First credit car 2 quick question

[WeirdLinguist]

I just got a student credit card (12% variable 1800 limit with 2% cash back), im planing on charging 20 or so percent (watching for that 30% rule) and paying it off every month obviously .

1. When can I apply for a "normal" card?
2. When can I get a good APR on a car loan?

[Seeker]

Originally Posted by WeirdLinguist

I just got a student credit card (12% variable 1800 limit with 2% cash back), im planing on charging 20 or so percent (watching for that 30% rule) and paying it off every month obviously .

1. When can I apply for a "normal" card?
2. When can I get a good APR on a car loan?

Not to be sarcastic, but.... How about when you get out of college and have a full-time career going?

It's fine to start with a credit card at this point in your life.... but do you really NEED more than one card now?

[kork13]

I'll agree with Seeker... In college, do you really need a huge credit line? Do you really spend so much more than ~$450/mo (25%) in chargeable expenses that this card won't work for you? Honestly, those terms aren't bad at all, particularly for a first card. And if you just need a higher limit, ask your bank to increase your limit. Another note, when I graduated college last year, my bank automatically transitioned my student card to the "normal" card version. My APR went down about 2%, but otherwise it was no different from what it previously was. And since I always pay it off, the rate drop (and thus the transition) was no real benefit to me.

To answer your questions, however, you can apply for a "normal" card anytime, and probably still get accepted. You may have a higher rate or lower limit (probably both) than someone with more credit history, but you can still get it. Student cards are designed to give students (people generally with ZERO credit history) a chance for credit.

As for a good car loan rate, probably at least 2-3 years. Particularly after the most recent credit debacle, lenders are being cautious with large loans, like for home, auto, and college loans. On our side, that means higher rates, and it takes time to build up a good credit history for you to overcome that caution on the part of lenders.

[arthurb999]

Don't start down the dark path of debt...

[WeirdLinguist]

thank you kork for answering the question I had

@arthur and seeker: I had a simple question I don't why you take a holier than thou attitute with me, I chose to go to a 4k a year school and have no debt after 2 years as a result so please :|

[boosami]

Originally Posted by WeirdLinguist

1. When can I apply for a "normal" card?
2. When can I get a good APR on a car loan?

There are plenty you can get with limited to no credit history that are not student cards. Other than that, you typicallly want a year to 18 months of good reported history before applying for something more exclusive or hard to get. What are you looking for in a "normal" credit card?

It will help build your credit if you open a retail credit card with a department store or something. They approve anyone with a pulse, and it's a different kind of account. Having a mix of different accounts will help your credit score go up faster. I'd wait at minimum 6 months between applying for credit of any kind.

Here's a plan for you:
1) Wait 6 months, then apply for a store credit card.
2) If you are approved, wait 6 months, then apply for a regular credit card.
3) If you are approved, wait 6 months, then check your credit score. Best rates are at 720+, followed by 690+, 660+, 620+. If your score puts you at an acceptable rate, apply for the auto loan.

See myFICO - FICO Credit Scores | Get a Free Credit Report Online for the auto payment chart with those numbers quoted.

[arthurb999]

Originally Posted by WeirdLinguist

I chose to go to a 4k a year school and have no debt after 2 years as a result so please :|

I actually don't give a damn what you do... but IMO...
You should keep it that way.

[boosami]

Originally Posted by arthurb999

I actually don't give a damn what you do... but IMO...
You should keep it that way.

I have 20+ credit cards and no debt on any one of them. Owning a credit card does not equal debt.

[arthurb999]

Originally Posted by boosami

I have 20+ credit cards and no debt on any one of them. Owning a credit card does not equal debt.

No but a car loan does...

why do you have 20 cc's and no cc debt... at one point you must have had some debt...

[Seeker]

@ OP.

My response was not intended to be anything other than what it was. A quick response to someone who (IMO) should make "education" his/her number one priority at this point in time... not ways to get in debt.

You posted no work or job related info. Nor expenses. As such, I personally, have no idea whether or not you could or should continue to apply for more CCs.

Many college students get in over their heads.... that's a problem. Not saying that you will.... just saying that this is a problem.

Determining NEED is a real question that you have not yet answered. Not that it's any of my business. But you asked a question, and I responded with my questions.

[disneysteve]

Originally Posted by arthurb999

Don't start down the dark path of debt...

Originally Posted by boosami

I have 20+ credit cards and no debt on any one of them. Owning a credit card does not equal debt.

Thank you, boosami. Why do people insist on equating having a credit card with having debt? They are 2 separate concepts.

We have 4 credit cards that we use regularly. Last year, we charged a total amount equal to about 1/3 of our annual income but we paid every monthly bill in full. Not a penny went to interest or any other fees. In fact, we collected about $1,000 in rewards by using the cards.

OP, what is wrong with the card you have? The interest rate is irrelevant since you will pay the bill in full each month. Use it responsibly and they will probably up your credit limit over time. The 2% cashback is quite good, actually, better than many "normal" reward cards.

[WeirdLinguist]

sry it took me so long to respond.

@Seeker & disneysteve: The question was meant to better understand how student cards work vs other cards and more generally how quickly credit "builds up". I'm not going to just jump into water sink-or-swim, but going to dip my toe into the water and at the same time try to learn more about the "credit ocean" hopefully you liked my analogy

I'm just trying to get my credit in the possible position with the current circumstances and stating the obvious: STAYING OUT OF DEBT

[boosami]

Originally Posted by arthurb999

why do you have 20 cc's and no cc debt... at one point you must have had some debt...

I use credit cards for rewards, and have never carried a balance (other than zero percent promotions) on any of them. I just slowly amassed a number of different types of cards over the years, and never bothered to close them.

For example, for 2 years I was flying the same flight on NWA regularly. So, I got a NWA credit card because I got 5 miles on the dollar, plus the normal frequent flier miles. When I stopped using that airline, the card was no longer used. Later, I did the same thing with United.

Years ago I bought a home theater from Sony on a zero-percent-for-18-months credit card deal, and earned interest on the thousands of dollars instead of spending it upfront. I bought new appliances from Sears in the same manner.

I had a gas card that offered 5-10% cashback on gasoline purchases, until they discontinued the program. So I got a new card that offers almost as good rebates.

I have made thousands of dollars off credit card companies over the years, and never paid them a dime of interest. Credit cards are not evil, they just have to be used responsibly.

[boosami]

Originally Posted by WeirdLinguist

The question was meant to better understand how student cards work vs other cards and more generally how quickly credit "builds up".

Having a "regular" card vs a student card does not build your credit any faster or better. The type of the card is not reported to the credit bureaus. Here's a quote from another post regarding getting/maintaining good credit history:

There are five general categories that make up your credit score:

• Payment History - This is the most important part of your score. Always pay on time, and don't be late or else your score will be affected. Any bad remarks like collections, leans, judgements, or late payments will affect your score negatively.
• Amounts Owed - This also makes up a big part of your score. The less debt you owe, the better your score will be. In particular, they look at how much credit you have available in comparison to the actual balances on your accounts. Keep your balances low, and if possible spread out among your accounts.
• Length of Credit History - The older your accounts are, the better. You can't really do anything about this one, except know that your score will go up as long as you have accounts open over time.
• New Credit - If you apply for a lot of credit in a short amount of time, your score might go down temporarily. So it is best to only apply for credit only when it is really necessary. Especially, don't apply for a credit card or account right before trying to get a major loan.
• Types of Credit Used - The best thing you can do here is have multiple types of accounts. A combination of credit cards, loans, and mortgages are good to have and affect your score positively.

I think the only one I'd add to that is that you obviously can't know how your credit score is doing if you don't check on it regularly! If you are building credit or interested in learning about it, I would suggest signing up for a credit monitoring service like myFICO - FICO Credit Scores | Get a Free Credit Report Online. It will allow you to keep tabs on your report/score.

[FrugalFish]

I agree with the approach that Boosami suggested- it is the one I followed years ago, quite by accident. We started with a secured card (no credit history) and got a store card shortly thereafter. It was not long before we were getting pre-approved credit card offers. It might be a little different in today's climate, you may not get offers in the mail, but after a little time has passed, you should be good to apply for another card and then a car loan. Good luck, sounds like you are off to a good start.

[red92s]

I'm just wondering what chargable expenses you have as a college student that total $450 a month. It sounds like you are determined to charge that 20% even if you need to or not, because you think it will boost your scores.

Running up 20% of the limit and paying it off every month won't help you build credit any faster than just using it for food and groceries. If you are never carrying a balance, the amount on your credit report is likely not going to be zero, but not going to be whatever your max balance is either as the reporting schedules are likely not lined up. So, I think you are much better off just using the card for one category of recurring purchases (gas, groceries) than TRYING to run up a certain balance. Again: if you are not carrying a balance, the amount you charge in a given month won't greatly affect your score. Occasional use and paying a full balance will boost your scores over time, regardless of how much you are charging. So, don't go out and try to buy yourself a higher credit score.

As for cash back, be careful. It can be a great reward. But, studies have shown people spend up to 10% more with a cash back credit report than they would paying cash, because they are so motivated by getting the "cash back". At that point, you are just overspending, not earning anything!

[boosami]

Originally Posted by red92s

Occasional use and paying a full balance will boost your scores over time, regardless of how much you are charging. So, don't go out and try to buy yourself a higher credit score.

Absolutely correct. As you can note from the FICO chart, "how much you charge" is not a category used to determine your credit score. You should charge something each month so that the payment is reported. If you don't make a payment because there is no balance, some creditors do not report the data at all and it will not help you as much.

[boosami]

Originally Posted by red92s

I'm just wondering what chargable expenses you have as a college student that total $450 a month.

I worked as a consultant in college and made ~$40k a year, while being enrolled as a full-time student with additional summer classes each year. With $450 as only about 10% of my gross income, I easily spent more than that a month on credit cards paid in full. I also got a monthly supplement from my parents equal to what they would have paid for me to be in the dorms. I know the stereotype is the "poor college student" but that's not what all of us were. I celebrated my graduation by buying a bottle of Cristal. Not exactly a smart purchase, but one that I afforded myself--in cash.

[red92s]

Originally Posted by boosami

With $450 as only about 10% of my gross income, I easily spent more than that a month on credit cards paid in full. I also got a monthly supplement from my parents equal to what they would have paid for me to be in the dorms. I know the stereotype is the "poor college student" but that's not what all of us were.

I don't doubt that at all, as myself and most of my friends had internships that paid more than most new college grads earn. I was more questioning the "$450 in necessary expenses" for a college kid that could be put on a credit card. You can't put rent on a credit card. You can't put a car payment on a credit card.

I was questioning what "expenses" is a college kid running up to arrive at $450 a month. Could be pretty easy if you lived off campus, paid a cable bill, had an iPhone, drove a lot, buy a lot of groceries, pay for a gym membership, pay to park etc. But it could also be pretty hard if you were on a meal plan, living in a dorm, walking most places, have on campus healthcare, etc. My concern is that he is trying to find stuff to spend $450 on every month just to use the card, when his expenses could be significantly less.

[boosami]

Originally Posted by red92s

You can't put rent on a credit card.

Sure you can, if the rental agency allows it. My apartment in college accepted credit cards for paying the rent. You could even do it online. That was years ago and I'm sure even more accept them now.

Originally Posted by red92s

My concern is that he is trying to find stuff to spend $450 on every month just to use the card, when his expenses could be significantly less.

This is a perfectly valid concern. Spending just to spend or for a "reward" that's not worth it doesn't make any sense at all. I think he's made it clear though that this is not about spending and rewards, but rather about how best to build credit. I think we've disspelled some of the incorrect ideas he had about that.