Simple Credit Card Questions for CC Owners?

Question

Okay so I just turned 18, but I don't want to rush into getting a credit card or anything, so I wanted to do some research before I go splurging or anything like that. I know that a teen with a credit card can get out of control, so I'm asking for Yahoo Answers help with a few questions. And below please assume that I'm using a Visa or Discover card

1. Usually what is the limit for a person of my age?

2. Say if I wanted to buy a 1000$ laptop, how would I go about paying it off monthly? Whats the minimum I could pay monthly, and how much interest would it add?

Answer 1

DONT DO IT.  

Getting into debt was my only mistake as it's so easy just to go along and buy what you want and not worry about it til the end of the month, until you realise that 75% of your wages are paying off your debt.

If you want a laptop most shops off 0% interest on the repayments so I would go down that route, or if you take out AOL broadband you get a free laptop.

Answer 2

Listen, if you're really smart you will want to do as much research as possible. Go to www.daveramsey.com, check out what's in there, listen to his radio show, check the stories of other CC owners and then decide. You wont regret it.

Answer 3

When I turned 18 (5 years ago) the majority of card offers I received typically had a 500-1000 dollar limit to start with.

I would NOT recommend making minimum payments on credit cards.  A minimum payment on a credit i card is typically 2-3% of the entire balance.

Consider this scenario:

You have a credit card with a 20% APR

You purchase an item for $1000

You make the minimum monthly payment - In this case we'll say it is $20.00

At this rate it will take you about 9 years to pay this debt off and over the course of those 9 years you will have payed over $1200 in interest.

Say you double your monthly payment and pay $40.00 instead.  It would take you about 2.5 years to pay off this debt with a total of $300 paid in interest.

Moral of the story, avoid making only minimum monthly payments.

For your other question: If you pay off the *ENTIRE* balance before its due you don't typically get charged any interest (Be sure, check the terms of your cardholder agreement)  What I mean by this is:

You have a ZERO balance on your card

Say you make a purchase on January 1st for $100

You then recieve your statement on January 15th, showing $100 as the new balance.

You submit a $100 payment before the due date.

You have paid no interest.

Answer 4

"Starter" cards usually offer limits of $500-$1000 as mentioned by other posters.

I would recommend starting building credit with small credit cards first rather than a sizeable loan. I'd suggest saving the $1000 for the laptop. Use the credit cards you get wisely as many have fallen prey to overuse. As other posters mention is it all too easy to overspend on credit cards and then pay a price financially (fees , overlimit charges, etc.and in terms of your credit )

In general I would suggest getting cards with limits that suit your income. DON'T focus on getting a maxmimum limit, rather, focus on a limit you can easily handle. Get the hang of the cards before you go wild with them. Credit card money is not cheap money and can be very dangerous money if unwisely used. Keep your balances below half the limits and pay ontime or even ahead of time. Pay by internet if you can. Keep good records. Stay within your means so you don't end up in banruptcy court later on.

Answer 5

Yea, definitly don't rush into getting credit cards. I did that when I was 18 & made the biggest mistake of my life. I have horrible credit now cuz of it. It gets addicting and u just want more & more. You would probably get about a $500 limit to start with, and once u paid ur bill 3 months in a row on time, they would raise ur limit. Any no matter when u pay ur bill, even if u pay it early, you still pay interest. The only way u don't is if u get a card that has a 0% interest rate for like 6 months or something. But it helps ur credit if u make a little more than the monthly payment each month, rather than paying it all off at once cuz they wanna see u make payments and how good u do that. If u spent $1000, ur minimum payment would probably be around $40, but it depends on the card & its terms. you can go to freecredittips.com, and they give u a lot of info on there about credit and how to build it, and payments & so on. i know all this info because i worked at a bank in the finance department. you pay interest on ur balance. say ur balance is $1000, and u have a 20% interest rate, u would pay $200 in interest. i really hope that helped, and if u need anything else and help with anything with it, feel free to email me. ill help ya out. just be careful & don't get urself in too deep. by the way, discover cards aren't accepted at as many places as visa/mastercard/american express are, and its harder to get a discover card than a visa or mastercard for ur 1st card. if i could make a suggestion, try getting a store credit card 1st, and buy like a $20 item, and then go pay $10 on it right away (normally u can pay right in the store).