Credit Cards

Saving for a House

Info and what's best for us

Credit Cards

06/10/18

APY, annual charge, benefits

Everything you need to know

01

A higher APY is better as your return will be higher.

APY is the Annual percentage yield, which just means the interest rate earned on an investment in one year, including compounding interest.

What's APY

Credit Cards tend to be seen as "free money" and people will spend wildly, forgetting that they have to pay the big bad corporation back eventually (with interest)

waawawawawaww

What's the Catch?

a small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit

I know, they're absolutely confusing

What are credit cards?

• What happens when you get approved?
• the bank authorizes a credit limit (the maximum amount you can borrow) to be used at your discretion.
• Your credit limit will depend on such factors as your income, your other debts and how much available credit you have on other cards.

A credit card is a plastic or metal card that allows you to access a line of credit offered by the bank that issued the card. Every time you pay for something with a credit card, you’re borrowing money from the card issuer to cover the purchase. You then have to pay that money back, either in full at the end of the month or over time.

• Credit cards offer:

• convenience
• consumer protections
• a quick way to build good credit (assuming you use them responsibly.)

General info

Your credit card issuer reports your payments to the credit bureaus (the companies that prepare credit reports)

these guys process credit card transactions, make sure that the money for the purchase gets to the merchant and that the correct cardholder gets billed.

• Payment networks:
• Visa
• Mastercard
• Discover
• American Express

How do they net-work?

Payment Networks

You must pay at least the minimum by the due date every month to avoid late fees and potential damage to your credit score.

Credit Score:a three-digit number that indicates how risky it would be to lend you money

Your credit card issuer reports your payments to the credit bureaus (the fellas who determine if you can buy a house/car/pizzas)Your payment history counts for 35% of your credit score

Paying just the minimum every month is ultimately the most expensive option since it will cost you the most in interest. Paying in full is the best option when you pay in full each month, you get a grace period that allows you to avoid paying any interest on purchases at all.

When your bill comes, you have the option of paying a certain minimum amount, paying the whole balance in full, or paying some amount in between.

How do these things build credit?

• CARDS FOR AVERAGE OR BAD CREDIT
• Credit card options for those with less-than-good credit are more limited.
• Rewards are more scarce, and interest rates are higher. Use these cards to improve your credit so you can qualify for better offers down the road:
• A good card for average credit won't charge an annual fee, or it might offer rewards with a fee.
• For bad credit, your best option is usually a secured credit card.
• These cards require a security deposit that you get back after closing the account or upgrading to a regular, unsecured card.
• In the long run, a secured card is less expensive than unsecured credit cards for bad credit, which tend to charge high fees that, unlike a security deposit, you never get back.

• BALANCE TRANSFER
• A balance transfer credit card lets you move your debt from another issuer to take advantage of a lower interest rate.
• Generally, these cards require good or excellent credit.

Rewards cards are ideal for cardholders who pay their bill in full every month. When you carry a balance, interest charges nip away at the value of rewards.

• LOW INTEREST
• Low-interest cards don't give you rewards
• they provide value with a lower interest rate making it less expensive to carry a balance.
• Many times, these cards will come with a 0% introductory APR period, giving you time to pay off a large purchase without interest. You usually need good credit to qualify.

• REWARDS
• Rewards credit cards give you something back for each purchase you make. Generally, these cards require good credit. They come in different types:
• Cash back cards give you money back. You can usually get that money as a check or a deposit into a bank account, or you can use it to reduce your balance.
• Airline credit cards and hotel credit cards give you miles or points that you can redeem for free flights or stays with the card's partner airline or hotel chain. How you redeem your rewards on these cards might be subject to restrictions, such as dates when you can't travel.
• General travel cards give you points that you can use to pay for any travel expense. They're more flexible than branded airline or hotel cards.
• Store credit cards reward you for loyalty by giving you discounts or other benefits for shopping at the store that provided the card.

Lame, I gotta choose

Different kinds

There's not many

Cards I think work for us

01

• A Chime Checking Account and direct deposit is required
• No rewards or sign-up bonus
• No upgrade path
• It doesn’t provide practice for managing more traditional cards

Cons:

• No credit check when applying
• Adjustable credit limit
• No interest charges
• Maxing out the card won’t affect your credit score
• Autopay feature makes on-time payments effortless

Pros:

Chime Credit Builder

• Your credit utilization isn’t reported to credit bureaus
• so you don’t have to be mindful of the percentage of your total available money you can spend.
• Unlike with a prepaid debit card, your payment history and other factors will be reported, so making on-time payments is important.
• If you miss a payment, your card will be disabled until you pay the balance.
• And if your payment is more than 30 days late, this will be reported to credit bureaus and can affect your credit scores.
• Whenever you use the card to buy something, the total purchase amount is put on hold in your Credit Builder secured account. Once your bill is due, the on-hold money is automatically used to pay it. This keeps you from paying late and not having the money available to pay your bill in full.

• The Chime Secured Credit Builder Visa Credit Card charges no interest because it doesn’t let you spend more than what you have available in your Credit Builder secured account.
• This is helpful because you can’t get into credit card debt with this card.
• Other secured credit cards charge high interest rates, making it possible to take on expensive debt at a time when you’re trying to establish a credit history.
• The Safer Credit Building feature — which is a variation on the autopay option available on more traditional credit cards — can prevent an accidental missed payment.

• The money you move from your Chime Checking Account to your Credit Builder secured account is the amount you can spend on your card.
• You can use the Chime Secured Credit Builder Visa® Credit Card to make purchases wherever Visa is accepted. Other secured credit cards have set credit limits, and you may have to use the card for several months before becoming eligible for a credit limit increase.

• Most credit cards will conduct a hard inquiry on your credit report when you apply (helps the card's issuer evaluate your creditworthiness)
• Even if you're then approved for the card, these hard pulls can temporarily ding your credit scores by a few points, which isn't ideal if you're new to credit. But the Chime Secured Credit Builder Visa Credit Card does not check your credit when you apply, meaning it's a good fit for those with poor credit or no credit.

Why the Pro's are Pro's

Chime CB continued

• The Chime Secured Credit Builder Visa Credit Card can help you strengthen your credit, but once that happens, there's no higher-tier card to move to.
• If you decide you're ready for a credit card that offers rewards and other benefits, you'll have to open up a brand-new account with an entirely different issuer.

• The Chime Secured Credit Builder Visa Credit Card makes it very easy to stick to a budget and pay your credit card bills on time.
• This is good news for your credit scores, but any credit card you eventually graduate to will function very differently.
• Once you start using an unsecured credit card with an interest rate and fees, the training wheels come off in a major way.
• Revolving credit cards allow you to spend up to your credit limit, make just a small minimum payment while taking on debt and then spend up to the limit again. And if you make a late payment, you could get slapped with a late fee, a higher interest rate and a big dip in your credit scores.

• The link between the Chime Checking Account and the Chime Secured Credit Builder Visa Credit Card facilitates the card’s unique user experience, but opening an account and getting direct deposits can be a hardship for some.
• It used to be pretty rare for a secured credit card to offer rewards, but that's been changing in recent years. Unfortunately, the Chime Secured Credit Builder Visa® Credit Card isn't a part of that trend; it doesn't offer any kind of rewards program.

Why the Con's are Con's

Chime CB continued

Discover It: Secured Credit Card

• The minimum deposit is $200
• It has a high ongoing APR
• It requires a bank account

Cons:

• More value in the form of rewards
• The chance to upgrade to a regular credit card
• An annual fee of $0

Pros:

Why the Pro's are Pro's

• It’s rare to find a secured credit card that offers rewards. With this card, you’ll earn 2% cash back on up to $1,000 in spending per quarter on gas and restaurant purchases, and an unlimited 1% back on all other purchases
• You'll also receive a one-time bonus: INTRO OFFER: Unlimited Cashback Match (Discover will automatically match all the cash back you’ve earned at the end of your first year)
• With a lot of secured cards, you'll need to close your account to get your deposit back. Not with the Discover it Secured Credit Card.
• After you’ve held the card for seven months, Discover will begin automatic monthly reviews to see whether you’re ready to move to an unsecured card and get your deposit returned.
• You're already required to pay a security deposit on a secured card, so it's best to avoid an annual fee, if you can help it. This card's annual fee of $0 is one less obstacle for would-be applicants.

cont. c

Discover It cont.

Why the Con's are Con's

• Although the $200 minimum security deposit on the Discover it® Secured Credit Card is relatively low, it can still be a barrier.
• In this regard, the Capital One Platinum Secured Credit Card could be a a better option. In some cases, you may be able to qualify for a minimum deposit of just $49 or $99 for a credit limit of $200 on this card.
• The interest on the Discover it Secured Credit Card is not very attractive:
• It comes with 10.99% intro APR on Balance Transfers for 6 months, and then the ongoing APR of 28.24% Variable APR.
• If you plan to carry a balance, you may be better off with the $0-annual-fee DCU Visa Platinum Secured Credit Card, which has a much better APR.
• Like most cards, the Discover it® Secured Credit Card has to be funded by a bank account.

cont. c

Discover It cont.

DCU Visa® Platinum Secured Credit Card

• Security deposit required
• Credit union membership required
• No rewards

Cons:

• No fees
• Low interest rate
• Credit-building help

Pros:

• The purpose of a secured card is to help you rebuild your credit.
• That can't happen if the card issuer doesn't report your card activity to the companies that compile credit reports, the basis for credit scores.
• The DCU Visa® Platinum Secured Credit Card reports to all three major bureaus, making it easier for you to get back on track to building good credit.
• You also get free access to your FICO credit score, so you can track your progress.

• The ongoing APR is 16.75% Variable.
• around 10 percentage points lower than the rates people with poor credit would typically be offered, and it's lower even than rates on many cards for people with good credit.
• In general, it's best not to carry a balance on a credit card from month to month. If you pay in full, you don't have to worry about interest, and keeping balances low is good for your credit score. But if you have to carry debt, it won't cost as much with this card as it would with many others.

Why the Pro's are Pro's

• The DCU Visa Platinum Secured Credit Card eliminates just about all of the high fees, including ones that are standard on most cards.
• Beyond the $0 annual fee, the card imposes no fee for purchases outside the U.S., while many other cards charge 3%
• Even cash advances are fee-free, and you don't pay a higher interest rate on advances. (Many cards charge a fee and impose a higher rate.) You must put down a hefty refundable security deposit when you open the account. But beyond that, the card costs very little.

DCU Visa cont.

• With most credit cards, you don't need to have an account with the issuer's retail bank to be approved. Not so with the DCU Visa Platinum Secured Credit Card.
• You must be a member of the Massachusetts-based Digital Federal Credit Union.

• If you're struggling with bad credit, rewards aren't as important as building good credit. Still, it's nice to get a little something back for your spending.

Why the Con's are Con's

• The DCU Visa® Platinum Secured Credit Card requires a whopping $500 security deposit, far more than any other card that NerdWallet recommends.
• By contrast, a different card, the Capital One Platinum Secured Credit Card, requires a far lower security deposit.

DCU Visa cont.

• High APR
• No rewards
• Bank account and credit check required

Cons:

• Flexible security deposit
• Access to a higher credit line
• Freedom from fees
• Upgrade potential

Pros:

Capital One Platinum Secured

• Capital One is one of the few major issuers offering credit cards for people in all credit score ranges. Its secured card is for people who are building credit.
• Its popular rewards cards, like the Capital One Venture Rewards Credit Card and the Capital One Quicksilver Cash Rewards Credit Card, are for people with good or excellent credit
• As you use your card to establish a good payment history and build your credit, you may be able to upgrade your account to a credit card without a security deposit.

• Make your monthly payments on time, and you could get access to a higher credit limit in as little as six months without having to deposit more money.
• A higher credit limit gives you increased flexibility, but more important, it can help your credit by reducing your credit utilization, a key factor in your credit score.
• The lower your utilization, the better.
• If you have a $200 credit limit and a balance of $60, your credit utilization is 30%, which is about as high as you want it to go. If your credit line gets bumped up to, say, $500, your utilization drops to 12%.

• Credit cards for people with bad credit or no credit are notorious for high fees. That's one of the reasons NerdWallet recommends secured credit cards for building credit:
• You have to put down a security deposit, but you get that money back when you close the account in good standing or upgrade to a regular unsecured card.
• he Capital One Platinum Secured Credit Card keeps things light with an annual fee of $0. Like all Capital One cards, it doesn't charge foreign transaction fees, so you can take it with you if you're traveling abroad.
• The card does charge a late fee of up to $40 if you don't pay your bill by the due date.

Why the Pro's are Pro's

• With most secured cards, your credit limit will be equal to your deposit, but the Capital One Platinum Secured Credit Card allows for a lower deposit for those who qualify.
• Your deposit may be $49, $99 or $200 for a starter credit line of $200.
• You can increase your limit up to $1,000 by making more than the minimum deposit before activating your account.
• If you can’t pay your security deposit upfront, Capital One will let you pay it in installments of at least $20, as long as you provide the full amount within 35 days of approval.

Capital One PS cont.

• Like most secured cards, the Capital One Platinum Secured Credit Card doesn't offer rewards.

• To qualify for the Capital One Platinum Secured Credit Card, you must have a checking or savings account and Capital One could check your credit and employment history.
• That can present a hardship for applicants without a bank account or a credit history.

Why the Con's are Con's

• Like most secured cards, the Capital One Platinum Secured Credit Card charges a high interest rate.
• The ongoing APR is 30.74% Variable APR
• However, that doesn't have to affect you:
• Pay off your balance every month, on time and in full, and no interest will accrue.
• There's no introductory 0% APR period, but most credit cards for bad credit don’t offer one anyway, so you're not missing anything.

Capital One PS cont.

• You have to track your rewards categories
• Rewards on in-store shopping are limited
• There's no free shipping perk
• There's no 0% intro APR period
• You'll need good to excellent credit
• Capital One® Walmart Rewards™ Mastercard® vs. other major store cards

Cons:

• High ongoing rewards
• Redemption flexibility
• Travels well

Pros:

Walmart Rewards Mastercard

• There's no minimum redemption amount, and you have a plethora of choices for using your points.
• Options include applying them as a statement credit; booking for travel through Capital One's travel portal; or buying select gift cards available through the Capital One rewards redemption center.
• the points never expire as long as your account is open and in good standing.
• Note that literal cash back is not an option as a deposit to a checking or savings account, even if you bank with Capital One.

• Since it's a Mastercard, you'll enjoy wide acceptance both at home and abroad.
• The card's lack of foreign transaction fees combined with the aforementioned travel protections and benefits make it a worthy traveling companion.

Why the Pro's are Pro's

• Walmart sells almost anything you can think of, so if you don't mind doing most of your shopping online, you could earn 5% on almost everything you buy, including groceries via pickup or delivery.
• Even if browsing a brick-and-mortar Walmart is more your speed, you'll still get double rewards when you shop there.
• Bonus rewards are also possible on gas if you fill up at a Walmart fuel station, which includes Murphy USA stations. Outside of the Walmart umbrella, dining and travel snag you elevated rewards, too.
• In short, it's a solid everyday credit card.

Walmart Rewards Mastercard

• The rewards structure on the Capital One Walmart Rewards Mastercard is relatively similar to two other cards aimed at those who place an emphasis on value pricing
• Amazon's Prime Visa earns 5% back on Amazon.com
• Whole Foods Market purchases; 2% back at restaurants, gas stations, plus local transit and commuting (including rideshare); and 1% back on everything else.

• The Capital One Walmart Rewards Mastercard doesn't come with an introductory interest-free window on purchases or balance transfers.
• Most other store cards don't either, but many cash-back credit cards do.
• The low end of the card's ongoing APR range is in line with the industry average, but not everyone will qualify for that rate.

• If you're building or mending your credit score, the Capital One Walmart Rewards Mastercard may not be right for you.
• The store-only version of the card is attainable for those with only average credit.

Why the Con's are Con's

• For a co-branded card, 2% back on in-store Walmart purchases isn't exactly jaw-dropping.
• It's true that there's a way to earn 5% back on in-store purchases in the first year you have the card, but it's a temporary promotion that requires a specific payment method.
• If you prefer to do your shopping inside Walmart's brick-and-mortar stores, you'd do just as well after Year One with the Citi Double Cash Card.
• Walmart.com itself advertises free shipping, but only on purchases of $35 or more. Other store cards, like the Target REDcard Credit Card, offer free shipping to cardholders on all eligible items, no minimum purchase required.

Walmart Rewards Mastercard

“Capital One Secured Review: Good Choice for Bad Credit.” Www.nerdwallet.com, www.nerdwallet.com/reviews/credit-cards/capital-one-secured.

“Walmart Rewards Mastercard Review: Impressive Everyday Savings.” NerdWallet, www.nerdwallet.com/reviews/credit-cards/walmart-credit-card. Accessed 18 Mar. 2024.

“Digital Federal Credit Union Secured Card Review.” NerdWallet, www.nerdwallet.com/reviews/credit-cards/digital-federal-credit-union-secured. Accessed 18 Mar. 2024.

McGuire, Virginia C., and Melissa Lambarena. “Discover It Secured Review: Earn Rewards as You Build Credit.” NerdWallet, 24 Feb. 2024, www.nerdwallet.com/reviews/credit-cards/discover-it-secured Accessed 18 Mar. 2024.

“Chime Credit Builder Card Review: A Secured Card with Guardrails.” NerdWallet, www.nerdwallet.com/reviews/credit-cards/chime-credit-builder. Accessed 18 Mar. 2024.

“How Annual Percentage Yield (APY) Works.” Investopedia, 2019, www.investopedia.com/terms/a/apy.asp.

“Credit Cards 101.” NerdWallet, 12 July 2021, www.nerdwallet.com/article/credit-cards/credit-cards-101#:~:text=Credit%20cards%20offer. Accessed 18 Mar. 2024.

Thank you!