Question about Credit

[Cain]

Cain, I like the Suze Orman Show a whole lot. She's a financial advisor who can make most things fairly easy to understand. She's on Saturday nights on CNBC and she has a website, suzeorman.com.

She's written a book you may want to read called "Young, Broke and Fabulous" that is geared to your stage of life and has a lot of great advice.

You owe us nothing. It's such a pleasure to help, and you give back to everyone else.

Thanks, I'll try to check the website out. Thanks, and have a great day/night, drive safe.

 

[Madeline]

Well, here is my situation, as of now:

The only thing credit wise I am going to do is a truck. I am buying a Dodge Ram 1500, not sure what year or how much, but I know I can make a 5000$ down-payment on it. I get 10% off of any MOPAR (Chrysler, Dodge, Jeep) due to a parent working under them, and in Tennessee sales tax is taken off for Service Members. So, let's say my truck costs me 20,000$ (that is way above what it should, but anyways) in the end I'll actually pay around 13,000$, after down payment and discount. So, I'll need a loan of 13,000$. I plan to have it paid off, max of 3 years, which will be, at 7% Interest, 910 dollars in interest, not too killer.

Basically, I'll need to take a 13,000$ loan out on the truck in the end. I have a car currently, but I do not want to take this with me, and I plan to sell it, but I am letting my parents keep what I put into it, because I owe them at least that for raising me. Would getting a 13,000 dollar loan be affected by credit score?

Other then that, credit will NOT affect me until I retire out of the USAF to buy a farm in North Dakota. Then it will probably play a HUGE role, but until then, their is nothing I really want, ever.

Yes, the rate you get on an auto loan will be dictated by your credit score. I think you are under 18, so you may not be eligible for a credit card on your own yet. Ask your parents if you can be an authorized user on their cards, if they have great credit scores...this will be reported on your credit report and will effectively give you the same score they have.

Once you are 18, you should get a major credit card. Be sure you read and understand the terms before you accept one -- and Suze Orman is a great resource for learning how to do this. It is VERY complicated. Go to a credit union, not a bank, for your first Master Card or Visa. In fact, if you can, open an account now with a credit union...even a savings account. That will establish you as one of their customers before you apply. Suze Orman's website has a link to all the credit unions in the country.

Once you are 18, use the credit card issued to you (not the one your parents authorized you as a user on, though they should not remove you if they don't need to) for a small purchase every month, and allow a small balance to ride. Say your limit is $5,000. You would pay down all but $500 and incur interest of say, $50 a year on that. It might seem like a waste of $50, but that is needed to demonstrate your "creditworthiness" and is a worthwhile expense.

 

[Cain]

Well, here is my situation, as of now:

The only thing credit wise I am going to do is a truck. I am buying a Dodge Ram 1500, not sure what year or how much, but I know I can make a 5000$ down-payment on it. I get 10% off of any MOPAR (Chrysler, Dodge, Jeep) due to a parent working under them, and in Tennessee sales tax is taken off for Service Members. So, let's say my truck costs me 20,000$ (that is way above what it should, but anyways) in the end I'll actually pay around 13,000$, after down payment and discount. So, I'll need a loan of 13,000$. I plan to have it paid off, max of 3 years, which will be, at 7% Interest, 910 dollars in interest, not too killer.

Basically, I'll need to take a 13,000$ loan out on the truck in the end. I have a car currently, but I do not want to take this with me, and I plan to sell it, but I am letting my parents keep what I put into it, because I owe them at least that for raising me. Would getting a 13,000 dollar loan be affected by credit score?

Other then that, credit will NOT affect me until I retire out of the USAF to buy a farm in North Dakota. Then it will probably play a HUGE role, but until then, their is nothing I really want, ever.

Yes, the rate you get on an auto loan will be dictated by your credit score. I think you are under 18, so you may not be eligible for a credit card on your own yet. Ask your parents if you can be an authorized user on their cards, if they have great credit scores...this will be reported on your credit report and will effectively give you the same score they have.

Once you are 18, you should get a major credit card. Be sure you read and understand the terms before you accept one -- and Suze Orman is a great resource for learning how to do this. It is VERY complicated. Go to a credit union, not a bank, for your first Master Card or Visa. In fact, if you can, open an account now with a credit union...even a savings account. That will establish you as one of their customers before you apply. Suze Orman's website has a link to all the credit unions in the country.

Once you are 18, use the credit card issued to you (not the one your parents authorized you as a user on, though they should not remove you if they don't need to) for a small purchase every month, and allow a small balance to ride. Say your limit is $5,000. You would pay down all but $500 and incur interest of say, $50 a year on that. It might seem like a waste of $50, but that is needed to demonstrate your "creditworthiness" and is a worthwhile expense.

I am 18. My parents will not allow me to have a credit card while I am still under their roof. Once I graduate and am shipped out, then I shall. I am setting up a Checking and Savings Account soon, trying to find a bank I can trust and stay with for a long time.

 

[sparky]

Your credit score is very valuable. Protect it by at least checking with all three credit bureaus at least once a year to see if there is activity on it you do not recognise, to undo the impact of identity theft. You can be more vigilant by subscribing to a service, and only you can decide if that's worth it. It might be while you are overseas, as you'd have a much more difficult time undoing any identity theft damage from there.

Many things affect your credit score, and certainly, paying bills late is one of them. So are incidential expenses at college, like an unpaid library fee. Check with your burser's office at school once a year that nothing has been overlooked

sage advice Maddy>

Credit Bureau Contact Information

to back you up further, most people need a little help reading thier report, they may be unaware of the erronuos info might be on it, so joining a credit reporting agency to help one tailor thier report is, over the long run, a wise decision

 

[California Girl]

So, I have always had questions about what Credit really is, and how to make the best of it, and I have a few questions that I'd like to ask:

1. If you where to use a credit card to let's say, pay your payments/buy everyday items, and you always pay it off that day or at most a week later, would that improve your credit more then just buying and selling with money or debit?

2. How can you improve your credit score other then a credit card and paying payments on time?

3. What good is having a high credit score?

4. What is your credit score when you become 18? I mean, is their a standard everyone starts with?

First off having a good credit score lowers much of the interest that you may be charged on things like a car loan. So it can mean a difference over a few years of thousands of dollars in your pocket.

Get one credit card. use it to buy your gas every month, and pay it in full every month.

Do not pay your cell phone or any type of monthly payment you have late.

Things like auto insurance can be withdrawn directly from your checking account.

Do not permit multiple credit checks for no good reason. In other words, do not apply for credit that you do not need.

^^^ That.

 

[WorldWatcher]

>

Well first of all let me say I'm a retired Chief with two children. One female, 19 currently attending college on an AFROTC scholarship who will go on active duty in about 2.5 years. Our son, 20, choose a different career path and is a Junior in college with a Business IT major.

For both of them we setup credit cards in their name through Navy Federal Credit union. Both have been very responsible in it's use.

Well, here is my situation, as of now:

The only thing credit wise I am going to do is a truck. I am buying a Dodge Ram 1500, ...

Not saying buy the truck or not buy the truck (I can never fault a man for wanting his truck ) but I would suggest taking a serious look at 1-year, 3-year, and 5-year time frames on what is likely to happen.

Once you join the Air Force will you be able to take it to Basic? Is there leave after Basic when you can return home to pick it up? What follow-on training are you likely to attend? Where is it? After your initial training what type of permanent commands are you likely to be assigned to? If stationed overseas what will you do with the truck?

These are all the types of questions that should be pondered.

Other then that, credit will NOT affect me until I retire out of the USAF to buy a farm in North Dakota. Then it will probably play a HUGE role, but until then, their is nothing I really want, ever.

Don't be so sure. Credit has a large impact (although mostly unseen) on a persons life. It impacts the ability to obtain credit cards and the interest paid. It impacts vehicle loans and interest paid. Heaven forbid there is a family emergency, but it is a good feeling to know that once approved for leave in such a case you can walk into the airport and lay down the plastic for the next flight out. Or say you are traveling between bases and the truck dies and you need repairs and a motel for a couple of days as an unseen expense.

A lot of the idea of credit should be reserves in case of a crisis.

Hmm, I think I am starting to understand, it shows the trust that you will pay off your debts?

Exactly and as I've told my own kids: "Trust is not given, trust is earned."

A good credit score is determined by:

• Income to debt ratio,
• Also by how much credit you have verses your income (you can have to much credit which is a danger if it were all max'd out at once). (I think they treat secured debt and unsecured debt slightly differently though. I'm not sure.)
• Payment history - which is what the whole idea of carrying a small balance is about. If no debt history is built up, that has a negative impact on your overall score. Lenders my see you as a higher risk and therefore charge a higher rate.

I am 18. My parents will not allow me to have a credit card while I am still under their roof. Once I graduate and am shipped out, then I shall. I am setting up a Checking and Savings Account soon, trying to find a bank I can trust and stay with for a long time.

Madeline recommended $5000, my kids have $1000. At first I thought her target was a little high, but then I thought about it and as an independent individual it's probably not a bad target - although you may need to start out a little lower and build up to it over a couple of years.

You should definitely look at joining a financial institution prior to going to basic. That way when you are doing your induction processing you can have your Direct Deposit information available and ready to rock if that's the way they are doing it these days. Having one in advance means you won't have to join a rinky-dink credit union or local bank just because you have to.

I would highly, HIGHLY recommend joining a credit union over a bank. Modern credit unions offer a full range of financial services (checking, debit cards, savings, home/auto/secured/signature loans, financial planning, certificates, etc...) and typically at lower rates, lower minimums, and with less (or no service fees if any at all). For example a bank may let you have a checking account, however if you don't keep a $1000 minimum then they charge a fee every month. On the other hand a credit union my require only a $50 minimum.


Likely credit unions:
1. Navy Federal Credit Union (www.navyfederal.org) | (Navy Federal Credit Union - Wikipedia, the free encyclopedia)
2. Pentagon Federal Credit Union (www.penfed.org) | (Pentagon Federal Credit Union - Wikipedia, the free encyclopedia)
3. Air Force Federal Credit Union (Air Force FCU) | ***

Navy Federal Credit Union
Having been a member since 1980. NFCU is the largest credit union in the United States with branch offices all over the place and access to something like 28,000 ATM's. NFCU's assets are about three times that of PFCU's and they have more locations.

Pentagon Federal Credit Union
This is also one I know of although I'm not a member. I live in Hampton Roads, VA in spitting distance to Langley, AFB and I'm frequently on the base for shopping at the Commissary/Exchange.

Air Force Federal Credit Union
I have no experience with the Air Force Federal Credit union, however I was not impressed with their web site as it seem fairly amateurish to me. After 32-years of being associated with the military I'd never heard of it and didn't even know it existed until I went looking for some balanced recommendations to make. As I said I live near a major AFB and never heard of it.


In the "old" days access to NFCU and PFCU was more restrictive. For example with NFCU you had to be either (a) an Navy Officer, or (b) Navy Enlisted assigned to a ship or overseas. But that changed many moons ago. Now any active duty military or military dependent can join NCFU. Your custom user title says "Air Force DEP" so you can join these credit unions now. Since NFCU is so large, it is a good organization to join and always keep (even if you decide to bank locally - don't close all accounts keep at least one active). And with on-line banking, on-line bill paying, etc... the need for a local branch isn't what it used to be.

Credit unions also typically have lower rates for credit cards then do banks and commercial lenders.


*********************************************

When it comes to getting a Credit Card, there are two main types: Unsecured and Secured.

Always try for the "Unsecured" first. This is a traditional credit card based on credit score. The supplying agency looks at work history, credit score, etc... in determining if they will open a line of credit and issue an unsecured card.

The "Secured" card through a credit union is just as the name implies. Let's say you apply for an "open" card and are denied because you don't have six months of work history. Well you can still get a "Secured" card by having at least that amount in your savings account. The CU places a "block" on your account equal to the amount of credit although the money remains in your account. So let's say you have $1500 in a savings account and get a $1000 Secured Visa Card. The CU block will only allow you to draw up to $500 out of savings, but IIRC you still earn interest on the whole $1500. After one year of responsible use, they should (or you can request) that the card be converted from "Secured" to "Unsecured" after you build up some history.

The "Secured" card does count toward credit history, even though it's - well - secured and not based on a line of credit. Not a bad place to start if needed.

When we got credit cards for the kids (at 18) my son was working part time and qualified for an Unsecured card based on work history (it was only $500 at the time). However my daughter had just graduated from high school and had not worked, so she was not approved for an Unsecured Card. She used the money in her savings account as the basis for a Secured Card which she had for a year before getting it converted to an Unsecured Card.



Hope this helps. BTW - you are asking a lot of the right questions. Keep it up. Most guys your age have two questions in mind: (a) where's the beer, and (b) where's the chicks. (The order of those questions is determined by how longs it's been since they had the previous response. )



>>>>

 

[Montrovant]

The fact that people recommend an 18 year old get a credit card, or multiple cards, I find unfortunate. Not because it is bad advice, but because it might be very good advice. Our society is based far too heavily on borrowing.

There seems to be a lot of good thoughts here, I just regret the circumstances that make them sensible.

 

[Claudette]

Cain. If your a real responsible spender then get a credit card.

Once you get that credit card it becomes very easy to use it for everything and to misuse it as well.

Believe me. I know. I got into a load of trouble with a credit card. I also got myself out of it on my own. No one bailed my ass out but me.

I now buy everything on a cash basis. If its something I don't have the money for at the time then I save up to buy it. This can sometimes take a while.

Patience is a virtue.

The only credit card I now own is the one on my Debit card.

 

[Madeline]

Cain. If your a real responsible spender then get a credit card.

Once you get that credit card it becomes very easy to use it for everything and to misuse it as well.

Believe me. I know. I got into a load of trouble with a credit card. I also got myself out of it on my own. No one bailed my ass out but me.

I now buy everything on a cash basis. If its something I don't have the money for at the time then I save up to buy it. This can sometimes take a while.

Patience is a virtue.

The only credit card I now own is the one on my Debit card.

Unfortunately, Claudette, if you do not rack up a history of responsible use of credit card, your credit score might not be what you wish. And even if you never borrow money again for anything, that can affect your job prospects, your insurance rates, your access to rental property, etc.

If overspending is still a concern, you might want to get a secured credit card. Works almost the same as a debit card...you deposit $500, say, they impose interest and fees (modest amounts, usually) and when you have spent $500 on it, it no longer works until you fill it back up. That card would help rebuild your credit rating, but a debit card will not.

 

[Cain]

>

Well first of all let me say I'm a retired Chief with two children. One female, 19 currently attending college on an AFROTC scholarship who will go on active duty in about 2.5 years. Our son, 20, choose a different career path and is a Junior in college with a Business IT major.

For both of them we setup credit cards in their name through Navy Federal Credit union. Both have been very responsible in it's use.

Well, here is my situation, as of now:

The only thing credit wise I am going to do is a truck. I am buying a Dodge Ram 1500, ...

Not saying buy the truck or not buy the truck (I can never fault a man for wanting his truck ) but I would suggest taking a serious look at 1-year, 3-year, and 5-year time frames on what is likely to happen.

Once you join the Air Force will you be able to take it to Basic? Is there leave after Basic when you can return home to pick it up? What follow-on training are you likely to attend? Where is it? After your initial training what type of permanent commands are you likely to be assigned to? If stationed overseas what will you do with the truck?

These are all the types of questions that should be pondered.

Other then that, credit will NOT affect me until I retire out of the USAF to buy a farm in North Dakota. Then it will probably play a HUGE role, but until then, their is nothing I really want, ever.

Don't be so sure. Credit has a large impact (although mostly unseen) on a persons life. It impacts the ability to obtain credit cards and the interest paid. It impacts vehicle loans and interest paid. Heaven forbid there is a family emergency, but it is a good feeling to know that once approved for leave in such a case you can walk into the airport and lay down the plastic for the next flight out. Or say you are traveling between bases and the truck dies and you need repairs and a motel for a couple of days as an unseen expense.

A lot of the idea of credit should be reserves in case of a crisis.

Hmm, I think I am starting to understand, it shows the trust that you will pay off your debts?

Exactly and as I've told my own kids: "Trust is not given, trust is earned."

A good credit score is determined by:

• Income to debt ratio,
• Also by how much credit you have verses your income (you can have to much credit which is a danger if it were all max'd out at once). (I think they treat secured debt and unsecured debt slightly differently though. I'm not sure.)
• Payment history - which is what the whole idea of carrying a small balance is about. If no debt history is built up, that has a negative impact on your overall score. Lenders my see you as a higher risk and therefore charge a higher rate.

I am 18. My parents will not allow me to have a credit card while I am still under their roof. Once I graduate and am shipped out, then I shall. I am setting up a Checking and Savings Account soon, trying to find a bank I can trust and stay with for a long time.

Madeline recommended $5000, my kids have $1000. At first I thought her target was a little high, but then I thought about it and as an independent individual it's probably not a bad target - although you may need to start out a little lower and build up to it over a couple of years.

You should definitely look at joining a financial institution prior to going to basic. That way when you are doing your induction processing you can have your Direct Deposit information available and ready to rock if that's the way they are doing it these days. Having one in advance means you won't have to join a rinky-dink credit union or local bank just because you have to.

I would highly, HIGHLY recommend joining a credit union over a bank. Modern credit unions offer a full range of financial services (checking, debit cards, savings, home/auto/secured/signature loans, financial planning, certificates, etc...) and typically at lower rates, lower minimums, and with less (or no service fees if any at all). For example a bank may let you have a checking account, however if you don't keep a $1000 minimum then they charge a fee every month. On the other hand a credit union my require only a $50 minimum.


Likely credit unions:
1. Navy Federal Credit Union (www.navyfederal.org) | (Navy Federal Credit Union - Wikipedia, the free encyclopedia)
2. Pentagon Federal Credit Union (www.penfed.org) | (Pentagon Federal Credit Union - Wikipedia, the free encyclopedia)
3. Air Force Federal Credit Union (Air Force FCU) | ***

Navy Federal Credit Union
Having been a member since 1980. NFCU is the largest credit union in the United States with branch offices all over the place and access to something like 28,000 ATM's. NFCU's assets are about three times that of PFCU's and they have more locations.

Pentagon Federal Credit Union
This is also one I know of although I'm not a member. I live in Hampton Roads, VA in spitting distance to Langley, AFB and I'm frequently on the base for shopping at the Commissary/Exchange.

Air Force Federal Credit Union
I have no experience with the Air Force Federal Credit union, however I was not impressed with their web site as it seem fairly amateurish to me. After 32-years of being associated with the military I'd never heard of it and didn't even know it existed until I went looking for some balanced recommendations to make. As I said I live near a major AFB and never heard of it.


In the "old" days access to NFCU and PFCU was more restrictive. For example with NFCU you had to be either (a) an Navy Officer, or (b) Navy Enlisted assigned to a ship or overseas. But that changed many moons ago. Now any active duty military or military dependent can join NCFU. Your custom user title says "Air Force DEP" so you can join these credit unions now. Since NFCU is so large, it is a good organization to join and always keep (even if you decide to bank locally - don't close all accounts keep at least one active). And with on-line banking, on-line bill paying, etc... the need for a local branch isn't what it used to be.

Credit unions also typically have lower rates for credit cards then do banks and commercial lenders.


*********************************************

When it comes to getting a Credit Card, there are two main types: Unsecured and Secured.

Always try for the "Unsecured" first. This is a traditional credit card based on credit score. The supplying agency looks at work history, credit score, etc... in determining if they will open a line of credit and issue an unsecured card.

The "Secured" card through a credit union is just as the name implies. Let's say you apply for an "open" card and are denied because you don't have six months of work history. Well you can still get a "Secured" card by having at least that amount in your savings account. The CU places a "block" on your account equal to the amount of credit although the money remains in your account. So let's say you have $1500 in a savings account and get a $1000 Secured Visa Card. The CU block will only allow you to draw up to $500 out of savings, but IIRC you still earn interest on the whole $1500. After one year of responsible use, they should (or you can request) that the card be converted from "Secured" to "Unsecured" after you build up some history.

The "Secured" card does count toward credit history, even though it's - well - secured and not based on a line of credit. Not a bad place to start if needed.

When we got credit cards for the kids (at 18) my son was working part time and qualified for an Unsecured card based on work history (it was only $500 at the time). However my daughter had just graduated from high school and had not worked, so she was not approved for an Unsecured Card. She used the money in her savings account as the basis for a Secured Card which she had for a year before getting it converted to an Unsecured Card.



Hope this helps. BTW - you are asking a lot of the right questions. Keep it up. Most guys your age have two questions in mind: (a) where's the beer, and (b) where's the chicks. (The order of those questions is determined by how longs it's been since they had the previous response. )



>>>>

I am wanting to buy the truck after Basic, while I am in Tech School, I have a parent in the car industry, and they know exactly what I want, and with their discount, my active-duty discount, etc, I should be able to get a good deal off. I can leave it at home, or at a family member's house while I am gone on deployments. I am requesting the 820th Security Forces group, which I think is in Georgia, and I can stay in for a max of 4 years (from what I've been told) and they deploy a lot supposedly.

Well, I do not plan to ever take a loan out, except on my truck and farm. I mean, their just isn't anything I can see I'd want. I am pretty simple in my wants lol. Thanks for all the info though .

So, I could join a Credit Union and it would basically be a bank + credit card? That sounds useful, and simpler then having 2 separate accounts.

Hmm, I found a credit card that is located in the state I really want to retire too, and it just seems like a good company but I am up for suggestions on what company. I just hate how they make handling money so complicated. I wish you could earn trust by just doing the right thing without having to do it in a certain way, ya know? But that's life lol.

Well, I have been working since I was 13 years old on farms, but I had a full time job all summer at a car dealership (50 hours a week, 10 hours a day=great summer...) and I just got my tax papers back, 130$ back I think, maybe more.

Thanks, I just ask a lot of questions in general lol. I just want to be prepared, I am going to have a rough time getting used to military life anyways, mine as well get the financial stuff out of the way.

 

[Cain]

Cain. If your a real responsible spender then get a credit card.

Once you get that credit card it becomes very easy to use it for everything and to misuse it as well.

Believe me. I know. I got into a load of trouble with a credit card. I also got myself out of it on my own. No one bailed my ass out but me.

I now buy everything on a cash basis. If its something I don't have the money for at the time then I save up to buy it. This can sometimes take a while.

Patience is a virtue.

The only credit card I now own is the one on my Debit card.

I hope I am responsible lol. I do not plan to spend money I don't have, that feels like, setting yourself up for failure.

 

[Claudette]

Cain. If your a real responsible spender then get a credit card.

Once you get that credit card it becomes very easy to use it for everything and to misuse it as well.

Believe me. I know. I got into a load of trouble with a credit card. I also got myself out of it on my own. No one bailed my ass out but me.

I now buy everything on a cash basis. If its something I don't have the money for at the time then I save up to buy it. This can sometimes take a while.

Patience is a virtue.

The only credit card I now own is the one on my Debit card.

Unfortunately, Claudette, if you do not rack up a history of responsible use of credit card, your credit score might not be what you wish. And even if you never borrow money again for anything, that can affect your job prospects, your insurance rates, your access to rental property, etc.

If overspending is still a concern, you might want to get a secured credit card. Works almost the same as a debit card...you deposit $500, say, they impose interest and fees (modest amounts, usually) and when you have spent $500 on it, it no longer works until you fill it back up. That card would help rebuild your credit rating, but a debit card will not.

No. I learned a valuable lesson with my credit card. DON'T OVERSPEND. LOL

I try to follow that creedo always.

That secured credit card sounds like something I could live with. Sounds like a good way to build up credit again. I will eventually have to replace my van so its something to think about.

Thanks Mads.

 

[signelect]

I will have all my credit cards paid off in March but you still need the card, try renting a car or flying some place without one. The scam is that if you don't owe much and pay on time they don't like you much, they want you to owe a lot and then you can get a high score. The card companies are giving cards to people who don't need or deserve them based on their past payment history, same was true with housing, that is what got us into the mess to begin with. All renters are not bad people any more than all home owners are good people. Don't buy what you can't pay for and you will be alright.

 

[WorldWatcher]

So, I could join a Credit Union and it would basically be a bank + credit card? That sounds useful, and simpler then having 2 separate accounts.

It's kind of hard to explain, but I'll try. You may have one "Master" account (with some institutions it may be a checking or a savings) and then within that organization you setup separate functional accounts. So you would join the Credit Union and create the required account. Then you setup other accounts as needed. Say you join by establishing a savings account - that has an "account number". Then you add a checking/debit card account - that is a separate account number. Then add a credit card - that is a separate account number. Same with Certificates of Deposit, auto loan, etc...

However when you login for on-line banking you have instant access to all your accounts through your "master" account. That permits you to arrange on-line bill paying from your checking or transferring money from savings to make a credit card payment, etc... You can even use on-line bill paying to pay things like phone, cell, cable, auto insurance, etc... right from the computer. You don't have to write checks and mail them anymore. Come to think of it I can't remember the last time we actually mailed a payment to someone via snail-mail.

Hmm, I found a credit card that is located in the state I really want to retire too, and it just seems like a good company but I am up for suggestions on what company. I just hate how they make handling money so complicated. I wish you could earn trust by just doing the right thing without having to do it in a certain way, ya know? But that's life lol.

Having a credit card from the state you eventually want to retire to isn't really a factor. In the military there are two important factors.

1. Home of Record
2. State of Residence

Home of Record
Home of Record is typically the location where you join the military and that is the location that the military will move you to when you exit active duty. Home of Record does not normally change while you are in the military. A couple of important points about Home of Record...

Typically the location does not change while on active duty, although you would need to review current Air Force policies to see if it can be changed if needed. I was recently in a discussion about this on another board with an Army person and there are regulations in the Army that let a person change the home of record at certain points for certain reasons. At your separation, the military will actually ship you anywhere you want but they will only pay the portion equal to the amount to home of record. For example my home of record was in upstate New York and I was stationed in Virginia. They paid for me to move to another Virginia location even though my Home of Record was New York because the cost of the move was less. If the cost is more, they bill you.

State of Residence
This is different then Home of Record, this is the state you claim for tax purposes and where you vote. When you join the military your State of Residence and your Home of Record will normally be the same place. Depending on tax laws of your original State and the residency requirements of where you live, many people on active duty try to change their State of Residence. For example lets Tennessee charges state income tax to military members (I don't know if it does or not) and after schools you are permanently stationed at Eglin AFB in Florida. Florida has no state income tax. So while there you establish residency and change your State of Residence. Florida becomes your State of Residence, Tennessee would no longer be able to charge you income tax, however Tennessee can remain your Home of Record.​

This can be kind of dicy though so you really want to research it if you decide to play with Home of Record and State Residency. My brother-in-law is a Navy Captain (equal to an AF Colonel) and he was stationed at Fallon, NV for a couple of tours. As a California native he changed his state of residency to NV. However when his kids were old enough for college NV would not let them attend school at the instate rate, even though they were "Nevada Residents" because they had no lived in the state for a number of years. Some things like that can be funky for military people.


BTW - I was stationed at Memphis at Naval Air Technical Training Command, Millington TC in the mid-80's. Boy I miss the BBQ.


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[Madeline]

I will have all my credit cards paid off in March but you still need the card, try renting a car or flying some place without one. The scam is that if you don't owe much and pay on time they don't like you much, they want you to owe a lot and then you can get a high score. The card companies are giving cards to people who don't need or deserve them based on their past payment history, same was true with housing, that is what got us into the mess to begin with. All renters are not bad people any more than all home owners are good people. Don't buy what you can't pay for and you will be alright.

Two important points, signelect: because your credit score is a function of your debt to credit ratio, do not close a card you have paid off. Let it sit unused, so that the available credit is enhancing your score.

Second: anyone who uses the card but pays it off each month, or who does not use it, is a source of loss to the issuer. Banks have been VERY aggressive about imposing fees and even revoking cards in these cases, regardless of the harm to consumers. Always read ALL the mail (snail and email) the issuer sends you in detail. If this is happening to you, call the bank and object. If they will not reverse their decision, report the bank to the new Consumer Financial Protection Bureau. And apply for new credit in as large an amount as possible ASAP, even if you have no need of it. If you have 2 cards, each with a $5,000 limit and the bank revokes one for non-use, your debt to credit ratio is effectively reduced by 50% and your credit score can drop dramatically.

 

[Cain]

So, I could join a Credit Union and it would basically be a bank + credit card? That sounds useful, and simpler then having 2 separate accounts.

It's kind of hard to explain, but I'll try. You may have one "Master" account (with some institutions it may be a checking or a savings) and then within that organization you setup separate functional accounts. So you would join the Credit Union and create the required account. Then you setup other accounts as needed. Say you join by establishing a savings account - that has an "account number". Then you add a checking/debit card account - that is a separate account number. Then add a credit card - that is a separate account number. Same with Certificates of Deposit, auto loan, etc...

However when you login for on-line banking you have instant access to all your accounts through your "master" account. That permits you to arrange on-line bill paying from your checking or transferring money from savings to make a credit card payment, etc... You can even use on-line bill paying to pay things like phone, cell, cable, auto insurance, etc... right from the computer. You don't have to write checks and mail them anymore. Come to think of it I can't remember the last time we actually mailed a payment to someone via snail-mail.

Hmm, I found a credit card that is located in the state I really want to retire too, and it just seems like a good company but I am up for suggestions on what company. I just hate how they make handling money so complicated. I wish you could earn trust by just doing the right thing without having to do it in a certain way, ya know? But that's life lol.

Having a credit card from the state you eventually want to retire to isn't really a factor. In the military there are two important factors.

1. Home of Record
2. State of Residence

Home of Record
Home of Record is typically the location where you join the military and that is the location that the military will move you to when you exit active duty. Home of Record does not normally change while you are in the military. A couple of important points about Home of Record...

Typically the location does not change while on active duty, although you would need to review current Air Force policies to see if it can be changed if needed. I was recently in a discussion about this on another board with an Army person and there are regulations in the Army that let a person change the home of record at certain points for certain reasons. At your separation, the military will actually ship you anywhere you want but they will only pay the portion equal to the amount to home of record. For example my home of record was in upstate New York and I was stationed in Virginia. They paid for me to move to another Virginia location even though my Home of Record was New York because the cost of the move was less. If the cost is more, they bill you.

State of Residence
This is different then Home of Record, this is the state you claim for tax purposes and where you vote. When you join the military your State of Residence and your Home of Record will normally be the same place. Depending on tax laws of your original State and the residency requirements of where you live, many people on active duty try to change their State of Residence. For example lets Tennessee charges state income tax to military members (I don't know if it does or not) and after schools you are permanently stationed at Eglin AFB in Florida. Florida has no state income tax. So while there you establish residency and change your State of Residence. Florida becomes your State of Residence, Tennessee would no longer be able to charge you income tax, however Tennessee can remain your Home of Record.​

This can be kind of dicy though so you really want to research it if you decide to play with Home of Record and State Residency. My brother-in-law is a Navy Captain (equal to an AF Colonel) and he was stationed at Fallon, NV for a couple of tours. As a California native he changed his state of residency to NV. However when his kids were old enough for college NV would not let them attend school at the instate rate, even though they were "Nevada Residents" because they had no lived in the state for a number of years. Some things like that can be funky for military people.


BTW - I was stationed at Memphis at Naval Air Technical Training Command, Millington TC in the mid-80's. Boy I miss the BBQ.


>>>>

So, it's basically like this? Correct me if I'm wrong please.

Master Account (Savings Account)
A) Checking Account
B) Credit Card

Is that how it works? Do you advise any good places to do all this with? I am pretty sure I'll follow your advice, you know a lot about this stuff. Thanks for all the help.

I went to MEPS at Memphis, I think that was the only time I ever went there, I live very far north of Memphis on a farm. Closer to Clarksville

 

[WorldWatcher]

So, it's basically like this? Correct me if I'm wrong please.

Master Account (Savings Account)
A) Checking Account
B) Credit Card

Is that how it works?

Yep

Do you advise any good places to do all this with? I am pretty sure I'll follow your advice, you know a lot about this stuff. Thanks for all the help.

Oh, good heavens, don't go with the place I recommend. I'm just some faceless guy on the interwebs. I could be giving you good info or I could be blowing smoke up your ass. ( ).

Check things out, make your own decision. (That way if you don't like the place you can't blame me.

I did make some comments previously...

Likely credit unions:
1. Navy Federal Credit Union (www.navyfederal.org) | (Navy Federal Credit Union - Wikipedia, the free encyclopedia)
2. Pentagon Federal Credit Union (www.penfed.org) | (Pentagon Federal Credit Union - Wikipedia, the free encyclopedia)
3. Air Force Federal Credit Union (Air Force FCU) | ***

Navy Federal Credit Union
Having been a member since 1980. NFCU is the largest credit union in the United States with branch offices all over the place and access to something like 28,000 ATM's. NFCU's assets are about three times that of PFCU's and they have more locations.

Pentagon Federal Credit Union
This is also one I know of although I'm not a member. I live in Hampton Roads, VA in spitting distance to Langley, AFB and I'm frequently on the base for shopping at the Commissary/Exchange.

Air Force Federal Credit Union
I have no experience with the Air Force Federal Credit union, however I was not impressed with their web site as it seem fairly amateurish to me. After 32-years of being associated with the military I'd never heard of it and didn't even know it existed until I went looking for some balanced recommendations to make. As I said I live near a major AFB and never heard of it.​

** I would recommend joining a major military credit union over a local bank because of access in many more locations, including many locations overseas.

** Go to the sites above and do some checking on ATM availability, service fees, etc... (usually none which is different then many banks).

** Each site should have a branch locator, open google in another browser then start looking up the zip codes of various bases were you may be assigned (including overseas addresses). Punch them into the branch locator and see what is available.

** You should pick and organization that meets your needs, not one that met mine in the past.


I don't think you can go wrong with establishing an initial account with either NFCU or PFCU. That would be a good place to start and you are likely to have access if needed through at least Tech School. If your permanent duty station doesn't have a branch locally, not a big deal, just set up something temporary with a local CU. But with direct deposit, on-line banking, debit cards, etc... you may find that you never miss having a local branch to walk into with one exception. Financial planning.

I do strongly recommend that you talk to someone shortly after basic in terms of financial planning. In the old days we didn't have access to a personal retirement account and you retired at 20-years with 50% of base pay. Now it's 40% of base pay @20 but you can setup a 401K/403B and start your investing early in retirement.



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[Cain]

So, it's basically like this? Correct me if I'm wrong please.

Master Account (Savings Account)
A) Checking Account
B) Credit Card

Is that how it works?

Yep

Do you advise any good places to do all this with? I am pretty sure I'll follow your advice, you know a lot about this stuff. Thanks for all the help.

Oh, good heavens, don't go with the place I recommend. I'm just some faceless guy on the interwebs. I could be giving you good info or I could be blowing smoke up your ass. ( ).

Check things out, make your own decision. (That way if you don't like the place you can't blame me.

I did make some comments previously...

Likely credit unions:
1. Navy Federal Credit Union (www.navyfederal.org) | (Navy Federal Credit Union - Wikipedia, the free encyclopedia)
2. Pentagon Federal Credit Union (www.penfed.org) | (Pentagon Federal Credit Union - Wikipedia, the free encyclopedia)
3. Air Force Federal Credit Union (Air Force FCU) | ***

Navy Federal Credit Union
Having been a member since 1980. NFCU is the largest credit union in the United States with branch offices all over the place and access to something like 28,000 ATM's. NFCU's assets are about three times that of PFCU's and they have more locations.

Pentagon Federal Credit Union
This is also one I know of although I'm not a member. I live in Hampton Roads, VA in spitting distance to Langley, AFB and I'm frequently on the base for shopping at the Commissary/Exchange.

Air Force Federal Credit Union
I have no experience with the Air Force Federal Credit union, however I was not impressed with their web site as it seem fairly amateurish to me. After 32-years of being associated with the military I'd never heard of it and didn't even know it existed until I went looking for some balanced recommendations to make. As I said I live near a major AFB and never heard of it.​

** I would recommend joining a major military credit union over a local bank because of access in many more locations, including many locations overseas.

** Go to the sites above and do some checking on ATM availability, service fees, etc... (usually none which is different then many banks).

** Each site should have a branch locator, open google in another browser then start looking up the zip codes of various bases were you may be assigned (including overseas addresses). Punch them into the branch locator and see what is available.

** You should pick and organization that meets your needs, not one that met mine in the past.


I don't think you can go wrong with establishing an initial account with either NFCU or PFCU. That would be a good place to start and you are likely to have access if needed through at least Tech School. If your permanent duty station doesn't have a branch locally, not a big deal, just set up something temporary with a local CU. But with direct deposit, on-line banking, debit cards, etc... you may find that you never miss having a local branch to walk into with one exception. Financial planning.

I do strongly recommend that you talk to someone shortly after basic in terms of financial planning. In the old days we didn't have access to a personal retirement account and you retired at 20-years with 50% of base pay. Now it's 40% of base pay @20 but you can setup a 401K/403B and start your investing early in retirement.



>>>>

I trust ya lol. I think I'll check out the Air Force one, I need to open a Savings soon, I should have about 200$ in it before I leave for Basic, and I have another account ran by family for me, but it is college fund (even though it'll be paid for ). Thanks for all the help, and I am checking out the Air Force one, and will have my parents look at it with me too. Thanks man, I owe ya.

~Edit~ lol I checked the Air Force website, I think you have to actually be stationed in one of these states: Texas, Oklahoma, Arkansas, Louisiana, or Mississippi. to do it, it has that behind a lot of the requirements lol.

 

[Madeline]

If you are not eligible for a military credit union right now, Cain, consider a nonmiltary one. Credit unions are non-profits, run for the benefit of depositors. This is why their services are superior to those of a bank.

The only time you should consider a bank is when taking out a mortgage, and that's only because credit unions do not offer them. But auto loans, savings, checking, credit cards, etc., they do.

 

[WorldWatcher]

>


Cain,

I feel like such an ass. All this time I've seen "Air Force DEP" and interpreted it to mean Air Force Dependent and not Air Force Delayed Entry Program.





My bad and I truly apologize for the confusion.


As a member of DEP I'm not sure if you qualify for to join one of the military credit unions yet. If you may or may not be, I would recommend calling their 1-800 number and check. As a member of the DEP you may qualify if you are actually now in a Reserve status. I'm totally not knowing on that aspect.


If you can join fine. If not, it's not that big a deal. Just what until after Basic to join one of the military CU's. In the grant scheme of a 20-year career, a few months won't make that big a difference, although you may want to have an account with a local CU just for initial direct deposit purposes.


God I feel like an idiot.



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