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How to select credit card?

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How to select credit card?

Postby Sticky Spice » Thu Nov 17, 2005 9:44 am

I think I'm going to have to get a credit card this Christmas. I don't know how to find cards with good rates and I've never had one before. I know that one major purchase I'm going to make will be at a department store, so I don't know if I should just get their credit card or what.

Any advice?
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Postby Coppermine » Thu Nov 17, 2005 10:34 am

Credit is a wonderfully magical, yet dangerous, place.

First of all, you should get one. Establishing credit will make it easier to get loans for a car or a home in the future. The key is to have good credit.

Also, how old are you? If you are in college, you can get a relatively low rate student card from almost any major credit card company. Of course, those cards usually have very low limits, typically around $1000 or less.

Also, do your research. One place to start is your bank, which may or may not offer good rates on credit cards. Then there are your major cards... Chase, Citibank, Bank of America, Bank One, Capital One (what's in your wallet?) and the two stand-alone credit companies, Discover and Amex.

Here is one thing you should look for... if you're just using your card for the holiday season, it would behoove you to seek out a card that offer 0% APR for 6-12 months. Many credit cards offer this deal, it's perfect for holiday purchases because is allows you time to pay off the cards at no interest before a rate of around 17-20% kicks in.

Department store cards may be a good bet, but you should only use that card for purchases at said department stores. Applying for and using a card for a purchase at a department store is often at a starting rate of 0% and will often give you a discount of around 10% on what you buy.

If you're going to use the care for purchases at more than one store, you should go for a national card.

I can't tell you which one to get... every credit card company offers different rates and different perks. One thing you should avoid are credit companies that offer cash back and travel awards... these cards usually start with a low rate, but a higher rate quickly kicks in and since you're only going to use it for the holiday season, I would try to go for 0% for a set time period.

Also, you should get a national card as opposed to a department store card becuase you can continue to use that card after the holidays and continue to establish good credit. You should use it for small to medium sized purchases that you can pay off at the end of the month, therefore eliminating the need to pay interest.

Check out some of the major card companies websites.... you can apply online and it will often ask you a series of questions that they can use to taylor a card to your needs. My first credit card was a low-limit/low-rate Discover card for students and it was perfect for helping me establish credit. Of course, you can really find a good card just about anywhere if you do your homework.
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Postby Pogotheostrich » Thu Nov 17, 2005 10:38 am

Good stuff Coppermine. ;-D
I'd also recommend looking for a card that has no annual fee.
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Postby slomo007 » Thu Nov 17, 2005 10:41 am

Coppermine...I disagree that you should avoid cash back cards, well sort of. If you actually plan on having a balance, then yes they may not be the best route. However if you want a credit card for its convenience and do not need to carry a balance on it, cash back is a wonderful thing. I have a Citi Dividend card that gives 5% cash back on gas and groceries, and has a $300 limit/year on how much you can get back. I have no problem hitting that limit, and don't carry a balance (and no annual fee). So basically I would be throwing $300/year a way by not using it.
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Postby rob0417 » Thu Nov 17, 2005 10:45 am

Don't get the department store credit card, unless you are going to pay it off in one shot. They try to lore you in with the promise of a 10% discount, and then charge large interest rates.

My advice to you is to pay off your purchases as soon as possible. If you must get a credit card, try to find ones with lower rates. bankrate.com is a good financial tool, and will give you some good information. Besides that look for something that interests you, like frequent flyer milage. also try to avoid cards with an annual fee.
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Postby Coppermine » Thu Nov 17, 2005 10:49 am

slomo007 wrote:Coppermine...I disagree that you should avoid cash back cards, well sort of. If you actually plan on having a balance, then yes they may not be the best route. However if you want a credit card for its convenience and do not need to carry a balance on it, cash back is a wonderful thing. I have a Citi Dividend card that gives 5% cash back on gas and groceries, and has a $300 limit/year on how much you can get back. I have no problem hitting that limit, and don't carry a balance (and no annual fee). So basically I would be throwing $300/year a way by not using it.


I see what you're saying... the Discover card I mentioned earlier had cash back, but it didn't benefit me as much probably because I didn't use the card as much as I should have.

What I should have actually said was to avoid cash back in lieu of higher interest rates. I know there are card with great cash back plans and reasonable interest rates... but some credit card companies will try to slip cash back in on the deal while charging a higher rate.

Of course, that's not as much of a problem as long as you don't carry a balance.

Also, no annual fee goes without saying... I'm not even sure how many credit cards still have an annual fee, but if the interest rate and awards seem too good to be true... then it probably has one.
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Postby slomo007 » Thu Nov 17, 2005 10:53 am

Coppermine wrote:
slomo007 wrote:Coppermine...I disagree that you should avoid cash back cards, well sort of. If you actually plan on having a balance, then yes they may not be the best route. However if you want a credit card for its convenience and do not need to carry a balance on it, cash back is a wonderful thing. I have a Citi Dividend card that gives 5% cash back on gas and groceries, and has a $300 limit/year on how much you can get back. I have no problem hitting that limit, and don't carry a balance (and no annual fee). So basically I would be throwing $300/year a way by not using it.


I see what you're saying... the Discover card I mentioned earlier had cash back, but it didn't benefit me as much probably because I didn't use the card as much as I should have.

What I should have actually said was to avoid cash back in lieu of higher interest rates. I know there are card with great cash back plans and reasonable interest rates... but some credit card companies will try to slip cash back in on the deal while charging a higher rate.

Of course, that's not as much of a problem as long as you don't carry a balance.

Also, no annual fee goes without saying... I'm not even sure how many credit cards still have an annual fee, but if the interest rate and awards seem too good to be true... then it probably has one.


While I never suggest ignoring the interest rate, if you do truly plan to pay your balance off then a high interest rate doesn't make much difference. Also, FWIW, my Citi card rate is about 12.5%....so I don't know how you can really beat that, especially considering the $300 cash back if you use it enough. If you're in college or don't have much of a credit history, they can be hard to get though. I think they have a college student version, but I don't know much about it.
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Postby acsguitar » Thu Nov 17, 2005 11:34 am

I use chase...

0% apr for a year even on balance transfers although there is a 75$ charge

also, 1 dollars reward for each dollar a 5x for gas and supermarket purchases.
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Postby ironman » Thu Nov 17, 2005 11:35 am

Credit cards are the devil! :-[

Well they can be. Just be smart with it. I had a couple cards in college and was pretty responsible with them. It wasn't until I got out and got a place of my own and paid for majority of my wedding that I got into trouble. Now I'm stuck paying off a debt that will be way more than I originally spent.

Store cards are tricky but it depends on what store it is. For example I have a card with Von Maur, which is a fairly local department store mainly in Iowa. Their cards have small limits (like $200) and no interest ever. So if you put $100 on it, even if you pay it off over a few months you will only pay what you charged. I also have a Sears card which has horrible interest rates, but it comes in nice for large item purchases when they have 6 months no interest specials going. That came in huge when we moved into our last house and had to buy all our appliances.
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Postby Coppermine » Thu Nov 17, 2005 11:37 am

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