College and beyond without a credit card?

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gasdoc
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College and beyond without a credit card?

Post by gasdoc » Sat Jun 18, 2016 8:34 pm

DW and I are in our 50's, have one credit card that we use for everything and can easily pay the balance at the end of every month. We enjoy the Amazon points that accrue as the result of our use of the card. On the other hand, both of us had missed payments and minimum payments at times when we were younger. Now we are wondering what to recommend to our teen age daughter who has just completed a short video series from Dave Ramsey's daughter- where they preach that using a credit card is bad. Period. For the past couple of years she has successfully used a debit card. I would love it if she could continue to use just cash and a debit card throughout her senior year and through her college and maybe graduate school years and beyond. Dave Ramsey says you don't need a credit score, and I certainly don't at my stage of life.

Please don't turn this into a debate about whether it is better to use a credit card or not- there are earlier threads that tackled this issue. I am wondering if anyone has actually navigated the educational years and the earlier working years without ever having a credit card. How was your experience? Thank you in advance!

Sincerely,
gasdoc

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Re: College and beyond without a credit card?

Post by livesoft » Sat Jun 18, 2016 8:37 pm

My oldest got through a masters degree without a car and without a credit card.*
My youngest is in college without a credit card (and no car).

As for beyond college, I would think that renting a car would be difficult with just a debit card. Also, I would think that a back-up card for a debit card that was just another debit card would be a hassle. Carrying cash to be the back-up would be even more of a hassle.

*I suspect she had friends that she used as a credit card. :)
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Re: College and beyond without a credit card?

Post by AlohaJoe » Sat Jun 18, 2016 8:56 pm

gasdoc wrote:I am wondering if anyone has actually navigated the educational years and the earlier working years without ever having a credit card. How was your experience?


I didn't have a credit card until after I graduated university and got my first "real" job. With debit cards, I think the need for credit cards has gone way, way down. The only time I wished I had a credit card but didn't.....

Due to my own mistakes I was in a train station in Pennsylvania (a city where I knew no one), having missed my connection. I was going to have to wait 24 hours for the next train. There was, however, an express train coming soon. I could pay to upgrade to it and get on that. I didn't have enough money to upgrade. If I had had a credit card, it would have made that day much, much, much better.

But I still survived.

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Re: College and beyond without a credit card?

Post by dodecahedron » Sat Jun 18, 2016 9:14 pm

livesoft wrote:My oldest got through a masters degree without a car and without a credit card.*
My youngest is in college without a credit card (and no car).

As for beyond college, I would think that renting a car would be difficult with just a debit card. Also, I would think that a back-up card for a debit card that was just another debit card would be a hassle. Carrying cash to be the back-up would be even more of a hassle.

*I suspect she had friends that she used as a credit card. :)


I thought most car rental places won't rent to folks under 25 anyway (unless they have a corporate credit card account in their employer's name.)

I got along fine without a credit card until after I finished college, but it was convenient though not really necessary to have one as a grad student. I didn't find it difficult to stay disciplined. It was VERY handy to have credit cards when my husband and I moved to take our first real jobs in a new city after grad school. Our paychecks from our first job were on a significant lag, it took time for our moving expenses to be reimbursed after we submitted receipts, and we had a lot of startup costs. We did manage to get the bills paid off within the grace period so no interest but our credit cards did help give us breathing room. Oh, another credit cards were handy for during grad school: prospective employers would fly job candidates out for interviews and then reimburse our travel expenses after we submitted receipts. Given the number of trips taken while on the job market, it was again nice to have the free float from the credit cards while waiting for travel expense reimbursement.

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Re: College and beyond without a credit card?

Post by reriodan » Sat Jun 18, 2016 9:22 pm

gasdoc wrote: On the other hand, both of us had missed payments and minimum payments at times when we were younger. Now we are wondering what to recommend to our teen age daughter who has just completed a short video series from Dave Ramsey's daughter- where they preach that using a credit card is bad. Period. For the past couple of years she has successfully used a debit card. I would love it if she could continue to use just cash and a debit card throughout her senior year and through her college and maybe graduate school years and beyond. Dave Ramsey says you don't need a credit score, and I certainly don't at my stage of life.


Did they really say that using a credit card is bad?? Wow, that is some horrible advice. And these people are well-known in the financial industry? :oops:

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Re: College and beyond without a credit card?

Post by livesoft » Sat Jun 18, 2016 9:29 pm

I'll add that my daughter had to go on a business trip at her new job just out of college and didn't have a credit card yet. She had to get her colleague to book and pay for her hotel room. I think that trip was her biggest motivation to get a credit card.
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Re: College and beyond without a credit card?

Post by theDON2050 » Sat Jun 18, 2016 9:33 pm

[/quote]
I thought most car rental places won't rent to folks under 25 anyway (unless they have a corporate credit card account in their employer's name.)[/quote]

age 21 is the minimum age to rent a car. They do have a surcharge for people who are <25.

I had 2 years of college without a credit card, and 2 years with one. Certainly didn't need one; got it for the cash back rewards. I know two people from school who- 1. didn't have a credit card 2. wanted to buy a house after college-- They both ended up having to get loans from the Bank of Ma and Pops instead of a traditional mortgage.

Teaching her to use a credit card wisely could hedge against the above scenario. A head start on credit (and cash back rewards :sharebeer ) wouldn't be a bad thing.

Also, what Livesoft just said! I have heard a similar story of someone traveling for work and it put them in a tight spot without a credit card when they had little cash flow (had just graduated from school). The firm reimburses twice a month but they had an awkward/avoidable experience booking their flight/hotel room.

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Re: College and beyond without a credit card?

Post by nyknicks4412 » Sat Jun 18, 2016 9:39 pm

Hard not to argue whether or not credit cards are bad. I would say that using a debit card for everything is quite risky if the numbers get stolen (which is quite likely to happen at some point). She'll need a card for certain purchases like renting a car. Not having one is also preventing her from improving her credit score (she may have student loans that will get it started but needs more than that).

I can imagine that getting through college would be quite easy without a credit card. It is the stage afterwards where building the credit score comes into play. Apartments, car, student loan refinancing and employers have all pulled my score just to name a few. Looking to buy a house soon and couldn't imagine applying for a mortgage without an established credit history. Dave Ramsey is the king of preaching no debt but unless you're ready to step in to help her out or she has some unique circumstances, at some point in her life she will need to take some on. Credit cards are an excellent tool to lower a debt burden by providing an easy boost to your credit score.

I really see no point in not opening up credit cards unless an individual is completely negligent with money and doesn't pay them off each month. Something tells me this won't be the case with your daughter if she's watching Dave Ramsey videos at her age.

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Re: College and beyond without a credit card?

Post by munemaker » Sat Jun 18, 2016 9:45 pm

I have 2 kids. When they started driving, I authorized them as users on one of my accounts. This set the stage for both to have credit cards in their own names in college. I paid the bills. They both bought houses about 2-3 years after graduation. At that time, their credit scores were in the area of 780. In both cases, their realtors were astonished. My kids had no idea how credit worked until they were buying their first homes. While their friends were struggling to pay student loans, they had no debt and were able to take mortgages at favorable rates.

You can definitely get through college without having a credit card. Helping the kids establish good credit scores at a young age is a gift you can give them, if you so choose.

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Re: College and beyond without a credit card?

Post by celia » Sat Jun 18, 2016 11:30 pm

Credit cards are better than debit cards. Besides building a credit history, all purchases should be put on one in case you need to return something or have a dispute. If you paid with a debit card, it is harder to get your money back (if at all). Our credit card companies have helped us out when something we ordered didn't arrive or car repairs were poorly done.

We had only one credit card that said they couldn't reverse the charges. (They paid a doctor while the bill was in dispute. The doctor office was too lazy to file a claim with our secondary insurance!) As soon as we got our money back on that card, we dumped them.

I think if teens use a debit card responsibly for two years (staying within a fixed amount), they could transition to a credt card for the same amount. If they go away to college and have to fly home with a layover where weather or delayed flights could impact their travel, they will feel safer and have options.
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Re: College and beyond without a credit card?

Post by abchew2 » Sat Jun 18, 2016 11:42 pm

I went through collage (undergrad and graduate school) without using a credit card and only my debit card. I didn't want to get into habits of buying things I couldn't afford so didn't get one until I started my career. I would find it difficult to go through adult life without a credit card as a backup. Things have happened while on vacation (here and abroad) where the debit card had limits or was not accessible at the time and I had to pay a significant sum for unforeseen problems. These aren't common but I sleep easier having the backup (if the rewards aren't enough of a motivation).

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Re: College and beyond without a credit card?

Post by jjface » Sun Jun 19, 2016 12:01 am

I didn't have a personal credit card until I came to the USA at age 27. I quickly realized that in the USA a credit score is something that you are going to need and a credit card was the best way to get started. Also credit cards provide better consumer protection than debit cards.

Starting off as an authorized user on yours would be the best place to start or a secured credit card.

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Re: College and beyond without a credit card?

Post by BeneIRA » Sun Jun 19, 2016 12:07 am

OP, I had a credit card for part of college and I paid it off every month. Later, it helped me lower my insurance rates and find more than one apartment that would accept me even though I had a small income. They all commented on the credit score. It allowed me to lower my security deposits and get accepted to rent in the first place. There are many college cards out there, Capital One and Discover offer college cards. They will come with a small limit and both cards allow for text reminders to make a payment, when a charge is made, etc. I believe the Discover It Student also has late payment forgiveness, but I could be wrong. If she has a $500 limit, she shouldn't be able to get into too much trouble. You can also monitor it as well. If she is responsible, it will help her in the long run. If she isn't, then it is better to get those mistakes out now as opposed to five years from now.

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Re: College and beyond without a credit card?

Post by FedGuy » Sun Jun 19, 2016 1:04 am

I didn't have, or need, a credit card in college (since I lived in dorms and room and board was covered, and I rarely ventured off campus). When I graduated, though, I realized I needed one...but I couldn't get one, because I didn't have a credit history. The same credit card companies that stuffed my mailbox with card offers all through college or set up stands on campus offering cards to nearly everyone with a student ID were now refusing to let me have a credit card because of my lack of credit history.

I had to take a secured card with a $200 credit limit. I never missed a payment, was never late, and always paid in full, but the credit card companies wanted a longer track record before they'd give me an unsecured card with a decent limit. I eventually went to grad school, though, and once I was a student again suddenly found that the credit card companies were again throwing good cards my way. I grabbed one pretty much as soon as I could.

So, even if you and your daughter decide that she doesn't need a credit card in college, she should still seriously consider applying for one before graduation. It'll become much harder for her to get her first card once she's handed her diploma.

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Re: College and beyond without a credit card?

Post by awval999 » Sun Jun 19, 2016 7:24 am

Just add her an authorized user of one of your credit cards. This will help her credit score, which is what I imagine you are worried about.

Tell her to use it only in an emergency.

Done.

I successfully managed to use a credit card in college. It's not that hard. Young adults need to learn personal finance. My first card was from my hometown small bank. My 2nd was a Discover cash back card. They both had smallish limits. But I knew to always the pay the statement balance. And now with a thick credit file I was able to get the low advertised rate on a car when I graduated, got the best mortgage rate available with only 5% down, and can now churn credit card sign-up bonuses to my heart's content.

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Re: College and beyond without a credit card?

Post by lgs88 » Sun Jun 19, 2016 8:53 am

I'm in college. I have a credit card, and my girlfriend does not.

She received a grant to perform research abroad, so she had to buy plane tickets -- but the University administration was so slow at getting the money disbursed that she missed out on the best fares. A credit card would have been useful there.

There are also security benefits to using a credit card, as other members of this thread have alluded to.
merely an interested amateur

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Re: College and beyond without a credit card?

Post by Mike Scott » Sun Jun 19, 2016 9:06 am

A credit card is a CONVENIENCE.

They also have less $$ liability compared to loss of debit card info. I did not have one until I was booking flights and hotels for later reimbursement as a graduate student and continuing to now. You can do the same with a debit card but I choose to not ever use debit cards.

As for behavioral difficulties with over spending on credit cards (which I think is the big DR problem with credit cards), I happen to be one of those people who spend more carrying cash than I do with a credit card. DRs insistence that a credit score is not necessary is maybe technically true if you pay cash for everything in life including cars and houses but ultimately a good credit score is helpful to most people sooner or later.

The credit card rewards are only positive if you have disciplined use of credit card spending. The card companies are counting on card holders to generate more money for them than they spend out in rewards.

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Re: College and beyond without a credit card?

Post by Toons » Sun Jun 19, 2016 9:08 am

I never had a credit card in those early years.
Worked out just excellent.
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gasdoc
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Re: College and beyond without a credit card?

Post by gasdoc » Mon Jun 20, 2016 9:03 am

Toons wrote:I never had a credit card in those early years.
Worked out just excellent.
Keep it Simple :happy


This is the OP. Sorry about posting a question, and then not having access to a computer all weekend. Toons, did you not run into problems needing a credit score and a credit card in your first years after school? Car rental? Airline tickets? Mortgage? These are some of the issues others have raised. Thank you!

gasdoc

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Re: College and beyond without a credit card?

Post by JDCarpenter » Mon Jun 20, 2016 9:12 am

gasdoc wrote:
Toons wrote:I never had a credit card in those early years.
Worked out just excellent.
Keep it Simple :happy


This is the OP. Sorry about posting a question, and then not having access to a computer all weekend. Toons, did you not run into problems needing a credit score and a credit card in your first years after school? Car rental? Airline tickets? Mortgage? These are some of the issues others have raised. Thank you!

gasdoc


I believe Toons is also in his 50s or older. That may affect the weight of his experience. (FWIW, and outside the scope of your intial post/request, we put our kids on a family credit card at 16 for both credit history and gas purchases. In college, they had that card as well--but they also knew that I check transactions daily and would call them out for reimbursement of any unnecessary charges.)
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Re: College and beyond without a credit card?

Post by flyingbison » Mon Jun 20, 2016 9:19 am

I didn't have a credit card in college, nor did I have internet, cell phone, cable tv, or air conditioning ... but that was a million years ago.

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Re: College and beyond without a credit card?

Post by N1CKV » Mon Jun 20, 2016 9:48 am

Having and using a credit card teaches responsibility.

My parent's helped by getting me a card because I was traveling about an hour away for school weekly, most of the route was across a single long bridge. Having a card was a safety net to pay for a tow or repair to get me out of a potential bad situation.

I applied for and received my own card by the end of my freshman year. My parents had already instilled in me that I should never spend more than I had to pay it off with. This is super easy in today's world where you can view your balance on your smartphone. At first I used my card only for gasoline, an expense I would have regardless. I slowly adjusted to having the responsibility of paying this bill every month and learned by surprise that the balance was higher or lower than anticipated. This taught me to be more mindful of not just what I charged but also when in relation to billing cycles.

Building credit starting as soon as early adulthood is important to achieving a solid score for future things such as home purchase, auto loans or even just purchasing insurance for either. Teach her how to use it responsibly. Use it as a backup for her own safety. Let her know if an true emergency came up that she SHOULD use it, let you know and you will help her take care of the bill. If she slips up don't let her ever carry a balance, pay it for her but demand that she repays you. Don't let her get in the habit of not paying the bill in full.
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Re: College and beyond without a credit card?

Post by Church Lady » Mon Jun 20, 2016 10:32 am

had to take a secured card with a $200 credit limit. I never missed a payment, was never late, and always paid in full, but the credit card companies wanted a longer track record before they'd give me an unsecured card with a decent limit. ....
So, even if you and your daughter decide that she doesn't need a credit card in college, she should still seriously consider applying for one before graduation. It'll become much harder for her to get her first card once she's handed her diploma.


What fedguy said.

I too had only a debit card in college, and couldn't get credit when I graduated due to no history. I had a hard time getting an apartment without a credit history, and had to pay a large security deposit to the utility companies. If I had wanted a car loan, I would have had to have gone to one of those exploitative EZ CREDIT -- IF YOU HAVE A HEARTBEAT WE'LL GIVE YOU A LOAN places.

Back in the day, you could get gas cards to build credit easily. This isn't helpful if you have no car :(

Help your daughter pick a sensible credit card. Good luck to you and her!
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Re: College and beyond without a credit card?

Post by BolderBoy » Mon Jun 20, 2016 10:36 am

gasdoc wrote:I am wondering if anyone has actually navigated the educational years and the earlier working years without ever having a credit card. How was your experience?

The credit card was much more convenient - sort of like having a private billing company that cost me nothing to use. But life without (in the 1970s) wasn't oppressive or anything, just required more planning in advance.
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Re: College and beyond without a credit card?

Post by Spewin » Mon Jun 20, 2016 10:57 am

I'm ~30 and I went through college without credit card or car. ( I actually did have a card, I just didn't use it.) I did use my mom's card to buy things she wanted to pay for, like textbooks. I used a debit card exclusively for my own spending and could have never had a CC without noticing.

In my second year of graduate school I got a credit card for the cash back. I didn't get it because I needed it, but I did want to build my credit further as well.

My wife also had no CC (of any kind!) through college. After graduating and getting a job she could not get a personal card for three years until being an authorized user under both her mother and me. Since the CARD act, you can only get a CC without a parent co-signing after the age of 21, but after the financial crisis no one would issue a CC to someone out of college and without a credit history.

In short, for the most part not using a credit card puts you at low risk for a series of annoyances in your life and may be cost you a small amount of money per year. While using a CC would eliminate those annoyances and extra costs. Any argument that all people should always use a CC or totally avoid the CC is total BS based on unprovable, and non-universal, assumptions. In long:

To my knowledge there are very few things for which a credit card is REQUIRED. Sometimes rental cars and hotel reservations do require a credit card; but more often, they will instead put a large hold on your debit card. I understand gas stations also sometimes do this putting a hold of ~$150 that may not be released for days.

Having a long held credit card (used responsibly) also builds your credit history. This can result in easier apartment rental, and lower insurance in some states/companies. You also have a larger range of mortgage providers at good rates.

The final element of concern is the legal protection against fraud. The maximum liability for CC fraud is $50 under (federal?) law. For a debit card it's $500 (I think). Many companies/banks/servicers actually provide the same protections even though not required. There is also the practical concern that the money is actually removed from your account until you notice. This could result in NSF fees/bounced checks. There is a law that requires banks to replace the funds in a certain time frame but still the practicalities of a CC are better.

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gasdoc
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Re: College and beyond without a credit card?

Post by gasdoc » Mon Jun 20, 2016 1:00 pm

Thanks, everyone, for the replies! Can anyone confirm that if I let her use the card my wife and I use, and only for emergencies, that a good credit rating will result? How can that be, since she would not be the one making the payments?

Sincerely,
gasdoc

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JDCarpenter
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Re: College and beyond without a credit card?

Post by JDCarpenter » Mon Jun 20, 2016 1:13 pm

gasdoc wrote:Thanks, everyone, for the replies! Can anyone confirm that if I let her use the card my wife and I use, and only for emergencies, that a good credit rating will result? How can that be, since she would not be the one making the payments?

Sincerely,
gasdoc


That was our experience (Kids are now 27, 26, and 24). Each was authorized user on the card beginning at 16 and it has counted on their credit histories. Same thing--we paid it each month, with reimbursement from them for any non-approved/appropriate expenditures.

As for her not making the payments herself, I think it is administrative convenience to overlook such details. Never really investigated the "why," only the "what will happen."
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Re: College and beyond without a credit card?

Post by munemaker » Mon Jun 20, 2016 1:13 pm

gasdoc wrote:Thanks, everyone, for the replies! Can anyone confirm that if I let her use the card my wife and I use, and only for emergencies, that a good credit rating will result? How can that be, since she would not be the one making the payments?

Sincerely,
gasdoc


From Credit Karma:

"Being an authorized user can impact your credit situation in a number of ways:

The accounts you're an authorized user on will appear on your credit report. A lot of Credit Karma members are surprised to see a card on their profile that they're "only an authorized user" on, but the fact is, credit bureaus treat these cards as if they were your own.

This setup can make you look bad. Essentially, the primary account holder's actions look like your own. If they miss a payment on this credit card, you miss a payment. If they rack up an extremely high credit card utilization, so do you. This can kill your credit score, the exact opposite of what you want.

Your credit score can be affected, depending on the scoring model. The VantageScore 3.0 model only includes positive information from authorized user accounts. On the other hand, the FICO model includes positive and negative marks from legitimate authorized user accounts but will sniff out anybody who games the system. So don't hold your breath if you pay to be added to someone's credit card- FICO won't boost your score."

source: https://www.creditkarma.com/article/how ... cts-credit

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Re: College and beyond without a credit card?

Post by beachlover » Mon Jun 20, 2016 1:51 pm

For relative oldsters like me, our experience in youth isn’t all that relevant.

In a small college town in the late 70s, the ATM network was just emerging, we routinely paid with personal checks, we could cash checks at stores that catered to students (with ID, for a fee), many stores had CC minimums, etc. There was a lot of unnecessary nuisance compared with today.

Fast forward to my daughters’ recent college and post-college experiences, with ATMs everywhere (but often with fees), no-fee rewards CCs, routinely charging very small purchases, and *credit scores being routinely used as a screen for urban apartment rentals after graduation*, and I would suggest that smart use of credit cards today is both convenient and a very useful tool to have in your financial arsenal.

As an additional note from our experience, our first daughter got her first credit card in her own name while still a student. Our younger daughter waited until post college (she used debit card while in school). Post college, she could not qualify for a CC on her own, due to fledgling work record and lack of steady payment history (utilities, etc.) from frequent moves while a student and shortly thereafter. So we had to help get her started with a card in her name but for which we were jointly responsible (no fee, cash back, but we had to be on the card as well).

As others have mentioned above. also in favor of credit versus debit is minimal (in many cases zero) obligation for fraudulent use and isolation from your other accounts. These days I see plenty of upside (convenience, security and rewards) and almost no downside to using a CC, other than the potential for lack of discipline and resulting cost of carrying a balance.
Last edited by beachlover on Mon Jun 20, 2016 2:35 pm, edited 1 time in total.

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Re: College and beyond without a credit card?

Post by itstoomuch » Mon Jun 20, 2016 2:03 pm

DS had a UGMA trading account, IRA/Roth Accounts, checking, savings and CC accounts under custodial ownership as a minor, since he was small and eventually went to college. He knew his current finances and and had the ability to know his UGMA's worth. I think I kept his CC card limit to 5k.

We just did a cruise to Hawaii with DS. Spending 5K for 3, in Hawaii is still fairly difficult in 7 days.
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Re: College and beyond without a credit card?

Post by telemark » Mon Jun 20, 2016 2:19 pm

My first credit card was an American Express card provided by my employer to use when travelling, when I was 27. So it can be done, or at least there was once a time when it could be done. But I own and use a credit card now specifically for the purpose of maintaining a credit score. Whether or not this is a good thing, your credit score is now used for all kinds of things that have nothing to do with issuing credit. Dave Ramsey may say that you don't need one but I doubt if he's speaking from personal experience.

What changed my mind was trying to open a savings account and being rejected for having a credit score of zero.

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Re: College and beyond without a credit card?

Post by campy2010 » Mon Jun 20, 2016 2:23 pm

beachlover wrote:For relative oldsters like me, our experience in youth isn’t all that relevant.

In a small college town in the late 70s, the ATM network was just emerging, we routinely paid with personal checks, we could cash checks at stores that catered to students (with ID, for a fee), many sotes had CC minimums, etc. There was a lot of unnecessary nuisance compared with today.

Fast forward to my daughters’ recent college and post-college experiences, with ATMs everywhere (but often with fees), no-fee rewards CCs, routinely charging very small purchases, and *credit scores being routinely used as a screen for urban apartment rentals after graduation*, and I would suggest that smart use of credit cards today is both convenient and a very useful tool to have in your financial arsenal.

As an additional note from our experience, our first daughter got her first credit card in her own name while still a student. Our younger daughter waited until post college (she used debit card while in school). Post college, she could not qualify for a CC on her own, due to fledgling work record and lack of steady payment history (utilities, etc.) from frequent moves while a student and shortly thereafter. So we had to help get her started with a card in her name but for which we were jointly responsible (no fee, cash back, but we had to be on the card as well).

As others have mentioned above. also in favor of credit versus debit is minimal (in many cases zero) obligation for fraudulent use and isolation from your other accounts. These days I see plenty of upside (convenience, security and rewards) and almost no downside to using a CC, other than the potential for lack of discipline and resulting cost of carrying a balance.


Well said. Totally agree.

FICO is also tightening up the credit history benefit conferred to authorized users. Recently FICO changed its algorithm so if it suspects that there is no relationship between the primary account holder and the authorized user then the credit history will not be applied to calculating the credit score of the authorized user. This is a recent change so one might guess that more restrictions could be coming down the road.

If I had a college-age daughter, I would add her as an authorized user on one of my oldest cards and then have her open a different card in her own name.

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Re: College and beyond without a credit card?

Post by rec7 » Mon Jun 20, 2016 3:51 pm

AlohaJoe wrote:
gasdoc wrote:I am wondering if anyone has actually navigated the educational years and the earlier working years without ever having a credit card. How was your experience?

With debit cards, I think the need for credit cards has gone way, way down. The only time I wished I had a credit card but didn't.....



I think this is so true. I like them no need to pay a credit card bill. I had credit cards when I was young but just used them for gas and food. I could have used cash just as easy.
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gasdoc
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Re: College and beyond without a credit card?

Post by gasdoc » Tue Jun 21, 2016 7:53 am

Thank you everyone for the replies. My preference would be to keep things as simple as possible, and not to introduce problems that don't exist now. Currently, she is a rising senior in high school, and is perfectly happy with a debit card only.

Sincerely,
Brian

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Re: College and beyond without a credit card?

Post by Watty » Tue Jun 21, 2016 9:03 am

As someone else mentioned there can be problems with using a debit card if there are fraudulent charges since you have no leverage with the bank and your money can be gone for several weeks if it takes that long to resolve it, assuming that it eventually gets resolved in your favor.

As a college student she will likely need to make many online payments and using a debit card online is a lot more risky than a credit card. If for no other reason I would get a credit card for online use.

I would get rid of the debit card and just get an ATM.

Many people, including myself, refuse to have a debit card.

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Re: College and beyond without a credit card?

Post by Rodc » Tue Jun 21, 2016 9:08 am

Daughter graduated college 5 years ago and only had a debit card. Was not a problem.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: College and beyond without a credit card?

Post by BL » Tue Jun 21, 2016 9:16 am

flyingbison wrote:I didn't have a credit card in college, nor did I have internet, cell phone, cable tv, or air conditioning ... but that was a million years ago.

+1
I did have a debit card for a while, but decided it was too risky.
Credit card was necessary for car rental for work.
Last edited by BL on Tue Jun 21, 2016 9:19 am, edited 1 time in total.

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Re: College and beyond without a credit card?

Post by SRenaeP » Tue Jun 21, 2016 9:16 am

Watty wrote:As someone else mentioned there can be problems with using a debit card if there are fraudulent charges since you have no leverage with the bank and your money can be gone for several weeks if it takes that long to resolve it, assuming that it eventually gets resolved in your favor.

As a college student she will likely need to make many online payments and using a debit card online is a lot more risky than a credit card. If for no other reason I would get a credit card for online use.

I would get rid of the debit card and just get an ATM.

Many people, including myself, refuse to have a debit card.


I stopped using debit cards in favor of credit cards as a graduate student, due to a double billing issue. I made a brick and mortar purchase but was somehow double charged to the tune of a couple hundred dollars. This caused several checks to bounce and I incurred NSF charges, etc. It took quite some time to get straightened out (faxing bank statements and such, this was in the late 90s). Since then, I only use my debit card at the ATM and use credit cards for pretty much anything above $5.

-Steph

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Re: College and beyond without a credit card?

Post by gasdoc » Tue Jun 21, 2016 9:49 am

Rodc wrote:Daughter graduated college 5 years ago and only had a debit card. Was not a problem.


Rodc, Thank you for this comment. How did she deal with the problems people have mentioned- rental cars, new mortgage, renting an apartment, insurance, etc?

Sincerely,
gasdoc

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Re: College and beyond without a credit card?

Post by Rodc » Tue Jun 21, 2016 10:05 am

gasdoc wrote:
Rodc wrote:Daughter graduated college 5 years ago and only had a debit card. Was not a problem.


Rodc, Thank you for this comment. How did she deal with the problems people have mentioned- rental cars, new mortgage, renting an apartment, insurance, etc?

Sincerely,
gasdoc


She did not rent any cars, but could have used my card on a one-off basis if needed, provided she could find a company that would rent to someone younger than 25. Someone said some rent as young as 21 so could come up I suppose.

I do not know any college students applying for mortgages. Or even in the first couple of years after college.

Was not an issue for renting an apartment, but presumably this too could have been a one-off use of my card or having me cosign.

I have never been asked for a credit card to get insurance. In her case she was on my insurance, as I presume are most students.

In general I think people make way too big a deal about credit scores. After college they can begin building credit history and in the vast majority of cases will be just fine.

All that said, having a credit card as noted by an earlier poster is a convenience. I don't think a low limit card is a bad thing. Or having your responsible child have a card on your account for convenience.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: College and beyond without a credit card?

Post by SouthernCPA » Tue Jun 21, 2016 10:05 am

Can you get by without a CC? Absolutely.

It sure makes it much easier when you do things like booking flights, rooms, rental cars, etc. Some rental companies and hotels will put a big hold on cash if it's a debit card to hold a reservation. It's a lot easier to just book on a CC and not worry about your cash balance.

We put everything on our CC and never use our debit cards. If I'm spending the same amount of money, I might as well get some points for it. Also, I'd rather someone steal my CC number than access to my bank account. If a fraudulent transaction happens, the CC company fronted the cash, not me.

I had a CC all through college that I used for gas, textbooks, etc. Having credit history was nice when I graduated and bought a house.

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Re: College and beyond without a credit card?

Post by gasdoc » Tue Jun 21, 2016 12:46 pm

Rodc wrote:
gasdoc wrote:
Rodc wrote:Daughter graduated college 5 years ago and only had a debit card. Was not a problem.


Rodc, Thank you for this comment. How did she deal with the problems people have mentioned- rental cars, new mortgage, renting an apartment, insurance, etc?

Sincerely,
gasdoc


She did not rent any cars, but could have used my card on a one-off basis if needed, provided she could find a company that would rent to someone younger than 25. Someone said some rent as young as 21 so could come up I suppose.

I do not know any college students applying for mortgages. Or even in the first couple of years after college.

Was not an issue for renting an apartment, but presumably this too could have been a one-off use of my card or having me cosign.

I have never been asked for a credit card to get insurance. In her case she was on my insurance, as I presume are most students.

In general I think people make way too big a deal about credit scores. After college they can begin building credit history and in the vast majority of cases will be just fine.

All that said, having a credit card as noted by an earlier poster is a convenience. I don't think a low limit card is a bad thing. Or having your responsible child have a card on your account for convenience.


Thanks, Rodc,
I appreciate your thoughts on this....

gasdoc

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Re: College and beyond without a credit card?

Post by takeshi » Tue Jun 21, 2016 1:53 pm

Credit is used for a lot more than just credit cards, auto loans and mortgages these days. A significant factor is age of credit. The earlier she starts the better on that front.

If she's using a debit card she can use a credit card like a debit card.

gasdoc wrote:Dave Ramsey's daughter- where they preach that using a credit card is bad. Period.

People who see things simply as black and white matters miss out on a lot. Inanimate objects aren't good or bad. Behaviors are. Poor financial decisions that lead to misuse of credit is bad. Like any other tool, credit can be put to good use or bad but that all depends on the person -- not credit itself.

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Re: College and beyond without a credit card?

Post by DaftInvestor » Tue Jun 21, 2016 2:00 pm

gasdoc wrote:
Toons wrote:I never had a credit card in those early years.
Worked out just excellent.
Keep it Simple :happy


This is the OP. Sorry about posting a question, and then not having access to a computer all weekend. Toons, did you not run into problems needing a credit score and a credit card in your first years after school? Car rental? Airline tickets? Mortgage? These are some of the issues others have raised. Thank you!

gasdoc


I didn't in my early years either BUT times were different then. You would go to a travel agent and they would print and give you a paper-plane-ticket (remember those?). Grocery Stores didn't even take credit-cards - they only took cash. I remember booking hotels and car rentals through the travel agent although I can't remember the exact mechanism - now everyone need a credit-card to hold the reservation (maybe they would take a debit card but that would be crazy-risky for the consumer). Now I don't do much without a credit-card - just too convenient (not to mention 2% back).

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Re: College and beyond without a credit card?

Post by telemark » Tue Jun 21, 2016 2:42 pm

If you have a decent credit score, it's easy to think that it doesn't matter much, because you don't notice when it's being checked. Is there anyone here without a credit score who can comment? I don't qualify anymore.

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Re: College and beyond without a credit card?

Post by Kevin M » Tue Jun 21, 2016 3:13 pm

Daughter recently graduated college, and still does not have a credit card. I have recommended to her that she get one to start building her credit score (she is extremely responsible). She has been an authorized user on my Fidelity American Express for years, and uses that card for expenses that I have agreed to pay for her directly. Yet when she finally did apply for a CC several months ago, using one of the many offers she gets in the mail, she was denied due to lack of income. Getting a CC has not been a high priority for her, and I'm leaving it up to her to initiate another application.

Maybe she needs to apply for one specifically geared for students.

Landlords do check credit history in making rental decisions. Amazingly, she seems to have enough of a credit history to have qualified to rent a new place on her own this month (moving for grad school). I think having the utility bill in her name at her last place helped. I have encouraged her to get a CreditKarma account to see what's going on with her credit score, but again, low priority for her.

Kevin
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Re: College and beyond without a credit card?

Post by gasdoc » Tue Jun 21, 2016 3:57 pm

I appreciate the time everyone is taking to answer.

Sincerely,
gasdoc

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Re: College and beyond without a credit card?

Post by Solair of Astora » Tue Jun 21, 2016 3:59 pm

I did not have a credit card/mortgage/car loan/etc. up until about three years ago. Things might have been more convenient and cost less if I had a credit score, but I was lucky in that everything that needed to be done got done.

I was able to get a mortgage without a credit score (when the credit report came back it actually said "not enough information"), but that was very interesting circumstances... my ex wife had gotten the mortgage because I had no credit and then when we separated I got the house. Because I had no credit, they had to do manual underwriting for a refinance and my choices for what type of mortgage were somewhat limited. FHA with PMI... uhg. I detest PMI, but then again I bought more house than I could afford. Refinancing the mortgage without a credit score involved a whole heck of a lot more paperwork than refinancing it later when I did have a credit score a year later.

Setting up utilities almost always included some kind of security deposit. I think the electric company wanted a $200 deposit. I was able to put those up, but It's inconvenient to have $200 tied up for 6-12 months for one utility, let alone a few utilities. I'm sure it's even more inconvenient if you're young and just starting out.

I've got an OK score now (length of history and number of accounts is small). Having seen both sides all the while being financially responsible, I do find it quite humorous. I'm no different, but companies seem to treat me differently. It probably has to do with the fact that I'm a known quantity now. My score isn't perfect, but it doesn't come back N/A anymore.
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Re: College and beyond without a credit card?

Post by blevine » Tue Jun 21, 2016 4:14 pm

When I was in college, we didn't have laptops, cell phones, credit cards nor many other modern conveniences.
Some may remember the time before polio vaccines, and other life saving treatments.

I don't see why just because old farts didn't have something, people today should feel merit in living without some
modern convenience. Yes you can survive without some of them, but why ?

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Re: College and beyond without a credit card?

Post by Dandy » Tue Jun 21, 2016 4:22 pm

They didn't have debit cards when I started out. My concern is that when you are starting out you don't usually have much cash and your debit card is all about having cash in the account to use it. While it is somewhat natural to fear the dangers of having a credit card and getting in over your head there is also a fear of having some sort of emergency and not having enough to fund with your debit card.

I'm not sure that a debit card builds a credit rating which may become more important when the actual need for credit is critical e.g. mortgage.

I would suggest having a credit card and using it for small purchases and paying it off before interest is due to build a credit history and incase an emergency requires more than a debit card can handle. If the credit card turns into an abusive practice then cut it up. A lot depends on the individual - some can't resist impulse buying and others can.

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