<p>I’m a bit confused about how my card is going to work. It is a TCF credit/debit, and as I understand the amount we put into the account is my credit/debit limit (pretty high, enough for the year). When I go online to look at my account, it shows my purchases and subtracts them from my balance. Yet since I didn’t use my pin # for them, I assume I made these on credit. Or since they subtracted my purchases, does that mean it went on debit?</p>
<p>I went ahead and took a look at TCF’s website and saw no mention of any credit card products. Therefore, it would be my assumption that you simply have a debit card and that it draws directly from your checking account.</p>
<p>When you make a purchase with a debit card, it will either be coded as a PIN-type purchase or a credit purchase. The difference is that with a PIN-encoded transaction, the funds are immediately withdrawn from your checking account. With a credit based transaction, the funds are on what you can think of as a temporary credit, and are not actually deducted from your checking account until later.</p>
<p>There is also a differences in terms of the level of protection you have when making a PIN-based purchase and a credit-based purchase when using your debit card. Credit-based transactions almost always have more protection as opposed to PIN-based transactions, so whenever given the choice always go with credit. </p>
<p>In terms of establishing credit, I do not believe your debit card will report to the credit bureaus, and thus the card is not helping you build credit. You mention that you had a “credit limit” that was the amount of balance in your checking account. Alright, that’s a weird way of phrasing a “credit limit” as the only “limit” that debit cards have are daily purchase limits, which vary from bank to bank. For instance, I have a Washington Mutual debit card which has a daily purchase limit of $3,000, regardless of how much I have in my checking account. There are also ATM withdrawal limits, so check these details with your bank before you plan on making a large purchase. </p>
<p>Some people may tell you that debit cards do build credit, they may just do so “very slowly”. Incorrect. If you don’t believe me, go ahead and pull your three credit reports from the three major credit bureaus (you get one free report per year): Transunion, Equifax, and Experian, and you will most definitely see that your debit card account is not going to be listed there - hence, it is not factoring into your credit score.</p>
<p>more confusion, both me and my mom have called TCF several times and they always say the card is both a credit and a debit. There’s a 30 cent charge for every debit purchase though, so another reason to use credit. I don’t know of any daily spending limit, but I guess it’s possible..</p>
<p>Again, TCF’s website lists no credit card products. What they most likely mean by it being both a credit and debit card is that you can buy things via a debit transaction (PIN-based and funds are withdrawn immediately from your checking account) or via a credit transaction (non-PIN based and funds are withdrawn from your checking account at a later date.)</p>
<p>That $0.30 fee per debit-based purchase seems rather ridiculous - are you sure you don’t want to look into another bank that offers a debit card that does not charge any fees? You could also look at getting a credit card if you feel the need for one. Approvals for student credit cards are not that hard to come by.</p>
<p>
</p>
<p>This is brilliant. Just make the minimum payment! You will pay off that $200 TV the low low time of… multiple years.</p>
<p>This is the worst advice ever.</p>
<p>If you don’t pay off your entire balance every time you get a bill, you are charged interest on whatever is outstanding. You bought a $200 TV. You make the minimum $20 payment, so now you still owe $180. They charge 10% interested, so now you owe $198. So it costs you $20 to pay off $2. Does that seem like a good idea? No, no it does not.</p>
<p>Yikes, good catch soccerguy315. I completely missed that statement.</p>
<p>I agree with soccerguy that it is indeed one of the worst things you could possibly do. I believe what the poster of that quote may have been confused on is how balances get reported to the credit bureaus. I believe they may have been confused about the following:</p>
<p>If you pay off your statement balance in full every month, does a balance get reported to the credit bureaus? Short answer is yes. A common misconception is that paying off your bills in full when the statement comes means that it will report a zero balance to the credit bureaus and make it look like you’re not using your credit card. It is because of this misconception that some may offer advice to leave a small balance on the card so that it reports. This is incorrect!</p>
<p>In actuality, many banks and credit card companies report the statement balance. If your statement balance closes on the 1st day of each month and your balance at the end of the day is $100, then that $100 is what gets reported to the credit bureaus, regardless of whether or not you pay the bill in full the very next day. Now, this varies from card issuer to card issuer, as some report on a specific day in the month (regardless of when the statement closes). </p>
<p>One of the bad things that may arise from the fact that credit card companies report the statement balance, is that if you have a card with a $1000 limit and you have a $900 balance on it each and every month, you will look very overextended on your credit. Even if you pay it off in full every month, none of your other creditors will notice this because all they see is the statement balance of $900. When this happens, it might be a wise decision to pay down the card before the statement closes so that it won’t look like you’re too overextended on credit, and living well within your means.</p>
<p>gplayer, I think I’m going to play it safe and not get an actual credit card yet; I guess I’ll see how I handle this TCF card first and if that works out, I can start working up good credit on an actual credit card. But as of now, working this card will be hard enough. The good thing is my college has some sort of deal with TCF so its branches and such are really easy to access on campus.</p>
<p>Thanks for the advice, a lot of this stuff is really new to me.</p>
<p>the best way to deal with this is online banking and direct deposit from your jobs (if possible). what i generally do is i’ll use my credit card because of the points i get for every dollar spent. when i get home usually 2-3 days later the charge shows up on my credit card, and i see it on my banking acct online (since my bank issues my credit card i can see my credit card statement). i make sure to pay off whatever i’ve charged on the credit card right away. this way i don’t even have to worry about it later on, and i know that i won’t charge more on my credit card than i can. it’s worked for me for 2-3 years so far. but not everyone is the same. some people can not handle their finances the same way. my rule of thumb is simple, i refuse to pay interest on items that i could have easily paid with cash, therefore i pay on time and in full, otherwise if i don’t have the cash, i can wait.</p>
<p>BP-88, that is a great way to handle your finances, especially if you want to make absolutely certain that you do not spend more than what you actually have. Paying it off as soon as the charge hits the card is essentially like using a debit card, where the funds are immediately taken out of your checking account. </p>
<p>There are several things to watch out for if you choose to use this plan though. First of all, some credit card companies only allow a certain number of electronic payments within a certain period. For instance, Citibank limits you to a maximum of four (4) electronic payments per month. Another thing to watch out for is that paying off the credit card so often might mean that it may not appear to other creditors that you are using your card, and therefore have no experience with using credit. Let me explain:</p>
<p>Many creditors report your statement balance to the credit bureaus. So for instance, if your statement ends on the first day of each month, they report whatever the balance is at the end of the day to the credit bureaus. Others may choose a certain day of the month, regardless of the statement closing date. Bottom line: most creditors choose a single day in a month and report that balance to the credit bureaus. The credit bureaus keep a history of your balance from month to month. Since you pay so often, then a $0 balance may have been reported to the credit bureaus at one point or another if your balance on the day that they reported the balance to the credit bureaus was $0. So if your balance every day of the month was $100, but you paid it down to $0 on the day that they report to the credit bureaus, it would appear to other creditors that you never actually used the card for the entire month. </p>
<p>Showing this lack of usage is not a sign to other creditors that you are very experienced with credit, especially since they may think that you just put the card in a sock drawer and leave it there indefinitely.</p>
<p>Just my $0.02.</p>
<p>I have a credit card but it’s under my dad’s card and I never use it. I pay cash or debit. I mean, if I have the money to pay it off, I don’t see why I’d use credit card and make monthly payments.</p>
<p>About not paying off your balance in full, I didn’t mean making the minimum payment: I meant pay almost all of it off, and since I said to use very little of your credit limit anyway it wouldn’t have added up a lot. GP, I’m not sure how my advise differs from the advise you gave BP-TheGuy88: you told him not to pay it off immediately as it wouldn’t be reported, just as I had. Am I misunderstanding something? This might work out better with an example: If I spend, say, $25 on September 5th as my first charge on my credit card next month over a balance of $0, when should I pay it off? Should I pay it all off immediately or wait? If wait, how long should I wait? Thanks for your advice!</p>
<p>Edit: Actually, I see now what I misunderstood: you say to pay it off completely only when the monthly statement arrives and not to pay it off immediately, so this way no interest accrues yet you still get the credit benefit? If I’m correct, thank you very much clearing that up for me as I’d always heard to pay it mostly off.</p>
<p>essentially what you want to do is just pay off AFTER you get the bill, but not before the DUE date. i see what he means now, because this month I’m not getting a bill sent home. why? because I paid off all charges right away. so it’s as if i never used the credit card, as opposed to almost every other month, where i’ve usually kept track of what I’ve spent online, and how much i’ve owed, but still paid AFTER receiving the bill for my credit card. not sure if that makes sense.</p>
<p>example:
Jan 1 - first day you can use your credit card.
Feb 1 - bill arrives home for the days between Jan 1st to Jan 31st.
Feb 15 - due date before you start getting charged interest for the balance left on your credit card</p>
<p>You will want to pay your bill, between Feb 1 and 15. what you don’t want to do is what i did this month and pay it all before Feb 1st because then you won’t even getting a bill sent home and it’s as if you never used your credit card.</p>
<p>That makes perfect sense. Thank you very much for that advice!</p>
<p>yea, purchase with the credit card, and then as soon as you get the bill, write a check (for the full amount) and put it in the mail.</p>
<p>if you’re going to write a full check, may as well open an online account and pay your bills through there. saves you the pain of writing checks and you can schedule when you want to pay your bills.</p>
<p>I’ve found I’m actually a lot more frugal with my credit card than I am with cash, since once I break a $20 bill, spending the rest of the money doesn’t seem like that big of a deal. It’ll often get eaten up by late night runs to the vending machine when I’m stuck in my office at 2 AM or other frivolous costs.</p>
<p>Also, if you are good about paying off your credit card you can often get the limit increased rather quickly. I’ve had my American Express card for around 3-4 years now, and after two years I had my credit limit extended to $8000. Now, even with buying textbooks, buying airline tickets to fly home, and typical monthly expenditures I’ve still never cracked 15% of my credit limit.</p>