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credit card question

T

the batman

macrumors regular
Original poster
Feb 16, 2010
162
21
hey i just got my first credit card(the capital one secured mastercard) and i'm going to use it to build my credit, probably just use it to buy groceries etc. will i build credit quickly and better if i just pay the minimum monthly or will i build credit quicker by paying it all off immediately?
or what about a combination,,paying the minimum the first month and then next month paying off the rest of the balance?
also,how quickly should i have credit? from the first time capital one report it to the credit bureaus? i'm from england and moved to the states last year, started working in july, and have no credit history at this point
 
Pay it immediately IMO.
I don't know what the true answer is, if there is one, but I wouldn't even consider just making the minimum payment if I could help it.
 
If you can afford it, it's best to pay the card in full each month. Otherwise, you're paying interest. How quickly you'll build a credit record (and therefore be eligible for more credit!) depends on a number of factors, including how much you charge. The greatest danger of credit cards is that they can lead you to spend beyond your means, however, so be careful.
 
so it appears to be best for building credit to pay off in full asap?
thanks guys
 
the batman said:
so it appears to be best for building credit to pay off in full asap?
thanks guys
Click to expand...

It took me a year to initially build my credit with that same Capital One card. I'm going on 2 years and 4 months with it now. I really didn't see results until I got my Amazon Rewards from Chase last year. I was just staying at "Fair" until then.

They'll give you a CreditInform brochure if they haven't already. Set that up and you'll get an update on how you're doing every month and a quarterly report for free.

But yeah, pay it off totally every month and you'll be good.
 
The single most important thing you can do with a credit card, as far as building your credit score, is not to make any payments late (or miss any payments).

Beyond that, there ARE other factors that affect your credit score:

1. The length of time the account has been open. This is why you should not close the account, if you can help it.
2. Your utilization rate (percent of credit used vs. maximum credit line). This is why you should pay it off in full, to keep your utilization low (at or near zero).
3. The total amount of credit you have. This is another reason why you should not close the account, even if you end up with another card sometime in the future.
4. The number of accounts you have open and available.

You get the picture.
 
I'm not sure, but I do know that you should make sure you pay it off on time and don't spend money you don't have haha

I had too much fun with my first credit card during college :eek:
 
thanks for all the responses guys,so we just went to get some late dinner and it cost $18 (my credit line is $200) and i used my credit card-broke my mastercard virginity!
right move is to go ahead and pay it off now with my debit card right?
 
the batman said:
thanks for all the responses guys,so we just went to get some late dinner and it cost $18 (my credit line is $200) and i used my credit card-broke my mastercard virginity!
right move is to go ahead and pay it off now with my debit card right?
Click to expand...
No the right move is to water for your statement then pay it in full.
 
Definitely pay it off in full - you'll be charged interest if you only pay the minimum, which obviously you don't want.

Also, the point of a credit card is not to make a purchase with it and then immediately pay it off. Wait until you get your statement and pay it off all at once.

But be careful...treat credit like you would treat debit, as IF it were coming right out of your account as soon as you swipe it. Do not spend money you don't have or you'll end up ruining your credit. It's a big responsibility and credit's not something to mess with, so make sure you use the card consciously.
 
the batman said:
thanks for all the responses guys,so we just went to get some late dinner and it cost $18 (my credit line is $200) and i used my credit card-broke my mastercard virginity!
right move is to go ahead and pay it off now with my debit card right?
Click to expand...

No, no. Multiple payments between two weeks will get you in trouble. They'll shut your card off. Been there, done that. :eek: It's to prevent fraud. The others are right, just pay when your statement arrives or just a little before that.
 
Use credit cards for points, miles, bonus cashback rewards, warranty extensions, loss and theft of purchased items, Airline club access, and other perks. Treat them as cash, nothing else. Do NOT, under ANY circumstances buy anything with a credit card you are certain you can't pay for in cash within 30 days.

I recently dug myself out of 40k in credit card debt, but I use credit cards all the time now. Why? All those perks I mentioned above. Trick is...I move the amount I put onto my cards every day or so from my checking to savings and use that to pay it off at the end of the month. Keeps me in check. Don't make the same mistake I did. You're in for a world of hurt otherwise.
 
It's more about showing responsibility. Red flags are late payments and a large amount of your available credit used vs total available credit.

If you buy a $2000 Macbook Pro and pay it off over the course of a few months vs paying it off all at once I don't think will make a difference.
 
Check out the Credit Karma app, turn on the monitoring, and follow all the suggestions. And it's the number of accounts x the time they are open x your behavior. You don't want to wait years to open your next one because 'length open' gets averaged.

And use bankrate.com to find your next card.
 
I've had credit cards since I was 18, 33 now. I've missed payments on occasion, not because I couldn't make them but because I somehow forgot! As soon as I realized I missed it, I made the payment. I have 4 cards and charge pretty much EVERYTHING, then pay the amount due on the statement before the date due.

In that time I've had 2 car loans and a student loan, all paid on time while making payments and I believe both car loans were paid off early (I know one was). My credit score was VERY good (over 800) when I went to get a car loan 2 years ago.

As others said, use the card and pay it off once you get the statement. You won't owe interest until you don't make a payment, or don't pay in full.
 
just a check in 16 or so months later. building credit has gone really well, capital one have repeatedly increased my limit and it's now at 700 bucks. i also successfully bought a bed on credit - exciting, i know. also been working at apple for almost a year now, so all is going well
 
the batman said:
just a check in 16 or so months later. building credit has gone really well, capital one have repeatedly increased my limit and it's now at 700 bucks. i also successfully bought a bed on credit - exciting, i know. also been working at apple for almost a year now, so all is going well
Click to expand...

Congrats on the credit building, the bed, and the job! :D Lol, hey, buying a bed is probably one of the very few smart things you can use credit for.
 
Credits cards are easy:

1) Buy what you can afford, and pretend that you're using cash.
2) Receive the monthly statement and verify accuracy of purchases.
3) Pay off the full balance.

Other tips:

1) If you see a purchase on the statement that you don't recognize, call up customer support and inquire about it.
2) To ensure that you're never late on payments, set up auto-pay to withdraw the full amount from your checking account.
3) Be on the lookout for credit card deals. Some offer bonuses like 1% cash back on purchases.
 
Credit cards are amazing. I have 4 (Chase Freedom, Discover, Macys, and Target).

I balance my cards to my needs monthly and pay on time or the current balance. Cash back rewards are so nice too, I think I have $40 that hasn't been redeemed yet.

Also a plus - statements can save you when you need to rely on them for potential fraud, warranties, etc. Basically, any big purchases go on my card for extra protection!
 
the batman said:
just a check in 16 or so months later. building credit has gone really well, capital one have repeatedly increased my limit and it's now at 700 bucks. i also successfully bought a bed on credit - exciting, i know. also been working at apple for almost a year now, so all is going well
Click to expand...

Congrats! Responsible use of credit is SO important in a person's life (and surprisingly goes almost entirely untouched/undiscussed in high school).

I am a loan underwriter at a credit union. I look at credit reports all day, every day.

I'll echo a couple things that have been mentioned here already.

The most important thing with credit cards - pay them on time! Late payments are extremely detrimental to your credit.

As a rule of thumb, utilize 30% or less of your available credit. So if you have a card with a $1,000 limit, only carry a balance of $300 or less.

One card with a larger balance is better than a bunch of cards with smaller balances. For example, it is better to have a card with a $5,000 limit and a $1000 balance, rather than four smaller cards with $250 balances on each one.

Age of accounts is important. The longer you have an account open and maintain positive payment history, the better it is for your credit.

Credit mix is important. It is good to have a mix of credit cards and installment loans (car loan, mortgage, student loans, etc.).

Take is easy on the credit inquiries. Every time a creditor pulls your credit in order to open up a new account, your score gets adversely effected. However, if your credit is pulled multiple time within a 30 day period for the same purpose, it only counts as one inquiry against your score. For example, if you're shopping around for a car or mortgage and 3 different companies pull your credit so you can compare interest rates, you should only be "hit" for one inquiry against your score (even though all of the inquiries will show on your report). It should be noted that credit inquiries aren't as detrimental as some people think. You're only docked a couple points for each unique inquiry. Also, some companies (usually cell phone providers, utility companies, some credit card companies when they're doing limit increases) will do "light pulls" on your credit, which do not impact your score at all.
 
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