is in good shape, and my parents have finally realized how important it is to be responsible when it comes to credit.

Look buddy, not all of us are mechanically inclined enough to freakin' build our own house. ;)

They can be two different issues. However, once you come out of a bad credit fiasco, for the most part, you're on the same playing field as the 20 year old with his first CC...you gotta establish good credit.

What I generally recommend to people is this: Buy something on your credit card that you could easily buy with cash today. Put that money aside, add a little bit to it for interest, then pay it off over 4-6 months, longer if it's a big ticket item.

On the surface, it's ridiculous. Why pay $175 or more for something you could buy today for $150?

Because in today's world, trying to live life without good credit can be an incredible pain in the ass. I'm not saying you CAN'T do it, but it can be one hell of an uphill battle. No credit is almost the same as bad credit. It's all about the big picture in the end: the house, the car, whatever you set your sights on.

Banks and lenders are like any for-profit business--they offer a product or service and try to make money. And I understand the rationale behind showing a history of good credit--they're going to give you $200,000 to buy a house...why should they give this money to you?

I remember the days of every credit card company hawking their products on campus at SEMO...sign up for our card, get a free t-shirt! Get coupons for free food! Some kids just don't understand credit cards and the need for good credit down the line...they sign up for the cards, rack 'em up, then are nearly bankrupt before they're out of college. By the same token, these credit card companies love to prey on easy targets...knowing damned good and well the possible consequences of what they're doing.

Absolutely, Griff. If your financial picture isn't good, or you fear that there may be too much of a temptation in having one, don't get one. (Though I would recommend seeking some help on the latter.)

As an upper-middle-class white man, I'm playing THEM for all I'm worth. Just bought some furniture and a new Apple Powerbook.

Coincidentally, First Union (known as "FU" to most customers) had just sent me an offer I couldn't refuse: 0% interest until February 2002. On everything but cash advances, not just balance transfers. No doubt they are expecting me to run up the card and then get stuck paying their regular interest rates (sky-high) in February. But: I have the money. It's sitting in an FU savings account, in fact (don't laugh, it's done much better than the stock market). So instead of me paying THEM interest, those suckers are going to be paying ME interest. And I'm going to have almost-free (gotta pay the minimum) use of my furniture and computer until February.


Oh, of all the times i've been completely fucked because I couldn't rent a car or a hotel room! Seems like a travel thing if you ask me. I'm content with borrowing my mom's card for such occasions.

Financial independence from one's parents is hard to over-rate.

Which one'd you go for? They're supposed to be refreshing the lineup soon. Myself, I'm thinking I might get another iBook and pass this one to Jenni or my sister come January or February. I like the PowerBook, but I just can't get over my iBook. I love those things.

If it had a G4 processor, capability for more RAM and a 64MB Radeon 9000 Mobility, it would be the perfect notebook. :)

667 DVI (current model). The 800 cost a lot more and I heard the 667 had longer battery life. It's a refurb, too, which saved me a few hundred bucks.

The rumors I've heard put a SuperDrive in the new Powerbooks, which unfortunately would increase their thickness, and that 1" thickness is part of the reason I've wanted the thing since it came out.

Agreed. I love the thickness, but it's too wide for my tastes. I personally like the form of the iBook a lot more - though like I said, it could be a bit thinner and I wouldn't complain.

667 DVI is a perfectly acceptable laptop :) I certainly wouldn't complain. If you don't mind me asking, what'd you pay for it? Or what price range? Just curious... I have a friend that's looking for one, but he doesn't want to pay too much. Like I said, personally, I'm holding out for a decent-graphics iBook, hopefully by January-February. :)

The new ones are out! 1GHz with Superdrive, still 1" thick. Might have the iBook you want too.

Makes me glad I bought refurbished -- I'd really be kicking myself if I paid full price and then the new one came out. I think it was $2299, but it might have been $2199 + $100 for the airport card.

Not bad, not bad at all.

After seeing the upgrades to the PowerBooks, I've decided that I'm going to get one instead of the iBook. I didn't think they'd get all that they've gotten. Wow. :)

I still don't see where you guys are coming from. I've never carried a balance on a CC, yet I somehow got "magically" approved to buy a house over two years ago. Several lenders were willing to shell out their money to me.
"What?! But you can't build credit without carrying a balance!!"
*BS alarm* You can build creadit just by carrying credit cards and making purchases with them. Never spend more than you have, and never carry a balance. Why pay 8%+ on a balance when you can make that in a long-term investment?
D - I think you need to tell your "credit advisor" to go to hell. That's a load.

People also often make the mistake of buying the most expensive house for which they can get a mortgage. Yeah, sometimes that's a good idea because sometimes a mortgage is the cheapest loan you will get in your life. In other times, you put yourself on a stupid treadmill for a decade, where you HAVE to work a certain level of job because you HAVE to earn a certain amount.

I think the next place I get will be a fixer-upper where I devote my time to being the fixer-upper. Learn some of that carpentry, plumbing. The Griff way seems too hard on the back though.

Either way yah gets to buy all those tools, don't tell me you don't want a chop saw in the garage. Griff drooling having a Tim Taylor moment

Have you bought a car or other items on installments before? I dunno if you're married or not either.

To a degree, but if you pay those balances off the minute you get the bill, it doesn't help you much. 1) You're not making the CC company any money and 2) It doesn't show that you're responsible enough to pay on installments.

This is Hell's version of Slashdot Karma.

All I said is that my credit will go up <b>faster</b> with a balance on the card. And I use it enough that the stuff I bought at the beginning of the month is always paid off by the end of the month. If I don't keep making small payments on it, I'd hit my limit way too quickly.

Nope - I'm a single guy that's never had any type of financial responsibility before. I've been financially responsible, but I never burdened myself with spending more than I had (ala karyn), nor have I subscribed to the notion that one must "create" credit ratings for themselves. I also paid close attention to the problem that Tony presented -- don't over extend yourself. I found a house at half the amount I was approved for. I wanted something I knew I could afford for a while if I happen to lose my job, or that would be attractive in a rental market (though now I'm thinking it's a little too nice to let some frat-boys live in -- I guess I'll have to be extremely picky (I never said that) if the situation ever arises).

1). I'm glad I'm not making the credit card companies any money. They don't deserve it. The only way they should make their money is from the 3%+ they charge retailers to use their systems.
2). It shows that I'm respnsible enough to know my spending limitations, though. How does making payments on something you may purchase outright prove financial responsibility?

Just out of curiosity, what APR and what kind of balance are you talking?

That was my first card, when I had <b>no</b> credit. It's 18% APR, the limit is $1,000 and I try to keep $500 freed up on it (so $500 balance).

I still have not paid a cent of interest, but my advisor tells me that my credit is going up.

I have taken a loan which I could pay off right now but don't want to. I borrowed $1,700 from my credit union to purchase Jenni's iMac. I make payments of $156 each month, which means my interest rate is somewhere around 16% (if I just calculated that properly). At the end of a year, I will have paid them an extra $172 and my credit will have gone up a fair bit.

You do whatever works for you; I'll do what works for me. I used to be completely anti-credit card, but when I can manage my money the way I do, I consider having one to be a benefit. I still never spend money I don't have and I'm building credit. If you don't consider that important, great. I <b>do</b> consider that important, and that's why I work this the way I do.

You don't need to carry a balance to have good credit. The mortgage I took out recently was the first installment loan I ever got, and I always pay my credit card bills within the grace period (well, unless the suckers are going to give me free money, see above).

PayPal me now or pay me later ...
 

Some might like this new affinity Visa/ebay/PayPal card:

Paying a CC off within the grace period, which you're obviously doing if you've never paid interest, is not considered carrying a balance. So you're basically doing the same thing that blowmee is doing.

Do you get a yearly credit report, as these "credit advisors" strongly recommend? Are you verifying that the money you're throwing away now will help you make money later?

Are you bothering to read what I write?

[ edit - typo ]

Dave, I think Tob is right you're missusing the phrase "carry a balance". If you zero out your card during the grace period you are not carrying anything over, you're just using your card as we suggest.

And <b>that's fine</b>. I have been told, very clearly, by a number of sources, that carrying a balance will improve credit ratings more quickly than not carrying a balance. I've been trying to carry a balance, but if it's not working, well, I dunno. Maybe my credit is now going up faster because of the loan I mentioned before - on which I am making payments every month.

Perhaps I will apply for a better credit card from my credit union and let it carry a bit of a balance, so I can make payments on it and make my credit go up quicker.

blowmee says it shouldn't work that way; he's right. But it doesn't matter, because it <b>does</b> work that way. And the better credit you have, <b>the lower interest rates you pay in the future</b>. I am <b>not</b> independently wealthy, and I <b>do</b> plan to own a home, which means I <b>will</b> need to borrow money. Let's examine the difference between 5.5% and 5% on a $200,000 mortgage over 30 years, shall we?

5.5% with no money down over 30 years comes out to 360 payments of $1,135.58 - for a total of <b>$408,808.08</b>.

5.0% with no money down over 30 years comes out to 360 payments of $1,073.64 - for a total of <b>$386,511.57</b>.

The difference in the two is <b>$22,296.51</b> - enough to buy a pretty decent car.

Suppose, then, that you put that extra money ($61.94 a month) into investments (stock market). We'll pretend that you only invested the saved monies at the end of the year - for the sake of simplicity. Suppose that, over time, your investment averages 20% each year - not at all unheard of in stocks and probably about average. At the end of that 30 year period, said monies would be worth approximately <b>$877,725.65</b>.

I fail to see how turning $65 a month into almost a million dollars over thirty years is a bad thing.

Can you back the claim that you will pay lower interest rates later by carrying balances on your credit card?
I still don't see how you are able to carry a balance, yet not pay any interest. Even if you charge something for a dime and don't pay the credit bill, you will be charged interest. I don't know of many cards that offer 0% interest beyond a certain introduction period.

I have already stated how this works; re-read above.

Yes, I <b>can</b> honestly say that I'll get lower interest rates in the future by building credit now. That is how it works.

If you have good credit, lenders are more eager to loan you their money. For people that have really great credit, they <b>really</b> want to lend you money - because they're gonna make money on it! It's a good investment to them! So they want you to choose them - and they offer lower interest rates. We call them "bidding wars" here in the defense industry. Mr. Lender A wants to be the lowest bidder (interest-wise), because he <b>wants</b> to get your money (because you have a superb history of borrowing money and paying it back with interest, meaning that he is going to make money on you), so he offers a used auto loan at 8%. Mr. Lender B wants your money too, so he offers a rate of 7.5%. Mr. Lender C really wants your money, so they offer 6%. You take their offer back to Mr. Lender A & Mr. Lender B and say "I can get 6% here, what can you offer me?" Continues on until you both are happy.

As I've demonstrated above, even half of a percentage point on a mortgage can save you <b>real dollars</b>, which you can put to work and make even more money.

Credit, investing, buying... it's all a big game, and you'll do really well for yourself if you know how to play it.

The best advice is to pay off your card each month. Dont carry a balance over. Your credit rating will take care of itself. They really really want to sell you stuff. Honest. For two low income yahoos, we have ridiculous credit lines. They're begging us to play. Daily.

Buying our house has been an amazing investment. The mortage lender, as usual, said we were approved for way more than we knew we could handle. We stayed in the price range we calculated and have done well. We had our home reappraised to rid us of mortgage insurance fees as it has almost doubled in value over the past 5 years.

We recently made the nerve racking decision to get a home equity loan. Lots of competitive options. As owners of a fixer upper, we decided to take advantage of a temporary city revitalization grant and build a new garage- the city picks up 25% of the cost if we live here 7 yrs, which is no problem. The loan is marketed with the same intensity as a credit card, the interest, the slipperiness of payments, only your house is the gamble. We are making payments far above the minimum looking at it as a strictly timed loan, rather than the convenient revolving credit, begging us to please spend!

Right on, warch!
If you play their game, you end up just the same as everyone else, especially now that the Fed has lowered interest rates again. I know people with horrible credit that have refinanced with lower rates than I originally got. I would do the same, but I don't plan to be in the house for more than two more years.
Pay now play later?

I think we've determined that Dave isn't in fact carrying a balance.

I believe what blowmee is talking about is the "Score Power" report from Equifax, which is one of the major credit-reporting firms.

For $12.95 (go to equifax.com and click "See my credit score"), they give you a credit report, a computation of your FICO score, and personalized explanations on what is affecting your credit rating and how you can improve it.

If your advisor is doing all this for you, then great. But Equifax is pretty much the horse's mouth. And almost every housing lender uses your FICO score to determine what kind of credit risk you are.

If your advisor hasn't discussed your FICO score with you, how good it is for someone of your age and income, and how you can improve it, I'd ask him about it.

Shit, lots to reply to here.

Russ, you bought both your Miatas with cash? I only ask b/c you said your home is the first installment loan you ever got.

Dave, that loan is going to be a huge helper. It'll help you get lower interest-rate loans in the future for sure, so long as you pay it on time.

As far as a better credit card, you may wish to try this:

Stroll downstairs from your office to the credit union. Tell them what a good customer you are, and that you'd like a lower interest rate on your credit card. Let them see the proof in the computer; show them a copy of that pay stub. If they refuse, look sad about it...mention something about taking your business elsewhere.

Now, a bit of warning on that: I don't know how long you've had 1) the credit card and 2) the loan. You're 21, so the longest you could possibly have had that card is 3 years. If you've had the card less than a year, this might not work. They like to see a nice history...a year usually works.

Blowmee, I can offer no scientific proof...only my own example.

I'm 27, and opened my first credit account 8 years ago. I've carried balances on them regularly...still do. My first MasterCard had a 19% interest rate...the Discover card had a 17% interest rate.

Fast forward to November 9, 2002. The highest interest rate I have on any of my cards right now is 10.24%. They're variables, but at the height of interest rates a few years back, the biggest interest rate I had was 13%. I get fantastic offers that allow me to transfer a balance for a ridiculously low interest rate...and that interest rate stays put until I pay off the balance (and so long as I don't miss a payment, which I don't).

(Granted, this does not include store cards, i.e. department stores and gasoline cards. Those bad boys are always high interest...and you won't budge them. I rarely carry a balance on one.)

I also got a copy of my Equifax credit report in August, which was updated through the end of June. Squeaky clean...beautiful. Also got a free copy of my credit score...it's good, but it would be better if I had less debt. Don't forget about Experian and Trans Union though...those 2 and Equifax have you and your credit under their hairy eyeballs. :)

Obviously, every situation (and lender) is different. Blowmee, whatever lender you went through determined that you were sound enough (financially at least ;) ) to assume the responsibility of a large loan...which of course, is outstanding.

Of course, I don't know the details behind you obtaining your home...your down payment (if any), interest rate, points (if any). That's none of my business, but hopefully, you got a great deal on it.

Don't think that I want to make CC folks money. :) But like I've said before, they're a business trying to make money. In fact, if you don't carry some sort of balance on some cards, or if you don't use it for a certain amount of time, you're either hit with an annual fee, or it'll be canceled (now that does sound dumb to me).

You're right...there is no guarantee that you're financially responsible just b/c you make those payments. But it tells a credit card company "Hey, this person is making consistent payments, and paying them on time, so they must have a little bit of smarts when it comes to handling money."

Also note that I'm not talking about carrying massive balances just to build up credit...it can be done in rather small amounts.

In the end, do whatever works for you...just be responsible, and keep the future in mind.

Here's more about FICO scores, straight from the folks that created it.

Yes. The first Miata I bought used. (BTW, it's actually "Matt" -- Russotto is my last name).

I know...I've seen you post enough on the newsgroups to know. :)