I hope this isn't a Sam Advises, more a "Can Sam just dumb something down for me?" I'm in a very stable job atm and my dad is pushing me to get a credit card 'just in case'. This is so daunting; those things just seem to cause grief imo. I just wondered if you could.. idek. What's an APR? What's a good APR? (apologies if APR is an English term) I don't know if I want one but as a 23 year old with a decent salary and stable job... I could probably get one and not do anything with it. Possibly.
Having a credit card, even if you don’t use it, isn’t an entirely bad idea. There are people who are more well-versed in this than I am, but as far as I understand it, having a credit card regardless of use helps you to build a credit history, which will help you in the future if you want to apply for a loan, mortgage, et cetera.
APR is “annual percentage rate” and it’s the percentage of your balance (how much you owe the card) that they charge you to lend you that money. The higher the APR, the more you pay for the privilege of charging something to your card.
I don’t know what standard APR is right now because a) I have really good credit and b) all my cards are SUPER OLD. (I have three.) I have a 9% APR on my bank credit card, and the other two are 19.9% (which is why I pay them off monthly; they’re both store cards for clothing stores). For someone with no credit history, a 20% to 25% APR is probably normal? Also it is normal for your first year to have a lower “introductory” APR that rises after 12 months – so read the fine print about that.
Of more concern to you, probably, as someone who doesn’t anticipate heavy use on the card, is whether or not it has an annual fee, which is a fee the card charges just for having it, whether you use it or not. You probably want to steer clear of those for now; most of them are for people who either have really awful credit or who want perks you can’t get with a no-fee card.
Now, point one: ALL OF THE ABOVE might be wrong or a gross generalization because I really know very little about this, so keep an eye on this post for people reblogging with corrections.
Point two: if your dad’s so hot to trot on getting you a credit card, make him help you. Ask him to explain shit and if he can’t, ask him to help you research it. Ask him about his credit history and what kinds of cards he has. (If he can’t or won’t tell you this, then he has no business pressuring you to get one.) Go to your bank where you have your checking/debit account and ask them what their terms would be for opening a credit card. Ask them to explain APR in detail. They want you to get a credit card so they should be happy to answer your questions. If you feel like they’re selling you a raw deal or pressuring you too hard, say “No” and walk away – you pay them for their services, you have zero obligation to do as they tell you.
If you want to build a credit history, once you have your card, charge something occasionally and then pay it off the same month. Buy yourself dinner on the card, pay it off. Buy yourself groceries, pay them off. That proves that you not only are willing to use the money you’ve been offered but you’re responsible in your use of it. As a young person, you should certainly keep an eye on your usage, because a TON of kids in their early twenties get in trouble charging shit to their cards and then being unable to pay for it later. Credit card companies count on this; it means you carry a balance for years and they make a ton of money. So it’s great to be prudent. But a credit card can really be a lifesaver in an emergency, and it’s good to have one to start showing off how responsible you can be with it. :)