topic Re: most beneficial manner to use new credit cards in Credit Cards

most beneficial manner to use new credit cards

lpayton — Sun, 07 Aug 2011 16:08:43 GMT

I have no revolving accounts, never have. Se signature for current scores. (I don't even have a car payment..Zero debt.)

I got a credit card with a $200 limit (Capital One master card, with a $49 deposit). Should I max it, and pay it off the first month? Or just charge $20 to it a month and pay that off? If I am paying it off (to zero balance) each month, does the utilization % affect my score?

I also applied for a Walmart card last night, and got a "we will let you know response". Also thinking of getting the secured USAA card. How many is recommended? I don't want to hurt my score, but I know I need at least one.

Re: most beneficial manner to use new credit cards

wmarat — Sun, 07 Aug 2011 16:17:43 GMT

CL of $200 is kind of useless, so I would handle it as a debit card, means pay it after each use.

A secure card is a good idea, but before you apply check with bank if they graduate secure card to unsecure and how much time it takes.

Re: most beneficial manner to use new credit cards

lpayton — Sun, 07 Aug 2011 16:26:48 GMT

I don't agree that a limit of $200 is "useless". Can you explain your thoughts further please?

Re: most beneficial manner to use new credit cards

wmarat — Sun, 07 Aug 2011 16:35:45 GMT

FICO - wise, you need allow util. of 9%, in your case $18. If, for any reason, you let balance go to $50, you get 25% of utilization and lose a few FICO points. If balance is $100 - your util would be 50% and you are in a FICO trouble.

According to my experience, there are very few things you can buy for $18, therefore you need to handle it as a debit card, which is a pain, very little of practical benefits and pretty expensive. Besides, I doubt, that Crap One will increase your credit limit.

Re: most beneficial manner to use new credit cards

lpayton — Sun, 07 Aug 2011 16:40:36 GMT

If I am paying it off each month in full, will the utilization hurt me? How could it, if it is paid in full each month?

Re: most beneficial manner to use new credit cards

Datx — Sun, 07 Aug 2011 16:50:29 GMT

@lpayton wrote:
If I am paying it off each month in full, will the utilization hurt me? How could it, if it is paid in full each month?

True. It sounds like you have a secured card from Cap One, is this correct? If so, I would suggest you keep building and adding to your deposit to get a higher limit as you go. You don't want to keep on opening low limit cards and be stuck in toy limit hell.

Re: most beneficial manner to use new credit cards

lpayton — Sun, 07 Aug 2011 16:56:55 GMT

Yes, it is a secured card, but I only had to pay $49, and got the $200 limit. They stated "frequent reviews for limit increase".

Well, I was pretty hopeful this was a good thing..atleast a step in the right direction. I just resent the fact that I am being FORCED into getting into debt to "build credit" so I can buy a home.

Re: most beneficial manner to use new credit cards

Anonymous — Sun, 07 Aug 2011 18:00:59 GMT

If it were me, knowing what I know now about util, I would charge as much as you want on it each month (staying below 200 of course) unless you plan on making multiple payments per month.

But IMO you would see your best scores by paying it all by the due date except $1.00, let the statement post then pay the $1.00, this way you will show 1% util which is better than showing 0% util.

Keep doing this month after month, building a great payment history and in time your scores will rise.

Re: most beneficial manner to use new credit cards

lpayton — Sun, 07 Aug 2011 18:58:17 GMT

Thanks Mustang!

@Anonymous wrote:

But IMO you would see your best scores by paying it all by the due date except $1.00, let the statement post then pay the $1.00, this way you will show 1% util which is better than showing 0% util.

Keep doing this month after month, building a great payment history and in time your scores will rise.

Re: most beneficial manner to use new credit cards

Anonymous — Sun, 07 Aug 2011 21:24:36 GMT

I have the same credit card. I paid $49 security deposit and got $200 limit. I charge whatever I want, of course below 200, and then PIF just before the statement close date, but I always leave a small amount to report, for example $10.

Capital one reports to the credit bureaus the next day after the statemet closes.

I have had a good experience with Capital one, I know is a crappy limit, but I had no credit history before them, and I got lots of denials, so I am grateful that they gave me credit.

BofA gave me a partially secured card too. I paid $99 and they gave me $500 CL. You might want to try this one.

$200 limit is not useless. Payments on time and low utilization will help your credit score. You dont have to get into debt to get a good credit score, just charge what you can pay beofre any interest is generated.

Re: most beneficial manner to use new credit cards

LTomBerry — Sun, 07 Aug 2011 21:57:48 GMT

I am not aware of a secure USAA card. The "lowest" one that they advertise is the Rate Advantage Mastercard which is a no frills no rewards platinum MC which is probably the easiest one to get approved for. You will still probably need a 650-660 or so to qualify for that one.

Re: most beneficial manner to use new credit cards

lpayton — Mon, 08 Aug 2011 00:14:07 GMT

Yes, they do have one. You deposit $200 into a CD, or whatever amount you want as your CL. And that is the credit limit you are extended.

I am a former Marine, husband is too and we have investigated the product thoroughly.

Re: most beneficial manner to use new credit cards

lpayton — Mon, 08 Aug 2011 00:24:55 GMT

Details of the USAA Secured Platinum MasterCard:

Card Details

Credit limit:Between $250 and $5,000 — based on your initial deposit in your USAA 2-Year Variable Rate CD.
Interest Rate: 9.9% APR (variable)
Annual fee:$35. There's no application fee.
Required security deposit: USAA 2-Year Variable Rate CD (1.15% APY)
Benefits: Travel and Retail

Re: most beneficial manner to use new credit cards

Datx — Mon, 08 Aug 2011 00:38:34 GMT

Are you aware the USAA secured card does not unsecure? Not sure if that matters to you or not. I heard this from another board where quite a few applied for the card when it first started to come out months ago.

Re: most beneficial manner to use new credit cards

lpayton — Mon, 08 Aug 2011 00:46:23 GMT

I figured it probably didnt..so once you deposit into the CD...get the card (among others)...and establish some new credit, do you reapply for another card with them and withdraw the CD? Can you withdraw a CD? Let me guess, you pay 59% (or something crazy) in tax penalties if you do...right?

Re: most beneficial manner to use new credit cards

clocktick — Mon, 08 Aug 2011 00:56:19 GMT

It's not a 401k, it's just a CD. There are different kinds of CDs. You would have to read the fine print about withdrawing the money.

I understand about buying the home and it's an exciting process. Nobody has to go into debt though, just because they have a credit card. Lenders just want to see that you can use credit responsibly before lending you hundreds of thousands of dollars! All the matters in this "game" is how much (or should I word it, how little) gets reported. Do not pay interest if you don't really have to. Good luck!

Re: most beneficial manner to use new credit cards

lpayton — Mon, 08 Aug 2011 04:11:24 GMT

@clocktick wrote:
Nobody has to go into debt though, just because they have a credit card. Lenders just want to see that you can use credit responsibly before lending you hundreds of thousands of dollars! All the matters in this "game" is how much (or should I word it, how little) gets reported. Do not pay interest if you don't really have to. Good luck!

Good advice..you are right. I guess I just have always prided myself on not borrowing money, always paying cash, and not being like many of my friends who have managed to rack up thousands and thousands of dollars in credit card bills. I know that is the extreme though and I shouldn't get myself in a hissy over it...I just plan on paying my utilities with the new card each month, then paying off before statement, except 10 or 20 bucks and letting that post. I already pay the utilities each month anyways, may as well do it now and build some credit in the meantime.

Re: most beneficial manner to use new credit cards

haulingthescoreup — Mon, 08 Aug 2011 18:30:24 GMT

@lpayton wrote:
@clocktick wrote:
Nobody has to go into debt though, just because they have a credit card. Lenders just want to see that you can use credit responsibly before lending you hundreds of thousands of dollars! All the matters in this "game" is how much (or should I word it, how little) gets reported. Do not pay interest if you don't really have to. Good luck!
Good advice..you are right. I guess I just have always prided myself on not borrowing money, always paying cash, and not being like many of my friends who have managed to rack up thousands and thousands of dollars in credit card bills. I know that is the extreme though and I shouldn't get myself in a hissy over it...I just plan on paying my utilities with the new card each month, then paying off before statement, except 10 or 20 bucks and letting that post. I already pay the utilities each month anyways, may as well do it now and build some credit in the meantime.

Good plan.

One way to think of available credit is as being similar to insurance. I don't plan to wreck my car or go into the hospital for three weeks, but I have options if I do.

If something comes along in your life where you would benefit from having a good credit profile, then using a CC for regular expenses without getting suckered into overspending will prove to have been beneficial. <-- That sounds like an insanely long fortune cookie message, but I hope it makes sense. In other words, it isn't costing you anything to use a CC the way you describe, and it may well benefit you at some point in terms of lower mortgage rates, lower car insurance rates, and so forth.