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well again, i never said it was a bad idea to have a credit card. like i mentioned, sometimes you must have a credit card, such as making reservations at a hotel... i use one card exclusively for gas purchases. i have money set aside, but since sometimes gas stations can place a temp hold of over 100 on debit cards, i just prefer to use the credit card and i pay it down online every week or two. you just have to be disciplined.
and, as mentioned, if you are honestly going to pay it down continually, then the % rate is an afterthought.
dont do the insurance. period. just dont.
and good job on asking about getting a lower rate.
The credit insurance is pretty much a scam. Technically it isn’t a scam, but it is a waste of your money.
And 11 or so percent is a good rate for a credit card, but since you plan to pay you credit card bill completely every month, the rate you are being charged becomes a mute point.
As long as you use it and pay it it will build your credit history. Don't be late or run up a balance to the maximum and then only pay the minimum. That hurts your credit.
The credit card company I worked for divided active accounts into 2 categories: Transactors and Revolvers.
Transactors charge and pay off the balance each month. Revolvers carry a balance.
You would think that the CC companies would love the revolvers, but actually they make more money if you charge and pay rather than if you carry. Every charge you make the CC company gets a transaction fee from the merchant. So the merchant may only get 95 cents for the dollar you just charged. That is why you often see signs that say "must charge $5 for credit card" etc. BTW, the merchant can't legally do that - but the CC companies rarely enforce it.
Revolvers run a higher chance of default and therefore will get fewer perks and have a lower chance of getting a credit limit extended or fee forgiven.
you need to read emlands response. shes basically told you that someone who runs up a high balance and then just pays minimum will, of course, be giving some money to the company based on the rate charged against the balance. but... what she tells you is that a credit card company makes more money on the fees they charge merchants...
for ex, if you charge thirty times a month and pay it all off, you are still helping the company make money, its just not off you... if comes from the merchants who accept the card. so its not like you will get unfavorable terms or service if you keep paying it all down.
personally, if i carry a balance and cannot pay it all off, i always pay a little more than the minimum, if possible.
i think you are overthinking this a little, which isnt bad concerning money... just make it simple:
1) pay on time, all the time. whether its the minimum or a little more, always pay on time. most of the time i pay almost all my bills electronically using their websites or my banks e-payment system.
2) when you get a card, keep it. the longer you keep a card the longer the credit history with that card. and when people look at your credit score, part of it comes from being able to see a history of good credit.
likewise, its a good idea to not get new cards over and over. for ex, i had a 3000 balance on a card after a home remodel. i had an ability to pay it all off. it was the only credit card i had. i had an offer for a one year 0% interest balance transfer. i took it and kept both the new and old card. the old card was kept for the history. the new card was another line of credit history that i built up. i payed it all off within the year. by the time it was done, the only extra money that came out of pocket was a fee for the transfer... which was a smaller fee then than some are now. i suppose i could have just paid it all off right away, but i was looking to get another card anyway and it all worked out by the numbers when i was done.
3) keep a low debt to credit ratio. this means theyll look at when you are extended a line of credit, how much of that do you use? someone who has a balance of 800 on a 1000 line of credit might be less favorably viewed than someone who has 2000 balance on a line of 10000, even though the first scenario has a lower overall balance. in the first case, the person is using 80% of their available line, and in the second the person is using 20%. now... theres several factors at play here... the person with the larger balance hopefully has an established history and is in good financial position to pay that debt down.
so its not just how much you owe, but what % of your available credit do you use. you dont want to be too high, otherwise you might be looked at as a higher risk. yes, they want you to use your card... they want you to carry some balance perhaps... they also want you not to default or get into financial trouble. its much better to have you as a customer for a decade of healthy use than to get a little profit off of dumb, unsustainable use.
in the case where i transferred the balance, i actually most likely increased my credit score because my debt ratio, while low before, became even lower...as i had two cards, not one, with a combined higher credit limit... and i was using then a lower overall percentage of my credit. again, makes me look disciplined.
instead of 3000 on a card with an 8000 limit, i had 3000 on a card with a limit of 7000, and i still had the 8000 card... so 3000/8000 = 37% before, and after 3000/15000 = 20%. like i said, i paid it all off before the 0% term was over. now i have a larger credit line and a good history.
generally speaking, i still use both of these cards. one primarily for gas. gets paid off regularly. the other i use for planned expenses. my sons preschool bill get directly charged. i pay it off regularly. i use it for a few other things like that... things i budget for and have money for, but it lets me know those things are getting paid automatically without problems.
4) have a few different kinds of debt to establish history. i have a mortgage. now, im set to pay it off a dozen years early cause i put an extra 100 payment in each month, but its a different debt, and a record of my ability to pay on time. i dont have a car payment, but its not uncommon that young people, along with credit debt and potentially school loans, use car payments to establish a credit history. a friend of mine in college had an excellent history she built with one credit card, one retail credit card (clothing), a car loan, school loans, and one other small retail loan for a sofa. while most of her school loans were deferred until after she was out, the rest of the debt was being paid on time, paid quickly, and establishing herself a great credit history. she had no problem long after she was out of school getting a home loan.
so you are taking the first steps with the credit card. in time, youll likely continue to expand your credit by taking out different kinds of loans. again, the debt itself isnt bad... the credit is a tool... but you just need to manage it well and think long term.
i said keep it simple. i suppose i just made it seem complicated.
go to yahoo or google and search for "how to build good credit" youll find a lot of decent reference sites.
But if you are carrying a balance over and have never managed a credit card before the insurance is cheap compaired to the 2k i just paid for bankruptcy. It is so easy for something to go wrong, my wife and I both lost our jobs at the same time. Go figure
Don't worry I didn't really accept that.
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