Credit Cards

This started out as a comment to Tenured Radical's post, "A Graduation Guide for the Age of Living in Debt". It got a little long, so I've moved it here. But you should go read her post first.

On the topic of credit cards, I'd like to add my two cents: namely, that with a little self-control, a credit card really can be a good thing. Without a credit rating, you can't get cable. You can't get internet service. You can't get a cellphone plan (pay-as-you-go is an option though). You can't get electricity. I know these things because as a Canadian coming to the US, I had to rely on others for these things. Oh I had a Canadian credit rating, but that means diddly south of the border, it seems.

This is what happens when you have a Social Security Number, but no credit rating, and you try to get, say, internet, electricity, etc.:
VerComStar: "What's your SSN?"
Me: *gives SSN*
VerComStar: "Hmmm.. is there anyone else in the household?"

At this point the options are "yes" and you go get them, or "no" and you don't get service.

I had been working in the country legally on that SSN for eighteen months, but because I had no US credit cards, I had no US credit history. Then four months ago the lovely folks at CapitalOwned offered me a parasitic high-interest mastercard, which I took.

I proceeded to use it for one purchase a month, setting aside the money to pay the bill the moment I spent it. When we switched internet providers a month ago, lo and behold: I suddenly existed.

Here's the thing: you don't need to carry a balance to get a credit rating. If you buy one thing on it a month (preferably something you were going to buy anyway, like groceries) and pay it off each and every month, then voila: easy credit score. You exist.

Of course if, as so many young people today, you think that credit cards are for "buying now and paying later" then please, for your own safety, don't get one. And for everyone else's safety, maybe don't leave the house.