Student credit cards

[Brian SD]

I am looking to pick up a new credit card for upcoming purchases at IKEA (God save the poor students), but I know nearly NOTHING about credit cards - I was wondering if I could get some help on the situation. The two cards that I was considering are: Citibank Platinum Select Visa for students ( Benefits | Terms ) American Express Blue for students. ( Benefits | Terms ) Things I noticed: The AmEx card has a lower APR (by 3%), and a longer grace period, but it is it accepted enough to justify it? Visa is accepted everywhere... I would like to hear some input from AmEx holders to see where the stance on this is. Also, the Citi card has 0% APR for 6 months, which may provide a nice help.

 

[FIHTies]

Brian:

There are two dangers you need to know about CC's.  One is that they allow you to spend more money than you have, and 2 they use all kinds of tricks to allow you to get into debt and then make money off of that.

For example, while credit cards are quick to offer cash advances which charge a higher interest rate than purchases, they dont pay that off on a FIFO basis, (First in first out) so if you transfer or cash advance $500 (eventually charged at 13+% and then buy 500 dollars which is charged at 7% they will pay off first the purchase of 500 dollars before paying off the 500 cash advance so you wind up paying a higher % .

Most people here are responsible however the allure of the card and spending since you dont have to pay for it now is dangerous.  Especially at this point in your life where you can do some serious damage to your credit rating which will affect you down the line (mortgages, car loans etc...).

That being said, its important to have to build up your credit, but if I could do it again I would seriousely reconsider the card and its usage.

While Amex is great for some of the benefits, the Visa/MC duo is accepted everywhere cause Amex charges vendors too much.  3% vs the V/MC of 1% or thereabouts.  That being said I just called up Amex to dispute a charge and they said no problem, and put the onus of proof on the vendor.  When I did that once with Visa (some time ago) I had to fill out reports and papers etc...

Whatever you decide use caution.

Good Luck.

JJF

 

[FCS]

For example, while credit cards are quick to offer cash advances which charge a higher interest rate than purchases, they dont pay that off on a FIFO basis, (First in first out) so if you transfer or cash advance $500 (eventually charged at 13+% and then buy 500 dollars which is charged at 7% they will pay off first the purchase of 500 dollars before paying off the 500 cash advance so you wind up paying a higher % .

The general rule is that they will allocate your payment to the balance that carry the lowest interest rate, regardless of when the balance was made. So if you carry a total balance of $1000 consisting of $500 interest-free balance and $500 of 20% interest balance, a payment of $500 will be allocated towards the $500 interest-free balance, even if you made that balance one minute before your payment.

 

[banksmiranda]

I have a student Discover Card and an AmEx Blue for Students. I always pay off the bill at the end of every month. I simply got the AmEx in case I ever wanted to buy something at a place like NM which accepts only AmEx. In addition to these two I have a United Mileage Plus Visa. In the end I have two cards which I use regularly (Visa and Discover) and one which I hardly ever use (AmEx).

 

[imageWIS]

A few things to consider:

Having a CC open with no balance and that is rarely used is not a negative thing, on the contrary, it will help your credit over the long run; although I might add that having one or two of these cards is ok, whilst having 3 or more open does not look too good to creditors.

Always pay as much as you can. Even though you should try to adhere to only purchasing items you can afford to pay when the statement comes, if for whatever reason you need to spend more, pay as much as you possibly can, paying interest on CC's is the equivalent of taking cash and throwing out a window.

It is always good to have an AmEx, they have one of the best rewards programs and their customer service and the claims departments are second to none. Plus in the future if you want a gold, platinum or black (Centurion, oh how sweet it is) AmEx, you will be able to just convert the card in-house without any hassle.

Citibank is also an excellent CC company; their fraud protection is extremely well designed, and is great comfort. Plus, with Citibank, you have the advantage of paying your CC at any of their branches.

Hope this helps.

Jon.

Oh, yeah, did I mention I used to work at MBNA?

 

[FIHTies]

Oh, yeah, did I mention I used to work at MBNA?

They are EVIL.

Very lenient lending policies that make for miserable debt problems. caveat Emptor. JJF

 

[Brian SD]

Thank you for the feedback. I am not worried about being irresponsible withmy card, as my main point in getting one is to build my credit. I do not plan to buy anything on my card that I could not also get on my check card, so when payment time comes I will be able to pay in entirety and not have any interest.

Oh, I also mean to ask, is there any reason not to get both cards and use them interchangeably (AmEx when accepted)?

 

[faustian bargain]

having to pay 2 bills every month, is one possible reason.

we got in a credit card hole while in school (both of us got graduate/professional degrees), and it took us years to get out. but get out we did...now we have 'good debt', i.e. low interest student loans and mortgage.

our credit card of choice (and we have several to choose from) is the United Miles Visa...we use it for EVERYTHING, and pay it off completely every month. we have precisely one gajillion miles now. just waiting for the kids to be old enough (or us to get brave enough) to vacation in hawai'i...

/andrew

ps - oh and i gotta agree, AmEx service is fantastic. it is too bad they aren't accepted everywhere, but i guess you can't have everything can you.

 

[Kai]

I don't use credit cards, even now. I never had one as a student. I use a Mastercard debit card. In all respects, it works like an ordinary platinum Mastercard, except that I don't get charged interest on any purchases, because the money just comes out of my checking account.

Credit cards suck. They suck the money out of your pile into the credit card company's pile.

 

[imageWIS]

I don't use credit cards, even now. I never had one as a student. I use a Mastercard debit card. In all respects, it works like an ordinary platinum Mastercard, except that I don't get charged interest on any purchases, because the money just comes out of my checking account.

Credit cards suck. They suck the money out of your pile into the credit card company's pile.

Not if you pay everything off at the end of the month. Plus, you can earn reward points.

Jon.

 

[FIHTies]

Quote:

(Kai @ 17 Aug. 2004, 3:52) I don't use credit cards, even now. Â I never had one as a student. Â I use a Mastercard debit card. Â In all respects, it works like an ordinary platinum Mastercard, except that I don't get charged interest on any purchases, because the money just comes out of my checking account. Â Credit cards suck. Â They suck the money out of your pile into the credit card company's pile.
Not if you pay everything off at the end of the month. Plus, you can earn reward points. Jon.
Ahhh... Once an MBNA employee always an MBNA employee..

Actually I have to agree with the both of you... I flew to Italy business class last July on a business trip with MILEAGE just cause we started paying outr suppliers by CC. Of course if you cant pay it off then you can lose your pants so you are both right. As all things in life. All in moderation. JJF

 

[vero_group]

I put credit cards in the "evil" category. Many Americans -- including college students -- simply use it as an "income expander" to cover the higher expenses of a more luxurious lifestyle. In reality, they cannot afford that lifestyle ( yet. be patient. ) on their current income. The credit card is simply the crutch to get to the higher lifestyle. Unfortunately, it's a downward spiral for the less disciplined among us. A charge card like the normal American Express card is better since you have to pay it off each month or it gets taken away from you. It provides all the main benefits of carrying plastic around in the first place, and it keeps you from getting addicted to the "income expander" lifestyle. The fact that it is accepted at fewer vendors is a GOOD thing. If they don't accept it, pay with cash or cash-equivalent. One such cash equivalent is the debit card. This is the best in my opinion. It pays directly from your checking account. Functions like a credit card or debit card (PIN transaction) on the vendors system, and it functions as an ATM card as well sometimes. I bank at USAA Federal Savings Bank in San Antonio and my debit card does it all plus it gives me 1/4% cash back on everything I buy. I pay all my bills on it and make anywhere from $15 to $20 a month from it. Since USAA checking is free, pays interest, and USAA reimburses me for any ATM fees I incur, I MAKE MONEY from my checking account each and every month. That's $180 to $240 more in my pocket each year without working for it. I laugh "all the way to the bank" when I see BankOne or BOA bragging in its advertisements about "free checking". Whoopee. USAA FSB is the best hands down. Meanwhile, USAA does offer a 12.5% credit card too, if that's your must-have thang.