Well, my husband and I have hit the point where we cannot not have a credit card anymore. We've avoided it for years but given our current circumstances, its a necessity at this point or we won't be able to cover our bills. We are hoping that once we get out tax return in Feb, we'll be able to just pay it off and keep it around for future emergencies.
But, since we've never had a credit card before, I don't really know much about them other than you can get in a lot of trouble very quickly if you don't use them carefully. How many can you have at a time without hurting your credit? How many is too many? If you are good with payments will that help your credit even if you have a balance? Are there any companies in particular that should be avoided? How badly does it hurt your credit to apply for different cards? We will probably need more than one because our credit isn't the greatest (DH has a lot of student loans--a few deferred and I'm a SAHM w/out anything besides utilities in my name) so we probably won't get high credit limits.
This is not a step DH and I are taking lightly. Like I said, we've avoided it for years but with the money we've had to put out unexpectedly over the past few months, we just don't have any further options--even with high interest rates.
I wouldn't worry about getting more than one card at this point, unless you forsee having an extremely large bill which would require a large credit limit.
We had several credit cards when I married dh (all his). Once we finally paid off his debt we kept two on hand. It actually has been a benefit for us to have the credit history, especially because he made his payments on time and paid them all off in the end.
We were finally credit card debt free, but like you found ourselves in a situatin where we needed to use it again. For us it is typically a car repair or other large unforseen bill. Our current card is through our bank, so if I were you I would start there.
I would avoid Capital One and although we had a Chase card at one time, I wouldn't reccomend them either.
I wouldn't worry about deferring student loans, as long a it was an arranged deferrment that shouldn't affect your credit report. We've had to defer our student loans twice and it wasn't a problem.
I can't get one, my credit was so ruined by divorce and I suspect my ex not doing as ordered and removing me from CCs he was to pay.
It does suck because it makes renting a car near impossible, and paying for hotels a pain (hotels hold like 25% more than expected bill from debit cards until several days after you leave) etc.
When I was traveling until I built up some savings...it was really hard for me to pay for a ticket (500-1K) hotel (couple hundred to 5K once!) and all the misc food etc charges. At one point my company owed me over 5K and my hotel was on a corp card my boss owned.
I'd like to have one JUST for the car rental etc drama. but I cannot have one.
You REALLY need to stay on them and if you use them go home and pay expected amount that same day and not wait for bill....otherwise you end up paying nearly double for the items you bought if you end up in a spiral!
I think I paid around 7-8K for what was originally around 2K of debt. it's nuts.
I'm working hard to never have credit debt ever again. I have substantial savings now and can pay cash for most of what we need....Altho I DO have a car note and plan on keeping that up for probably the next 5-10 years to help repair my credit.
And I have the joint home that I was tasked with keeping because my ex can't afford it....so I'm DEF not paying down morgage early...but I have given thought to buying a second home and perhaps renting the current since the only offer we got on the house was almost half of what we'd need to break even. I lived there jointly with ex for 36m, and i've been paying the bills myself for err...2 months shy of 5 years now.
You really have to look at it and realize that something may be a good price (etc) like 20 bucks, but after interest and fees and all that you end up paying tons more. if you have to have one and use it for emergencies, do EVERYTHING humanly possible to pay it off quick as you can.
Part of my joint marital CC debt was because I (had to) switched jobs when I was 5-6m pregnant and couldn't take paid leave. My ex made about half of what I did (now I make about 6x what his income is) and we had NO savings due to low income (previous job paid me less than ex made) and had to pay for midwife, etc.
then our washer broke (700 ish on CC) then a week after the baby was born the outside portion of the heat/ac broke (3k) and our income didn't cover or barely covered mortage and bills....so put some of that on CC for the 8 weeks I took....
suffice to say when we divorced a year later, we had 15K of joint CC debt. some was his before we married, and I'd had a little that I managed to get paid off before this point....
It happens QUICK....not to scare you.,
I've had a credit card since I turned 18, but have always (ok, almost always - I've run a balance for a month or two a couple times) paid it off every month. Doing so, is, as I understand it at least, good for your credit. It shows your responsible and will pay it back, as a result, IMHO its worth it to have one and use it and pay it off every month. I credit the fact that DH & I both have good credit to having done so for years.
I have two credit cards - both mastercards, one through Barclay's and one through my old bank (Key). If I was getting a new one I'd shop around and find one with rewards of one sort or another that I'd use (thats where the barclay's card came from - orignally a certain % of all purchases got deposited into my DS1's 529 acount, though thats no longer the case :( )
I think it depends on your circumstances. If the setbacks are temporary, I would personally rather have a few months of late bills on my credit report than have to deal with credit cards. Credit card debt is such a huge financial and spiritual trap. (I would even skip student loan payments, if I had to, before getting credit cards. I would sell my blood. I would stand on the street corner with a cardboard sign and do performance art.) If the circumstances are more permanent, then you're going to need to make major adjustments into a more sustainable situation anyway, and that would be a good investment to make with your tax return.
You also should be aware that credit card companies can analyze your card spending patterns, and survival mode spending is a red flag to them. I'm not sure how much current law limits how they can change credit limits and so on, but you should be aware that the companies are definitely looking out for themselves, and might yank your credit just when you really need it.
Credit cards have gotten us out of brief money crunches on a number of occasions and I think if you use them wisely, what's the big deal? If you're getting a tax return in Feb, figure out how much you are going to charge, what the possible APR will be, and see if it's worth it. My first card was a Capital One card and they are pretty lenient (or at least used to be) with giving people with limited credit a card. It's high APR but when I got it they had a 12-month intro of 0%, then as long as you paid on time every month, would figure out a new, lower APR for after that year. We now have two cards-- one is a different Capital One card and one is a Chase Amazon card that has nice perks. I don't have complaints about either company. I mean, they're all evil, right?! Also if you've never had a credit card, chances are you don't have much credit to "hurt" anyway by applying for multiple cards. I seriously never knew until a few years ago that you needed a credit card to build credit and now I'm glad that we have them. We ended up deciding to buy and finance a new car last year and would've been SOL without a solid credit history.
Jean, feminist mama raising three boys: W (7), E (5) and L (2.15.13)