The World of Credit
- rickyhochsprung
- Feb 1, 2021
- 2 min read
The world of Credit
*This is not financial advise, nor is anyone from optic options a financial advisor, this is used for educational purposes only*
What is Credit?
A Credit Card is a financial tool that allows someone to make purchases up to a certain limit and is to be paid back monthly. ( The correct way to use a credit card is to pay it off in FULL). To avoid interest and other fees.
How does one get a credit card?
Name
Social Security # or EIN
18 Years of age ( or become an authorized user)
Source of Income
Have reliable credit History
Apply online
What to look for if you are getting your first credit card!
No to small annual fees
Compatible at where you will be looking to make purchases
Credit Card Benefits
What kind of Credit Card limit you are looking for.
Good customer service
Why use a credit card over a debit card?
Unauthorized transactions can be reversed on a credit card
Unauthorized transactions can not be reversed on a debit card
Credit Card benefits (Cash back, free travel and other perks)
Build a Credit Score
Not worry about having enough money in a checking account
More secure and consumer friendly
Great for online transactions
What is a CVV number?
The CVV Number on your credit card or debit card is a 3 digit number on VISA®, MasterCard® and Discover® branded credit and debit cards. On your American Express® branded credit or debit card it is a 4 digit numeric code.
( Don't share your CVV number with anyone).
What is an Expiration Date?
The expiration date is the date at which the card is set to expire; it will be displayed in the format of the month/ year. For example “11/25” meaning that the credit card expires in November of 2025.
Why do you want Credit?
To open up businesses
To have proof of making consistent payments
Have more flexibility
Benefits
Every big purchase will check credit score (unless cash)
Credit cards have protection
It will help you later in life ( Houses, cars, anything finance).
What is a credit Score?
A credit score represents a numerical value that proves that you are able to make payments, the higher the score the better. The official definition is a number assigned to a person that indicates to lenders their capacity to repay a loan.
Anyone can view their credit score on TurboTax.com
Credit score is used in everyday life and is very IMPORTANT.
Typical rules of a Credit card to have as parameters
Don't spend more then you have
Always pay the card off in full (unless 0% financing special)
Keep information confidential
Credit Cards typically don't check income so you can boost up your financial situation without them knowing / caring (be realistic).
The sooner you start to build your credit the better.
You can have as many credit cards as you want and typically want to have a low amount of usage but if you have a 1,000 limit it is hard to only charge 100$ annually.
Now what cards do I Recommend?
First time card holders
DISCOVER student card
DISCOVER it secured
Petal 2 Visa card
Citi Secured Credit Card
Amex Plum Card
Blue Business Cash Card
Experienced Card holders
AMEX Platinum
Chase sapphire
Chase sapphire preferred
AMEX Blue cash preferred
The link below is an entire list of Credit cards, do your own due diligence, and don't go out and apply for 10 right away try to limit it to 1-2 a quarter.
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