First credit card

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MP173
Posts: 1914
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First credit card

Post by MP173 » Sat Apr 28, 2018 12:05 pm

Our son is graduating from college and needs to open a credit card.

Any suggestions regarding the first CC for a 23 year old?

Ed

dknightd
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Re: First credit card

Post by dknightd » Sat Apr 28, 2018 12:06 pm

Don't carry a balance

dustinst22
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Re: First credit card

Post by dustinst22 » Sat Apr 28, 2018 12:13 pm

Discover IT is a good option as they generally approve on thin credit and the rewards are solid.

CitiBank Double Cash is a nice rewards card but I'm not sure how they are with thin credit profiles.

You may want to add him as an AU to an older credit line, that will give his credit a boost. The older the card and the higher the credit limit the better. If you don't want the added risk, simply don't give him the card. It's just for credit boost purposes.

Also, yes, don't carry a balance obviously.
Last edited by dustinst22 on Sat Apr 28, 2018 1:00 pm, edited 4 times in total.

Gryphon
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Re: First credit card

Post by Gryphon » Sat Apr 28, 2018 12:14 pm

If you're looking for something that will encourage responsible CC use, perhaps an Amex Green Card would be a good start. You have to pay the balance off every month. When I got tired of carrying large credit card balances, I carried one of these for several years while paying off the other cards. I feel like it helped me break the "buy now, pay later" habit - every time I was tempted to use the card, I knew that I would have to pay for whatever I charged at the end of the month, and I needed to have the money for it.

mhalley
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Re: First credit card

Post by mhalley » Sat Apr 28, 2018 12:43 pm

Does he have a credit score that will allow him to get a regular cc? If not, he should start with a student cc. It will be harder to get one after graduation if he has no fico score. Another option is to check with a local credit union for a fresh start program. Have him open a credit karma or credit sesame account to monitor his score. Once he has two cc, have him freeze his credit to prevent identity theft.

https://www.nerdwallet.com/best/credit- ... ge-student
https://clark.com/personal-finance-cred ... dit-cards/

Doroghazi
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Re: First credit card

Post by Doroghazi » Sat Apr 28, 2018 12:47 pm

I believe people should have a credit card far before college graduation to establish a credit history. Ex: they are opening a phone or some other type of utility account. If no credit history, a deposit will be required, which, no matter what the phone company or utility says, they will not get back. Paper work lost, yada yada yada.

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Alexa9
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Re: First credit card

Post by Alexa9 » Sat Apr 28, 2018 12:57 pm

I would apply for a few to start building a credit history. Don't be afraid to get denied. Discover It is an easy approval.
You can also apply for a secured card that works like a debit card.
If not you can add him as an authorized user to your account with a low credit limit or even cosign if you trust him to be responsible (as a last resort, not recommended).

RetiredAL
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Re: First credit card

Post by RetiredAL » Sat Apr 28, 2018 3:07 pm

Here's what I did with my three kids when they turned 18 - I opened a joint card with them. They immediately got a higher credit score, and I could help them manage their financial affairs. After this joint card is open 6 months, have them apply for a card in their name only, and guess what, the helped credit score follows them.

If you are paranoid, after they open the new card in their own name, collect, but don't close, the joint card. Let it age for a few years.

This helped credit score will be a plus for a car loan sometime later. Or a rental application, or car insurance, ect.

A year after my daughter graduated college, she was able to buy a house at a good rate because good history already existed for her.

Also, avoid as an early card, a card from Capital One or American Express, and some others, which don't report a person's monthly balances, as the credit bureaus will assume the card is at the limit and lower the score. Yeah, that's how you get a "balance too high" on your credit report when you pay the balance to zero each month.

mouses
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Re: First credit card

Post by mouses » Sat Apr 28, 2018 3:40 pm

I like my CapitalOne card. It is a straight 1.5% cash back, so simple.

And you have access to the cash as soon as you charge the item. So when I periodically check my transactions, a few clicks and I've put that in my account as a credit.

Also, their customer service is good and seems based in the U.S.

I would never get an American Express card because if their stupid no credit limit policy. Twice I've had to provide my current financial information on the phone in the middle of the store because I charged a large purchase. Once was bad enough, twice was that's it.
RetiredAL wrote:
Sat Apr 28, 2018 3:07 pm
Also, avoid as an early card, a card from Capital One or American Express, and some others, which don't report a person's monthly balances, as the credit bureaus will assume the card is at the limit and lower the score. Yeah, that's how you get a "balance too high" on your credit report when you pay the balance to zero each month.
I have three cards, but the CapitalOne one is the one I use 90+% of the time. I pay it in full every month. My credit score is in the 800s somewhere, so this doesn't seem to be a problem.

Pigeon
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Re: First credit card

Post by Pigeon » Sat Apr 28, 2018 10:59 pm

Whether adding the child as an authorized user helps him build credit depends on the particular card. This article is a little dated but covers the issue https://www.nerdwallet.com/blog/credit- ... ld-credit/

SrGrumpy
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Re: First credit card

Post by SrGrumpy » Sat Apr 28, 2018 11:34 pm

MP173 wrote:
Sat Apr 28, 2018 12:05 pm
Our son is graduating from college and needs to open a credit card.

Any suggestions regarding the first CC for a 23 year old?

Ed
My wife just got a Barclay-Uber card with a $1,000 credit limit since she has not much history. A rep called her to verify info. Might be useful, assuming your son uses Uber, and likes to eat out (4% cash back).

NoHeat
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Re: First credit card

Post by NoHeat » Sun Apr 29, 2018 11:09 pm

Your son is still a college student, so he’s eligible for the special credit-card accounts for college students at Discover and Bank of America Cash Rewards. The credit limits will be low, but the cards are no-fee and have a cash-back reward.

When he graduates he can keep the card, and when he gets a job he can ask the banks to raise the credit limit.

https://www.discover.com/credit-cards/student/

https://www.bankofamerica.com/credit-ca ... edit-card/

dustinst22
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Re: First credit card

Post by dustinst22 » Sun Apr 29, 2018 11:13 pm

RetiredAL wrote:
Sat Apr 28, 2018 3:07 pm

Also, avoid as an early card, a card from Capital One or American Express, and some others, which don't report a person's monthly balances, as the credit bureaus will assume the card is at the limit and lower the score. Yeah, that's how you get a "balance too high" on your credit report when you pay the balance to zero each month.
Not sure where you got this information. Both C1 and Amex report as all other banks. Reported utilization is the key metric to keep in mind. Even when you pay in full, the balance amount on your report is what's on your card when the bank reports to the bureau.

Trism
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Re: First credit card

Post by Trism » Mon Apr 30, 2018 7:49 am

RetiredAL wrote:
Sat Apr 28, 2018 3:07 pm
Here's what I did with my three kids when they turned 18 - I opened a joint card with them. They immediately got a higher credit score, and I could help them manage their financial affairs. After this joint card is open 6 months, have them apply for a card in their name only, and guess what, the helped credit score follows them.

If you are paranoid, after they open the new card in their own name, collect, but don't close, the joint card. Let it age for a few years.

This helped credit score will be a plus for a car loan sometime later. Or a rental application, or car insurance, ect.

A year after my daughter graduated college, she was able to buy a house at a good rate because good history already existed for her.

Also, avoid as an early card, a card from Capital One or American Express, and some others, which don't report a person's monthly balances, as the credit bureaus will assume the card is at the limit and lower the score. Yeah, that's how you get a "balance too high" on your credit report when you pay the balance to zero each month.
All six of my personal American Express cards (four revolvers and two charge cards) report the statement balance (if any) to my credit reports every single month. So does Capital One. In fact, all ~28 of my cards report balances monthly.

I have one card from US Bank that reports the balance as of the last day of the month, rather than as of the statement date. The rest all report statement balance. All of them report monthly.

mouses
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Re: First credit card

Post by mouses » Mon Apr 30, 2018 8:03 am

Trism wrote:
Mon Apr 30, 2018 7:49 am

All six of my personal American Express cards (four revolvers and two charge cards) report the statement balance (if any) to my credit reports every single month. So does Capital One. In fact, all ~28 of my cards report balances monthly.
28? :shock:

Trism
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Joined: Mon Jul 18, 2016 6:34 pm

Re: First credit card

Post by Trism » Mon Apr 30, 2018 8:05 am

mouses wrote:
Sat Apr 28, 2018 3:40 pm
I like my CapitalOne card. It is a straight 1.5% cash back, so simple.

And you have access to the cash as soon as you charge the item. So when I periodically check my transactions, a few clicks and I've put that in my account as a credit.

Also, their customer service is good and seems based in the U.S.

I would never get an American Express card because if their stupid no credit limit policy. Twice I've had to provide my current financial information on the phone in the middle of the store because I charged a large purchase. Once was bad enough, twice was that's it.
RetiredAL wrote:
Sat Apr 28, 2018 3:07 pm
Also, avoid as an early card, a card from Capital One or American Express, and some others, which don't report a person's monthly balances, as the credit bureaus will assume the card is at the limit and lower the score. Yeah, that's how you get a "balance too high" on your credit report when you pay the balance to zero each month.
I have three cards, but the CapitalOne one is the one I use 90+% of the time. I pay it in full every month. My credit score is in the 800s somewhere, so this doesn't seem to be a problem.
Amex doesn't have a "no credit limit policy." They offer two types of personal cards: charge cards (which must be paid in full monthly) and revolvers (you can carry a balance like most other cards on the market).

The revolvers have traditional credit limits, but the charge cards have what is called "no preset spending limit," which means that they will approve your transactions based on an algorithm that looks at your spending behavior and your financial and credit qualifications.

I have never found the spending limit on my Amex charge cards. In fact, each of my Amex charge cards has more spending power than every other card I have, including a revolver from Citi with an $80,000+ limit.

You can go to the Amex site and find out in advance if a particularly large purchase will be approved on your charge card, although I have never found that necessary. By "particularly large" I am not talking about $400 at Target or $5,000 at a furniture store. I'm talking LARGE.

Trism
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Re: First credit card

Post by Trism » Mon Apr 30, 2018 8:06 am

mouses wrote:
Mon Apr 30, 2018 8:03 am
Trism wrote:
Mon Apr 30, 2018 7:49 am

All six of my personal American Express cards (four revolvers and two charge cards) report the statement balance (if any) to my credit reports every single month. So does Capital One. In fact, all ~28 of my cards report balances monthly.
28? :shock:
I've closed a few recently. 8-)

rec7
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Re: First credit card

Post by rec7 » Mon Apr 30, 2018 8:46 am

Will a secure card for the credit union work? They way they will be on their own from day one. Has anybody gone that route?
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Mike Scott
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Re: First credit card

Post by Mike Scott » Mon Apr 30, 2018 9:33 am

A secured card would work but I would get one of the "student" cards starting with Discover.

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prudent
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Re: First credit card

Post by prudent » Mon Apr 30, 2018 9:53 am

Someone with a thin (if even existent) credit history ought not to apply for a bunch of cards right away. Take a student offer first (good approval chances), then after 6-12 months of employment, or if he is solicited to apply, apply for one where he banks (again, good approval chances). Once some history accumulates, the likelihood of getting approved for a premium cash-back card like Citi DoubleCash is much greater. He will want to avoid getting declined by being overeager. Only take no annual fee cards, keep balances low.

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tainted-meat
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Re: First credit card

Post by tainted-meat » Mon Apr 30, 2018 9:58 am

Agree with others who have recommended the Discover student card.

I received it as a college sophomore in 2006 and the credit I built with it helped me get approved for a home loan in 2009.

I still use it for the rotating categories today.

mmmodem
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Re: First credit card

Post by mmmodem » Mon Apr 30, 2018 10:19 am

I was denied left and right when I tried to apply for my first credit card. I refuse to pay for a secured credit card or ones with annual fees. The only people that would give me a card was the gas station. So I used that for a few months. Then I started receiving solicitations for regular credit cards. Citibank gave me a whopping $250 limit which I promptly charged to the max and learned my lesson fast (and cheaply) about not spending more than you can pay off.

That's probably how I would start off with my daughter. She will have to sign for the card herself, no cosigning. If she is denied, then we'll sign her up for a gas card or department store card. The actual credit card will have a low limit so that she doesn't get herself into trouble.

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