Credit card and/or Apple Cash for teens?
- Thread starter zovall
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Remember the days where any one in college could get a Discover card? I think I got a Six Flags MC card thinking I could use all those points for free tickets... never used them once and then they canceled that particular card and I don't remember what I did with the points.
A friend of mine said his kid tried to get a credit card and was denied even though he had a job.
I was taught to abhor credit card debt and I'm grateful to my parents for doing so. The only time I've paid interest on a credit card in over 25 years is a few times where a mistake was made, either by me or my bank. I've bought a few cars on credit, and a couple houses, and my credit score every single time--even on my very first loan--was over 800. Also, although I carry a few cards in my wallet just in case, I use only 1 of them and only switch when forced to (thanks Costco/Amex!).
irvinehomeowner
Well-known member
Add them to your credit cards if you can.
Points for you and I think it builds their credit.
Also... prevents fraud vs those bank ATM cards that can be accepted as MC/Visa.
Points for you and I think it builds their credit.
Also... prevents fraud vs those bank ATM cards that can be accepted as MC/Visa.
sgip
Well-known member
Soylent Yellow is now is interested in opening a credit account. The only card our Credit Union is offering her is a secured card, then after 12 months a "real credit card". Odd for someone 26 and gainfully employed, but what can you do? Sure, there are other card issuers with lower standards, but we don't like their rates. Wish we had started her on a credit build earlier.
We started Soylent Blue off differently by getting a $500 secured card in her own name when she was 16. Unfortunately in some ways ... by her 18th birthday she was flooded with credit offers because of her clean payments history. Today she limits the number of credit accounts she has and knows how to manage her bills because of her prior credit use experience.
If you've got a teen building credit, be sure to remind them that if they use it, they have to pay it. Things can get out of control quickly if Jr. believes Mom and Dad are going to zero out kiddos credit bill every time.
Adding your Kiddos to your account helps, but it's not "authentic" credit. Most credit reports will show these shared accounts as an "Authorized User" account, not the child's own credit.
Finally, credit isn't well built by the number of cards they have or that they maintain a zero balance. Strong credit is built on payment history. Let some expenses on the card get paid over a few months to show on time payments. Yes, this also means paying a few dollars of interest, but it's a small cost relative to the benefit of documenting responsible credit use.
We started Soylent Blue off differently by getting a $500 secured card in her own name when she was 16. Unfortunately in some ways ... by her 18th birthday she was flooded with credit offers because of her clean payments history. Today she limits the number of credit accounts she has and knows how to manage her bills because of her prior credit use experience.
If you've got a teen building credit, be sure to remind them that if they use it, they have to pay it. Things can get out of control quickly if Jr. believes Mom and Dad are going to zero out kiddos credit bill every time.
Adding your Kiddos to your account helps, but it's not "authentic" credit. Most credit reports will show these shared accounts as an "Authorized User" account, not the child's own credit.
Finally, credit isn't well built by the number of cards they have or that they maintain a zero balance. Strong credit is built on payment history. Let some expenses on the card get paid over a few months to show on time payments. Yes, this also means paying a few dollars of interest, but it's a small cost relative to the benefit of documenting responsible credit use.
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irvinehomeowner
Well-known member
Remember the days where any one in college could get a Discover card? I think I got a Six Flags MC card thinking I could use all those points for free tickets... never used them once and then they canceled that particular card and I don't remember what I did with the points.
A friend of mine said his kid tried to get a credit card and was denied even though he had a job.
Sorry, I have to respectfully disagree with this. As you stated, payment history is what matters; dragging a balance doesn't. If the card is used every month, there will be a balance every month and a payment history to match. One thing many consumers unfortunately don't understand about cards is that holding a balance--in any amount--effectively invalidates the grace period. Even if you have just $1 in carried balance, you will pay interest on the average daily balance of all purchases from the prior month.
I was taught to abhor credit card debt and I'm grateful to my parents for doing so. The only time I've paid interest on a credit card in over 25 years is a few times where a mistake was made, either by me or my bank. I've bought a few cars on credit, and a couple houses, and my credit score every single time--even on my very first loan--was over 800. Also, although I carry a few cards in my wallet just in case, I use only 1 of them and only switch when forced to (thanks Costco/Amex!).
qwerty
Well-known member
We don’t have any credit card debt, only debt is the mortgage. We charge up the credit card every month and pay the bill in full. The mortgage is only in my name. My fico score is 850 (perfect according to the banks website), my wife’s is 810. The 40 point difference is because she gets dinged for not having any loan history.
Credit scores are somewhat counterintuitive as you would think she would have a better score than me since i have debt and she has zero.
Credit scores are somewhat counterintuitive as you would think she would have a better score than me since i have debt and she has zero.
sgip
Well-known member
@daedalus
I'm not talking about dragging a significant balance for any great length of time. After reviewing thousands of credit reports and AUS's, I know from experience having an unused or zero balance card does not help increase your score. It can, in some cases if the account gets cancelled for lack of use, be a detriment to keeping a high score.
Zeroing out your balance isn't a "payment history" the way some scores models determine credit worthiness. It's a bunch of zeros to the model. If you get a low rate card and "drag" a $100 balance over 6 months, any interest charges are going to be negligible.
We are talking about a 30-50 or so point difference in a score here. The mortgage rate difference between a 775 score and a 725 score might be .25% in some cases. I'd rather pay $6.00 of interest on a credit card balance of $100 during 1 year than $60 a month of additional interest on a $300k mortgage for 30 years.
Small things done today can yield big differences tomorrow.
I'm not talking about dragging a significant balance for any great length of time. After reviewing thousands of credit reports and AUS's, I know from experience having an unused or zero balance card does not help increase your score. It can, in some cases if the account gets cancelled for lack of use, be a detriment to keeping a high score.
Zeroing out your balance isn't a "payment history" the way some scores models determine credit worthiness. It's a bunch of zeros to the model. If you get a low rate card and "drag" a $100 balance over 6 months, any interest charges are going to be negligible.
We are talking about a 30-50 or so point difference in a score here. The mortgage rate difference between a 775 score and a 725 score might be .25% in some cases. I'd rather pay $6.00 of interest on a credit card balance of $100 during 1 year than $60 a month of additional interest on a $300k mortgage for 30 years.
Small things done today can yield big differences tomorrow.
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irvinehomeowner
Well-known member
Credit score flex thread!!! 
I completely agree, unused/zero balance doesn't help. I stated, "if the card is used every month", since I'm assuming people have something--anything--to charge every month, even if it's just a recurring cell phone bill. Assuming that's true, then paying off the card in full every month does not hurt, since the balance due is what factors into the score. Personally, I whip out the CC at every single place that lets me. 100% of the points/cashback/credit score bennies without paying a dime of interest.
CalBears96
Well-known member
I don't even carry any cash in my wallet. I use credit cards for every possible purchase.
Imnotmoving
Member
Good credit will get you very far in life.