how do credit cards work?

[VintageMA]

Wow - I am amazed at how many people have responded to this thread.

My suggestion is to get the credit card, you may not be able to get a low APR with no past histroy, but that's okay. When you start out just use the credit card to pay for what you know you can pay off every month.

One suggestion is that things you would normally pay cash for (ie: gas, food shopping, etc) you save the cash and pay with CC and then pay off each month. When the bank see you charging and paying off each month they will continue to give you higher credit limits.

I royally f'ed up when I got my first CC and maxed it out when I was in college. My parent started getting calls at 8 in the morning from collectors and it was very shameful for me. My limit was $2000 and I was at $2500 with interest compounding - i couldn't keep up at the time with very little income. Luckily my parents bailed me out - but that was a serious lesson learned - and ever again I said would I hold a CC debt I couldn't afford to pay.

Another thing I learned was that it's very hard to get a loan if you've never had one before either, even with a CC. So getting a car with a loan for part of the purchase (even if the interest is higher) and paying it off on time (or even early) look great on your credit report.

We live in a credit/debt society right now - I've heard that it is almost the norm for people for to have up $20000 in CC debt at most times - and think of the interest being paid out for that.

To build credit over the time (expecially if you are thinking of buying a house and getting a mortgage with a good rate) it is good to work yourself up to having 2 CC's and going through a few loans (car or personal) and paying them off over time to help build your credit.