How does a credit card work and why do I have to get one?

[Clarinda Della]

To get a good credit rating you must have obtained and used credit. There are several ways to do this but getting a secured credit card and never charging more than 1/3 of your limit and paying at least double the minimum payment every month is merely the easiest way to build credit.

Right now, to rent an apartment, you need a co-signer with good credit.

Generally it takes 2 years from when you first get a secured card and being good with it, to be considered to have any sort of credit rating.

A secured card is where you take say $500 and put it in a savings account in a bank and they freeze that amount for two years and then issue you a credit card for that amount. After the two years, if you have been responsible with the card, the account is unfrozen and you get the money back. If you have been irresponsible, they use the money in the account to pay off the card.

When I first moved to LA from Canada, I had no credit in the eyes of US banks and I had Wells Fargo freeze $1500 for 2 years to re-establish my credit in the US.

[pochax]

To get a good credit rating you must have obtained and used credit. There are several ways to do this but getting a secured credit card and never charging more than 1/3 of your limit and paying at least double the minimum payment every month is merely the easiest way to build credit.

i would argue the best approach would be to pay off the CC balance in its entirety every month so as never to pay a cent of interest.

A secured card is where you take say $500 and put it in a savings account in a bank and they freeze that amount for two years and then issue you a credit card for that amount. After the two years, if you have been responsible with the card, the account is unfrozen and you get the money back. If you have been irresponsible, they use the money in the account to pay off the card.

probably no need to have frozen assets...there are starter CCs with very low limits one can get without a credit history. in fact, that is how i started when i was in college. of course, as i mentioned above, i paid off my balances in full every month.

[4jacks]

I entirely agree with Pochax.

I got a regular Credit Card at 18. Except I DIDN'T pay the balance every month. Which is why I'm eating ramen noodles. And he's Flossing in a brand new Minivan he paid Cash for.

I'm sure we both have excellent credit though.

[clydewolf]

Join a Credit Union and apply for their card....

[tony34]

If you are a member of any association, you may be able to get a credit card even if you have no or limited credit history. That's how I got my first credit card after graduating from college. Once you get it, always pay in full and on time to avoid interest charges and other fees

[Elmira Nancy]

With most credit cards, a purchase does not become more expensive if you use the card only for purchases and pay the entire balance shown on the credit card bill promptly. (It does become more expensive if you also use the card for balance transfers or cash advances or if you pay only the minimum balance or pay late.) You do not need to use a credit card to build credit. You can build credit merely by having a credit card, even if you do not use it. I believe that they count any month in which you do not owe anything, and are therefore required to pay $0.00 as a month in which you paid the required amount on time (I know that is illogical; I did not make the rules).