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So I'm very late to the building-up credit party (27 y/o) but I was thinking since I use Amazon a ton and will be using it even more now that I'm moving into my own appt, an Amazon Credit Card would be good? How do I know if it's a sensible idea?

I'm looking at this: http://www.amazon.com/Chase-Amazon-com-Rewards-Visa-Card/dp/B007URFTYI/ref=sr_1_1?s=financial&ie=UTF8&qid=1425675518&sr=1-1

I have a big concern about: "Balance Transfer Fee Either $5 or 3% of the amount of each transfer, whichever is greater."

They really would take 3% of any transfer of money I make into or out of the account? This seems "unnecessary" / really bad? What's going on, what do they mean by this? My direct deposit goes into one account then I xfer it into my savings -- I have no idea if that is even relevant but ... yeah I'm very lost right about this point, so I'll just end where my knowledge completely ends... thank you for any help!

  • Balance transfer here refers specifically to the act of transferring a balance from one credit card onto another credit card, usually to take advantage of some promotional interest rate on the new credit card. If you do not currently have a balance on a credit card then this does not apply to you at all. You can just ignore this information. – dg99 Mar 6 '15 at 21:12
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    Is your question "What is a balance transfer?" or "Which credit card should I get?". You've got a good answer as to what a balance transfer is. Which credit card is quite a broad question. – Raze Mar 6 '15 at 21:19
  • In deciding what credit card to get, it's a good idea to look at NerdWallet's comparisons, or those on similar comparison sites. Even if you don't get one of the cards they recommend, it's a good resource for seeing what sorts of rewards and rates are available for people with various credit scores, and you can compare those offerings to other ones you find. – BrenBarn Mar 6 '15 at 21:32
  • @Raze I am seeking broad advice that informed people might deem relevant to someone as uninformed as myself, basically. – HC_ Mar 7 '15 at 0:34
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    On a related note, I recently found Google Compare, which tries to help you do this: google.com/compare/creditcard/qs#p=0 – David Grinberg Mar 7 '15 at 15:48
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First and foremost you should do more research on credit cards and what everything means. As expressed by others the balance transfer fee is not what you think it is. Credit cards can be great, they can also quickly erode your credit score and your standing. So understanding the basics is VERY important.

The credit card that is right for you should have the following criteria.

  1. Have no annual fee.
  2. Be accepted where you plan to use it.
  3. Provide the best perks for your situation.

The first two points should be straight forward, you should not have to pay a CC company for the privilege to use their card. They should pay you through perks and rewards. It should also be a CC that can be used for what you need it for. If you travel internationally a lot and the CC you choose only works within the US then what good is it?

The third point is where you need to ask yourself what you do a lot and if a CC can offer rewards through travel miles, or cash back or other bonuses based on your lifestyle.

The transfer fee is not what you think it is, people who already are carrying debt on another credit card and would like to transfer that debt to another credit card would be interested in finding a fee or a low %. People do this to get a batter rate or to get away from a bad credit card. If one charges 28% and another charges 13%, well it makes sense to transfer existing debt over to the 13% provided they don't crush you on fees.

Since you have no credit card debt (assumption based on the fact you want to build your credit), you should ask yourself for what purpose and how often do you plan to use the credit card.

Would this card be just for emergencies, and wont be used on daily purchases then a credit card that offers 3% cash back on gasoline purchases is not for you. If you however love to travel and plan to use your credit card for a lot of purchases OR have a few large purchases (insurance, tuition etc.) then get a credit card that provides rewards like miles.

It really comes down to you and your situation.
There are numerous websites dedicated to the best credit card for any situation.

The final thing I will say is what I mentioned at the beginning, its important, CC's can be a tool to establish and improve your credit worthiness, they can also be a tool to destroy your credit worthiness, so be careful and make smart choices on what you use your card for. A credit score is like a mountain, it requires a slow and steady discipline to reach the top, but one misstep and that credit score can tumble quickly.

  • Thank you so very much. So, I don't travel much or intend to travel in the near future, so miles aren't something I'm interested in (I know that's what my parents cards are tied to though). I do use Amazon a lot, granted half of it or more might be merchants selling through Amazon. I plan on using this credit card for ALL my purchases, because I have a buffer of money saved up and I believe spending is how you build credit? I do not plan on taking ANY loans any time soon -- just paying daily life bills and recreational expenses and gas, etc. So the Amazon card does seem to line up, thanks aga – HC_ Mar 7 '15 at 0:37
  • @HC_ You get credit by spending, but thats just "activity". Activity is one part. Time you've held a card(s), paying on time, debt-to-credit ratio, loans, etc. All have parts to play in "getting" a high credit score. I would suggest getting a few different cards (Mastercard, Visa, Discover, Amex, store cards like amazon, etc) and finding cards that have good bonuses (cash back on groceries, resteraunts, whatever you do regularly) - then keeping them paid off in full but used. – WernerCD Mar 7 '15 at 2:21
  • @treeNinja I would generally agree that no annual fee is the best option, but there have been a few exceptions. I've seen some cards that have an annual fee that is balanced by having real good cash back options. They are a rare exception to the rule though. – WernerCD Mar 7 '15 at 2:27
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"Balance transfer" is a specific type of transactions where you use card X to pay off card Y.

Assume you have a credit card Y with $1000 current balance. You open a new credit card X, and use the newly approved credit to pay off the balance on Y. You'll pay $30 fee (3% of the balance you're transferring).

This doesn't apply to transfers from your checking/savings to the credit card to pay off the balance on that credit card. "Balance Transfer" is when you use credit limit of card X to pay off existing balance of card Y, nothing else.

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    Ahh wow okay, thank you so much. I think I understand now. – HC_ Mar 6 '15 at 21:24

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