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So I applied for my first credit card and got accepted with a $1,000 limit. I got a Chase Freedom Visa because my checking is at Chase and I wanted the convenience, as well as the Chase Exclusives program. It also has some nifty cash back bonuses, and I'm looking into ways to capitalize on that. I have a fairly large amount of cash just sitting around for my age (~7k at 23) and no major expenses, so I'm not really that liable to spiral into debt anytime soon, either. I was thinking about applying for another card to increase my cash back earning potential.
I was thinking about applying for the American Express Blue Cash Everyday card for the 3% back on groceries, and 2% on gas/dept. stores. I'm single and live at home, so my expenses are too low for most fee cards to be worthwhile.
How long do you think I should wait out? Other than that hard pull from my recent application, there shouldn't be anything other than some soft pulls on my report.
You sound a little too eager, so I would wait a while before getting a second card. There's a temptation to buy stuff you don't need and justifying it by telling yourself you are getting cash back on it. After at least six months but preferably longer, see if your expenses have increased - it can be much easier to spend with a card than with cash. If your expenses have been stable and you have paid off every bill in full each month (DON'T carry a balance), then start looking at another card. But even then, don't kid yourself into thinking you are 'making' money with cash back incentives. The incentives should be viewed as a small bonus, not an income stream.
You sound a little too eager, so I would wait a while before getting a second card. There's a temptation to buy stuff you don't need and justifying it by telling yourself you are getting cash back on it. After at least six months but preferably longer, see if your expenses have increased ....
Yes, I too read this somewhere recently. In addition to what maf763 said, CC companies want to see a positive track record of payments. They say to pay your card off in full every month, but I've also read that they prefer you carry some sort of 'interest gaining' balance so they can make a dime or two off of you.
I also agree with the incentives advice. Incentives are just enough bait at the end of the hook to keep you charging and charging.
In addition to what maf763 said, CC companies want to see a positive track record of payments. They say to pay your card off in full every month, but I've also read that they prefer you carry some sort of 'interest gaining' balance so they can make a dime or two off of you.
While the CC companies may or may not prefer you carry a balance (they make money from you with every transaction), that balance will NOT improve your credit score.
I see no reason to EVER pay interest or fees of any kind.
Your objective is unclear. For a young person with no prior credit history, an active CC account or two may help you establish a credit 'record.' But, it's your spending and timely payments that establish the record, not the fact that you simply have credit cards in your name. Frankly, credit cards are not really difficult to get; ... look at the college kids who are up to their necks in CC's and associated debt. We primarily use debit cards and probably throw-away a dozen CC offers monthly.
A little caution is in order here; ... look at the number of young people around you who have more credit card DEBT than they can manage and recognize that possessing multiple credit cards 'because you can' is a recipe for trouble.
I also agree with the incentives advice. Incentives are just enough bait at the end of the hook to keep you charging and charging.
Yup - more inclined to pick up the check when you slap that card down for the "cash back". You do realize that someone out there is paying for this? Miss your due date once and they charge you a $35 late fee!
Yup - more inclined to pick up the check when you slap that card down for the "cash back". You do realize that someone out there is paying for this? Miss your due date once and they charge you a $35 late fee!
Auto-pay.
I don't have it set to pay the balance as I sometimes put big purchases on the card and don't keep more than a few thousand in my checking account. Anyway, the person who is paying for the cash reward is the vendor.
So I applied for my first credit card and got accepted with a $1,000 limit. I got a Chase Freedom Visa because my checking is at Chase and I wanted the convenience, as well as the Chase Exclusives program. It also has some nifty cash back bonuses, and I'm looking into ways to capitalize on that. I have a fairly large amount of cash just sitting around for my age (~7k at 23) and no major expenses, so I'm not really that liable to spiral into debt anytime soon, either. I was thinking about applying for another card to increase my cash back earning potential.
I was thinking about applying for the American Express Blue Cash Everyday card for the 3% back on groceries, and 2% on gas/dept. stores. I'm single and live at home, so my expenses are too low for most fee cards to be worthwhile.
How long do you think I should wait out? Other than that hard pull from my recent application, there shouldn't be anything other than some soft pulls on my report.
why another credit card? All it's going to do is encourage you to buy things you might not have bought otherwise.
Keep in mind how big the Chase building is, then look at your house. They WILL win in the long run, maybe not with you, but trust me when I say the credit card companies are not losing money on their 'reward' programs.
Give it a year, see how it goes. The cash back stuff is nice but given your expenses are low, you won't realize that much and like someone said, miss one payment and your interest rate balloons and you probably pay fees that wipe out much of what you got back in cash. We have told our kids to buy gas on their credit cards and pay that off each month to establish their credit ratings. Sometimes if we have a big purchase to make we will put it on their card so they can get their cash back and then just give them the money to pay it off. Our oldest has a credit rating over 800 doing that, he's 21. With that good credit rating he qualifies for lower insurance premiums, got a great rate on his mortgage, etc. All of that is a way better trade off than getting a check for $25 every 4 months.
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