Credit Cards.

[BFloFoxRider.]

Ok so im curious... how do credit cards work? You just have a limit and you spend until you hit the limit then pay the bill +interest at the end of the month?

Sorry i like listening to feedback from everyone on here rather than my parents or some google search result.

And Debit.. Is debit where you get a certain amount and spend it like cash straight from your account?

[denmother]

Credit Card: You have a limit and you can charge up to that amount. You are required to pay the minimum amount each month (every card is different). Best to pay off the balance each month (that way you don't have to pay interest).

Debit Card: Usually attached to your checking account. Let's you pay for purchases against your balance without having to write checks.

[BFloFoxRider.]

So Credit you charge up to your set amount and pay at the end, and Debit you basically pre pay..
Ok i think i got this
Thanks

[CalEpic]

Credit cards can get you in financial trouble. My advice is to use them for emergencies only. If you can't afford to buy something it's better to wait until you can rather than incur the debt.

ps - listening to your parents is a good idea.

[BFloFoxRider.]

I do listen to my parents.
I just like outside advice also

[sdyeti]

Just to stress the interest thing: if you don't pay off everything you charged each month, interest will start acrruing on your balance. It depends on which card you have but it could be a lot!!

Sometimes we'll pay for big ticket items with the credit card to get the perks associated with using the card (ex: REI Visa give us a certain amount back with each purchase) BUT we pay it off and make sure we have the money for it.

[Reedster]

Credit cards are evil. They are the spawn of the horned red creature with a bifurcated tail.

Well, that's not true, but they can get you in a heap of trouble that can take a long time to get out of. It's probably not such an issue for you because as a younger adult it's likely that the credit card companies won't give you too high of a limit. But, as my limit went up I charged more and my debt went up until it was over $20,000.

The minimum payment on credit cards is usually the amount it would take you to pay off the card in 5 years (I think this is a law, but I'm not positive). The problem is that each time you make a payment they recalculate that payment so that it will take 5 years from that payment. If you don't pay more than the minimum you can end up in a cycle where you are only paying interest to the credit card companies but really aren't paying off the balance on the card. I did that for years.

The other issue is that their interest rates can be oppresively high. They also have fine print in their agreements so that if you are late on a payment they can jack your interest rate through the rough, making it even harder to pay off the card. Worse yet, they can and do increase your rate when you are late on other bills or other credit cards.

On the other hand, they can be good to have to make a purchase that you don't have the cash for at the moment. I also like it for traveling when you don't want to carry a lot of cash.

A debit card is also good for traveling, since it just allows you to get money out of your bank account. The good thing is that it's your money and you don't pay interest on it. The bad thing is that you have to have the money in order to use it.

I hope that I wasn't too wordy and that this makes sense to you.

~R

[Trizz]

When i was in high school, i was forced to take a credit class. it explained everything about credit card and how it can be good and bad,
this class has saved me from any financial trouble,

one of the best things i learned from this class is that you got to build your credit, most people get a credit card and take advantage of its abilites but later find you are screwed.

if you are looking for a credit card, i would suggest looking around but probably the only people that will give you one is Capital One,

so once you get your card, start of slow, maybe buy 1 item totaling $100, then give that card to your parents and pay off that 100 bucks in 2, 3 or 4 months, then treat yourself to another item,

this will do a few things, it will teach you to pay your bills, and it will build your credit

my suggestion is like everyone els, take it real slow.

[BFloFoxRider.]

Well, since im only 15 i have a feeling i couldnt get one anyways.. im going to open up a bank account soon. So this credit class... Do they have it at a junior college?
My schol pays for me to take classes at junior colleges... and i get college and high school credits.

[Trizz]

I dont know where they offer it know, but you should atleast read about them, and only being 15 man, i wouldnt worry about it at all, just have fun, i would love to go back to high school, i would do it tottaly different.

maybe your bank will offer classes, i know my bank always has stuff going on, OCTFCU has all kinds of classes and seminars on everything financial.

Originally Posted by BFloFoxRider.

Well, since im only 15 i have a feeling i couldnt get one anyways.. im going to open up a bank account soon. So this credit class... Do they have it at a junior college?
My schol pays for me to take classes at junior colleges... and i get college and high school credits.

[northshore]

If you plan to obtain a credit card at least sign up for one that allows you to gain items such as frequent flyer miles or something along those lines. Having one credit card can't hurt to build your credit since you are young. If you do use it, be sure to pay off the entire balance or you will be hit with interest charges. Remember that you are 'borrowing' money from the credit company

Debit cards is tied to your checking account so you need to be more careful about this since identity theft is literally right around the corner from you. Also, be careful where you use it because some retail stores don't want to take the points hit up front and will charge you a stupid debit card fee.

The bottom line, if you don't have the cash for it, don't buy it. You will seriously get yourself into trouble in the long run.

[Jordansrealm]

I would suggest not getting a credit card until you are working full time. Then you will have a better ability to pay it off consistently. The bank you choose for an account most likely offers a credit card so I would talk to them about it I am sure they would help you. Oh and a debit card isnt exactly prepay its a card linked to you bank account so when you spend money it gets pulled from your account. I would highly suggest this route before getting involved with credit card debt.

[Kid A]

credit card -> http://en.wikipedia.org/wiki/Credit_card
debit card-> http://en.wikipedia.org/wiki/Debit_card

be advised many people (including some of my best friends) got themselves in a very tight situation with overusing there credit card and no real means to repay. i imagine most banks may require parents or a guardian to co-sign on your first card. Any regard be careful

[BFloFoxRider.]

Originally Posted by northshore

If you plan to obtain a credit card at least sign up for one that allows you to gain items such as frequent flyer miles or something along those lines. Having one credit card can't hurt to build your credit since you are young. If you do use it, be sure to pay off the entire balance or you will be hit with interest charges. Remember that you are 'borrowing' money from the credit company

Debit cards is tied to your checking account so you need to be more careful about this since identity theft is literally right around the corner from you. Also, be careful where you use it because some retail stores don't want to take the points hit up front and will charge you a stupid debit card fee.

The bottom line, if you don't have the cash for it, don't buy it. You will seriously get yourself into trouble in the long run.

What about like a performance mastercard where i get points and once i get so many points i get a $20 gift card

I think my first step is talking to my parents about opening up a bank account then worry about paying for things. Im in the process of getting a job so we'll see what happens.

[Blue Rat]

A critical thing to consider is avoiding the use of credit cards except, as stated, for true emergencies.

Unless credit purchases are paid off in full each month, interest consumes dollars that could be spent funding your saving and/or future investing goals.

Suppose that you have a balance of $1,000 on a credit card that carries a 19.8% interest rate and a full grace period. If you make no more charges against the account and only pay the minimum payment of 3% per month, you will pay approximately $165 in interest over one year. If you continue making only minimum monthly payments for the rest of the $1,000 with no additional charges, you will take eight years and three months to pay it off, and you will have paid $843 in interest.

Carefully evaluate all your spending decisions, especially those being paid with credit. Make every spending decision on the basis of how it will satisfy your goals. Eliminate spending for items that have little or no value relative to your goals. Also be aware of your needs and wants as you make purchases.

[Collette]

Originally Posted by Blue Rat

A critical thing to consider is avoiding the use of credit cards except, as stated, for true emergencies.

Couldn't agree more. I've been debit-only for about a year now, couldn't be happier.

[dstepper]

The advice above is sound advice about not getting a credit card. But it is not as easy to live without credit as it once was. To rent a car or rent an apartment is tough without credit. Many employers now look at your credit rating when they hire.

I use credit cards for everything I can. My American Express Open for Business card returns 5% back on my cell phone, gasoline and office supplies bills. My Citibank Dividend Card 2.5 percent returned all purchases at grocery and drug stores. I never roll a payment over into the next month.

I used to get air miles but too much of a hassle to figure out there conditions...just send me the money.

Dean

[DBD]

Not sure if it has been mentioned but you can also get a card with a preset limit, just like a prepaid calling card or cell phone.

Talk with your bank if you have an account with one and they should be able to hook you up.

That way you can put say 1000$ on it because you have something to buy or you can keep 50$ on it and just use it for emergencies and such.

This way you do not incur any dept, wont over draw on your account and if the card is stolen they will only be able to use the amount that is on the card AND you also have theft protection as with a CC.

Just another option.