redpoint5

Got my first credit card recently and made a purchase. I wasn't going to ever own a credit card, but I decided to get one because it has no annual fee and pays 1% back on purchases. My question is what does grace period mean? If I have 20 days grace period, does that mean I have 20 days from the day I purchase something until I pay a finance charge on it, or does it mean 20 days from the date of my monthly bill to pay last months balance? They assume people just know what some of the terms mean in those wordy agreements.

My plan is to use the card for every purchase and pay it off with online bill pay all while building credit.

Patrick Campbell

I think the grace period is the time from statement date (they issue the bill) and the time where you have to pay it in full to avoid finance charges. If you are carrying a balance, it could change the situation, but if you pay your bill in full each month, you will be fine.

jbjarko

Yup, from the statement date. If you carry a balance over from the previous month, or you go past your statement date, you are assessed a finance charge, pay it off within that grace period and you are fine. Also a lot of people don't know that your payments are made to the lower interest rate balances first. So if you just transferred some money, and you carry a balance at the regular purchase rate or whatever. Your payments will ONLY go to that balance with the lower rate UNTIL it is PAID in full. And you guessed it, your other balance sits there and accrues interest.

roughstock

Credit cards are bad. There is no benefit(% cash back, airline miles, free crap) equal to or greater than the the interest of a credit card. The main reason for debt/bankruptcy is Credit Cards, because people don't pay them off each month. Unless you have extreme self control, be very careful, even then be careful. I cut mine up a long time ago and Have got along with them just fine, I just use cash or my debit/check card. Sorry for being so harsh, but i've seen too many people say "I'll only use it for emergencies" which is usually, "i'm out of gas, I need new clothes, Christmas is here. Well, those are not emergencies, these things are just part of everyday living, budget for these. It took me YEARS to pay of just a few months of CC use in College and shortly after graduation. Sorry for the ranting and raving, but I am really trying to help you. Google: Dave Ramsey. He is the best source on dumping your debt and building weath. It isn't one of those rip off deals you hear on the radio. this is legit. He has a best selling book, its a good read. Just look him up.

rockcrawler304

This is how I started to build credit at age 16. Got my first credit card and would charge $20-$30 a month and paid in full every month. Within a year I went from a $300 line of credit to $3000. I never let it get even close but it was nice to know I could use it for emergency if needed. My wife and I only have one card now and ust it about every 3-4 months to charge a nice dinner and then pay it off, mainly to keep the account open and keep the NO Annual Fee going

04ctd

i'm with RoughStock - every time i get one, i max it out MUCH quicker than i thought, then i have to work some extra project to pay it off.

i say watch yourself, and don't worry too much about GOOD credit. it will come.

as long as you don't have BAD credit.
if you need something, the people selling it will find a way to get you financed.

farmer0_1

if you use it as your checkbook. meaning when you buy something keep track to see if you have enough to pay all the bill at the end of the month you will be fine. i did the cash thing until i was forty and you end up with no credit score. went to get a cell phone had to either put five hundred down or have my elderly parents sign for me. gee mom and dad (they had a credit card) could you sign for your forty year old son that has cash in his pocket and a savings account and property and owes no one a dime. i have never carried a balance on my cards and charge alot to them each month for my hay farm.

roughstock

Actually, having several CC or high limit CC even with little to no balance is seen as a negative on your credit rating to some lenders because you still have the ability to go into debt. There are otherways to build credit. (safer ways) Like paying your bills on time.

smokindog

Head the advice that has been given above. Pay the balance in full every month.


Isn't it funny how those of us that own everything or almost everything outright don't have any credit according to the "credit bureaus"?

Truckman0097

This is completely dependent on the person using the card and their level of responsibility. I have owned a credit card since I was 16 and have never carried a balance from one month to the next, I pay off in full every month. So tell me how getting 5% cash back at Gas stations for $100 diesel bill is no benefit. Just have some self control, if you don't, then I agree that they can be very bad. Use them when you can buy something with no finance charges for 1 year, I would hope you could pay something off in that amount of time.

12valve@heart

I agree that you have to have self-discipline to make a credit card work for you and that not everyone should have one but I don't agree that debit/check cards are better. I have several credit cards and the ones that I use get paid off in full EVERY month (with the exception noted below). I won't have a debit/check card because of the risk. Think of it this way - if someone steals my credit card number, I can contest the charges and the credit card company is on the line for the money while we sort it out. If they steal my debit card number, they can clean out my bank account and I'm out the money until the bank gives it back to me (not to mention the problems created for me with other companies caused by bounced checks while it's all being sorted out). I'd rather put the credit card companies money at risk than my own. Beware the credit card interest but also beware the debit cards.

As a side note, I did sign up for a new store credit card last year when I made a large purchase and got 0% interest/$0 payments for 6 months. For me, the key was that I knew that I'd have the money saved in that 6 month period and so it was 6-months-same-as-cash for me but I know that not everyone has that discipline. I paid it off at the end of the 6 months without paying a cent of interest and haven't used the card since. Probably will cancel it one of these months but for now it just sits in the safe.

BlackSunShyne

You hit the nail on the head. Saying "credit cards are evil" as a blanket statement is just as incorrect as saying that "guns are evil and should be outlawed." You have to be responsible with your buying power. Just becuase you can buy it does not mean that you can afford it. I see people get these two mixed up ALOT, and it seems to be the downfall of most.

To the point of the question, yes the grace period is from the statement date. The date on the statement, not the date you open it

Just use it responsibly, it can be a good tool, to build credit and to earn some rewards on purchases. You need not pay interest to reap the rewrds, if you handle it in this matter, the rewards are a far better idea.

redpoint5

Thanks everyone for answering my question and lending good advice. I'm in no danger with my credit card. I was given a $10,000 limit and I have saved up $30,000 in the bank. Now I just need to figure out the best way to invest that money. School, index fund, real estate, small business... I'm on my way to having good credit now so that when I do need to take out a business loan or mortgage I can get the best rate possible.

dieselJon

I have a debit card, checkbook and cash. I am 19 with no credit cards and no credit I am gonna keep it that way. When I go to buy my first house, either I will pay in full or at least 20% down. Also, knowing my spending habits, it is better that I have no credit card

Jon