I'm apply for a Credit card,What's the good,the bad,and whatever else. - Tilted Forum Project Discussion Community

LLL2 · 08-27-2005, 06:17 AM

What does APR(Annual Percentage Rates ) mean other then what it really means.Damn does that make sense ? I'm trying to build my credit history because I have None.So when i'm apply for a CC what should i look for ,what's good for me.

Merlocke · 08-31-2005, 06:13 AM

forcards.com

it's the list of the lowest APR cards I've seen.
Canadians don't get as good deals though

streak_56 · 08-31-2005, 06:16 PM

I think annually my Visa is 19.5%, but I just got it. I had a Mastercard in Ohio that gave me 13.6% which I think is pretty low.

I'll give you a scenerio... my friend... lets call him R. Has three credit cards. Last year he made about 40000 working.... not bad. But he is in debt 12000.

Then theres me, I've had two.... I have never gone over my limit.

Just depends what kind of spender you are, I plan on just buying a tank of gas here and there... food... whatnot. Also, think about your limit.... mine on the Visa is 3000.

As said before, look aorund, see what you're comfortable with and apply.

Lead543 · 08-31-2005, 10:23 PM

R hey....gotta love spending $52,000 in a year.

I have a student one...kinda nice, the interest rate is 18% because it's free. The ones you pay an annual fee for have something like 9% and other perks like more air miles and cash back. Nonetheless I should have a nice sum of money (cash back) when I pay my tuition. My limit is $1000 I believe but if I need to spend more I just depsoit money into an account, if they know you have it ahead of time they'll let you charge it.

Go to your bank and set up an appointment, have a few things you wanna keep in mind (ie do you want a free cc? do you want extras like air miles? do you need a higher limit?) With no credit history you'll probably have to start small and work your way up.

zVp · 09-04-2005, 07:49 AM

Can someone fill me in about the interest rate on credit cards? The concept totally goes over my head. Is it something like you have to pay 18% extra? or... 18% extra if you're unable to make the payments?

aswo · 09-07-2005, 09:07 AM

Interest rates on credit cards, are whatever the bank wants to charge you

splck · 09-07-2005, 09:29 AM

As long as you pay off the amount you purchased during a given month, you won't have to pay interest. If, however you don't pay off the card every month, you'll pay a shit load of mony to the bank for using thier money. Use your card, but use it with care. Never spend more than you can afford to pay off when the bill shows up at your door.

Martian · 09-07-2005, 11:20 PM

So here's the skinny:

Credit cards come in roughly eight trillion different flavours, but they all break down into one of two categories. You have cards that you pay annual fees on and cards that you don't.

The cards with an annual fee will give you a lower APR because they're making their money off of you anyway. Whether you use the card or not the issuer makes a profit. The ones without an annual fee have a higher APR because they have to make up for the people who rarely/never use their cards or always pay within the grace period. Rates vary hugely from one area to the next, but it's not uncommon to see, as an example, 9% APR on a card with an annual fee vs. 18% APR on one without.

And just what is APR anyway? Simply put, it's the interest rate. an 18% APR means that you'll pay 18% of the loan's total value in interest per annum. The catch is that it's a compound interest and it's compounded monthly. So if you have a balance of $100 on your credit card at the end of month 1, the lender takes that balance and adds the month's portion of the total APR to the balance, which would be (($100*18%)/12) or $1.50. At the end of month 2 if you still haven't made any payments, the card issuer takes the new balance and does the calculation again. This is in addition to any late fees they may charge for not making a payment within the grace period, which means that total can add up very quickly.

And what's a grace period? Simply put, it's the time the issuer gives you to pay off any debts on the card without incurring a penalty, usually 30 days. Thus you can buy that new sofa for $500 on the 1st of the month and as long as you've paid down the $500 by the 30th you won't pay any interest on it. Note that you are expected to pay a portion of your balance every month and that failure to do so will result in a late penalty being added to your total debt in addition to a report of a late payment being made to the credit bureaus. This is called the minimum payment.

In addition to all that if you plan on using your credit card for cash advances or some other types of transactions a fee will be charged, usually a small percentage of the amount advanced or used (1%-3% is typical). And on top of all of that, a lot of cards tie in with other companies and/or incentive programs to give you extra perks. For example, here in Oshawa TD bank offers a GM credit card, which builds up points with each purchase that can be applied to your next purchase of a new GM car or truck. Air miles cards are also a dime a dozen, or there may be another of any number of tie-ins available.

Right about now I hear you saying 'well that's all well and good Mars, but what sort of card should I get?' The answer is that it depends on who you are and how you plan to use it. Without any prior credit history your best bet is a card with a small limit, $500-$1000. Card issuers will issue that sort of a card sooner because their risk is limited. At worst if you default on everything they're out a grand, which is a rounding error to these people. So try for a small one like that. Also go for the 'vanilla' cards without any perks or incentives. These also tend to be easier to get.

In terms of whether or not to get a card with an annual fee, that's highly dependent on how you use the card. Some people like to float a balance on the card (ie, always keep a small amount oweing). This will build up your credit rating faster as long as you consistently make those minimum payments. The downside is that the minimum payment becomes one of your monthly bills and if you're strapped for cash one month you can't simply throw the card in your sock drawer and not worry about oweing the card issuer money that month. If you're in a good enough position financially to do this then you're going to probably want to take a good long look at some of the cards with annual fees and do the math as to whether the annual fee is going to be less than the money you'll save on the lower APR.

The other option (and more popular one for people just starting out) is to use the card for a number of small purchases and then pay off the balance within the grace period, thus not incurring any interest. If you do this the card you want is definitely one without an annual fee, which if used properly will become a zero dollar investment (ie, you don't lose any money on it). It's worth noting that this will be the easier route, as the cards with the annual fees are generally targeted at the markets with a higher income who can afford to run up more of a balance.

If you're a student there are a number of student rate cards available in most markets. I won't go into detail about these as the credit card issuers will be practically throwing them at you. The reasoning behind this is that a student is more likely to get a high paying job after school and will therefore be able to spend more and use the card more, leading to more money for the issuer.

If you're not in school it's worth noting that a credit card isn't the only option for building a credit history (and may not even be an option; issuers are notoriously stingy with this market). Paying bills on time, such as phone, cable, insurance and even rent will also build up your credit history. Getting a cell phone is a popular option for those who may not be able to get a credit card due to insufficient credit history. Pay the bill on time every month and it will build up your credit rating steadily. But if your heart's set on getting a credit card get your butt into the bank and find out if they'll issue a secured card to you. The idea is that you pay the limit of the card (or more) up front; the bank throws that money in a savings account and uses it as collateral for the card. That way if you default (which is a fancy way of saying you can't pay) the card issuer can use that money to pay down the debt. Note that this doesn't mean it's not as bad to default on the card, as it still gets reported as such to the credit bureaus. Banks like these cards because even if you make all the payments within the grace period the bank still gets to make interest off of the money you gave them as collateral, but they won't generally advertise them as they're seen as somewhat unsavoury and are chiefly targeted at people who are trying to rebuild their credit ratings.

And the final option is to get a card at your local department store. Some stores (such as Zellers and Canadian Tire here in Canada and I think Walmart has one too) will offer you an in-store line of credit. You can use that to make purchases at the store and it will be reported to the credit bureau. These are pretty easy to get a hold of and don't generally carry an annual fee although the APR may be quite high. They're another good option for rebuilding credit as well as for starting out.

So yeah, there's that. Any questions, fire a PM my way. Have fun and be careful. A bad credit rating can haunt you for a long, long time.

zVp · 09-09-2005, 02:15 PM

Wow. That was a very informative reply. Thanks a whole bunch

Cynthetiq · 09-09-2005, 02:49 PM

you need to work on your grammar too

you are APPLYING for a card, not apply for a card.

details details details.

don't spend what you don't have.. do a search on credit card and you'll find lots of information here.

08-27-2005, 06:17 AM	#1 (permalink)
LLL2 Crazy	I'm apply for a Credit card,What's the good,the bad,and whatever else. What does APR(Annual Percentage Rates ) mean other then what it really means.Damn does that make sense ? I'm trying to build my credit history because I have None.So when i'm apply for a CC what should i look for ,what's good for me.

08-31-2005, 06:13 AM	#2 (permalink)
Merlocke Location: Canada	forcards.com it's the list of the lowest APR cards I've seen. Canadians don't get as good deals though __________________ -=[ Merlocke ]=-

09-07-2005, 09:07 AM	#6 (permalink)
aswo Crazy	Interest rates on credit cards, are whatever the bank wants to charge you __________________ People who love people

09-07-2005, 09:29 AM	#7 (permalink)
splck it's jam Location: Lowerainland BC	As long as you pay off the amount you purchased during a given month, you won't have to pay interest. If, however you don't pay off the card every month, you'll pay a shit load of mony to the bank for using thier money. Use your card, but use it with care. Never spend more than you can afford to pay off when the bill shows up at your door. __________________ nice line eh?

09-07-2005, 11:20 PM	#8 (permalink)
Martian Young Crumudgeon Location: Canada	So here's the skinny: Credit cards come in roughly eight trillion different flavours, but they all break down into one of two categories. You have cards that you pay annual fees on and cards that you don't. The cards with an annual fee will give you a lower APR because they're making their money off of you anyway. Whether you use the card or not the issuer makes a profit. The ones without an annual fee have a higher APR because they have to make up for the people who rarely/never use their cards or always pay within the grace period. Rates vary hugely from one area to the next, but it's not uncommon to see, as an example, 9% APR on a card with an annual fee vs. 18% APR on one without. And just what is APR anyway? Simply put, it's the interest rate. an 18% APR means that you'll pay 18% of the loan's total value in interest per annum. The catch is that it's a compound interest and it's compounded monthly. So if you have a balance of $100 on your credit card at the end of month 1, the lender takes that balance and adds the month's portion of the total APR to the balance, which would be (($10018%)/12) or $1.50. At the end of month 2 if you still haven't made any payments, the card issuer takes the new balance and does the calculation again. This is in addition to any late fees they may charge for not making a payment within the grace period, which means that total can add up very* quickly. And what's a grace period? Simply put, it's the time the issuer gives you to pay off any debts on the card without incurring a penalty, usually 30 days. Thus you can buy that new sofa for $500 on the 1st of the month and as long as you've paid down the $500 by the 30th you won't pay any interest on it. Note that you are expected to pay a portion of your balance every month and that failure to do so will result in a late penalty being added to your total debt in addition to a report of a late payment being made to the credit bureaus. This is called the minimum payment. In addition to all that if you plan on using your credit card for cash advances or some other types of transactions a fee will be charged, usually a small percentage of the amount advanced or used (1%-3% is typical). And on top of all of that, a lot of cards tie in with other companies and/or incentive programs to give you extra perks. For example, here in Oshawa TD bank offers a GM credit card, which builds up points with each purchase that can be applied to your next purchase of a new GM car or truck. Air miles cards are also a dime a dozen, or there may be another of any number of tie-ins available. Right about now I hear you saying 'well that's all well and good Mars, but what sort of card should I get?' The answer is that it depends on who you are and how you plan to use it. Without any prior credit history your best bet is a card with a small limit, $500-$1000. Card issuers will issue that sort of a card sooner because their risk is limited. At worst if you default on everything they're out a grand, which is a rounding error to these people. So try for a small one like that. Also go for the 'vanilla' cards without any perks or incentives. These also tend to be easier to get. In terms of whether or not to get a card with an annual fee, that's highly dependent on how you use the card. Some people like to float a balance on the card (ie, always keep a small amount oweing). This will build up your credit rating faster as long as you consistently make those minimum payments. The downside is that the minimum payment becomes one of your monthly bills and if you're strapped for cash one month you can't simply throw the card in your sock drawer and not worry about oweing the card issuer money that month. If you're in a good enough position financially to do this then you're going to probably want to take a good long look at some of the cards with annual fees and do the math as to whether the annual fee is going to be less than the money you'll save on the lower APR. The other option (and more popular one for people just starting out) is to use the card for a number of small purchases and then pay off the balance within the grace period, thus not incurring any interest. If you do this the card you want is definitely one without an annual fee, which if used properly will become a zero dollar investment (ie, you don't lose any money on it). It's worth noting that this will be the easier route, as the cards with the annual fees are generally targeted at the markets with a higher income who can afford to run up more of a balance. If you're a student there are a number of student rate cards available in most markets. I won't go into detail about these as the credit card issuers will be practically throwing them at you. The reasoning behind this is that a student is more likely to get a high paying job after school and will therefore be able to spend more and use the card more, leading to more money for the issuer. If you're not in school it's worth noting that a credit card isn't the only option for building a credit history (and may not even be an option; issuers are notoriously stingy with this market). Paying bills on time, such as phone, cable, insurance and even rent will also build up your credit history. Getting a cell phone is a popular option for those who may not be able to get a credit card due to insufficient credit history. Pay the bill on time every month and it will build up your credit rating steadily. But if your heart's set on getting a credit card get your butt into the bank and find out if they'll issue a secured card to you. The idea is that you pay the limit of the card (or more) up front; the bank throws that money in a savings account and uses it as collateral for the card. That way if you default (which is a fancy way of saying you can't pay) the card issuer can use that money to pay down the debt. Note that this doesn't mean it's not as bad to default on the card, as it still gets reported as such to the credit bureaus. Banks like these cards because even if you make all the payments within the grace period the bank still gets to make interest off of the money you gave them as collateral, but they won't generally advertise them as they're seen as somewhat unsavoury and are chiefly targeted at people who are trying to rebuild their credit ratings. And the final option is to get a card at your local department store. Some stores (such as Zellers and Canadian Tire here in Canada and I think Walmart has one too) will offer you an in-store line of credit. You can use that to make purchases at the store and it will be reported to the credit bureau. These are pretty easy to get a hold of and don't generally carry an annual fee although the APR may be quite high. They're another good option for rebuilding credit as well as for starting out. So yeah, there's that. Any questions, fire a PM my way. Have fun and be careful. A bad credit rating can haunt you for a long, long time. __________________ I wake up in the morning more tired than before I slept I get through cryin' and I'm sadder than before I wept I get through thinkin' now, and the thoughts have left my head I get through speakin' and I can't remember, not a word that I said - Ben Harper, Show Me A Little Shame

08-31-2005, 06:16 PM	#3 (permalink)
streak_56 who ever said streaking was a bad thing? Location: Calgary	I think annually my Visa is 19.5%, but I just got it. I had a Mastercard in Ohio that gave me 13.6% which I think is pretty low. I'll give you a scenerio... my friend... lets call him R. Has three credit cards. Last year he made about 40000 working.... not bad. But he is in debt 12000. Then theres me, I've had two.... I have never gone over my limit. Just depends what kind of spender you are, I plan on just buying a tank of gas here and there... food... whatnot. Also, think about your limit.... mine on the Visa is 3000. As said before, look aorund, see what you're comfortable with and apply.

08-31-2005, 10:23 PM	#4 (permalink)
Lead543 Registered User Location: Calgary	R hey....gotta love spending $52,000 in a year. I have a student one...kinda nice, the interest rate is 18% because it's free. The ones you pay an annual fee for have something like 9% and other perks like more air miles and cash back. Nonetheless I should have a nice sum of money (cash back) when I pay my tuition. My limit is $1000 I believe but if I need to spend more I just depsoit money into an account, if they know you have it ahead of time they'll let you charge it. Go to your bank and set up an appointment, have a few things you wanna keep in mind (ie do you want a free cc? do you want extras like air miles? do you need a higher limit?) With no credit history you'll probably have to start small and work your way up.

09-04-2005, 07:49 AM	#5 (permalink)
zVp Tilted Location: Woodbridge, Ontario	Can someone fill me in about the interest rate on credit cards? The concept totally goes over my head. Is it something like you have to pay 18% extra? or... 18% extra if you're unable to make the payments?

09-09-2005, 02:15 PM	#9 (permalink)
zVp Tilted Location: Woodbridge, Ontario	Wow. That was a very informative reply. Thanks a whole bunch

09-09-2005, 02:49 PM	#10 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	you need to work on your grammar too you are APPLYING for a card, not apply for a card. details details details. don't spend what you don't have.. do a search on credit card and you'll find lots of information here. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!