5

I'll be turning 18 in a few months, and I'd like to get a credit card as soon as I can. I've been doing some research on the options available, when I stumbled across this credit quiz.

I answered the questions the way I am planning to use my credit card, and, except for one question, I had correct answers.

How much of your monthly income goes to pay credit card bills?
A: Less than 10%
B: 11%-20%
C: More than 20%

I answered C (A was correct), because I figure I'll probably be spending at least 20% of the money I make, and once I have a credit card, I'll use that for at least 95% of my purchases.

Why does it matter how much of my income I use to pay credit card bills, if I pay them fully, and on time?

If I rack up $1,000 on my credit card in one month, and make $1,000 that month, and it all goes to pay off my credit card, what's wrong with that?

10

I agree with you. The quiz was looking at it differently, as if you had a huge card balance and were making minimum payments. The fact that I run all my spending through my cards somehow looks like my card payments are 60-70% of my budget. But when you break it out, zero of that is interest, and it's just a budgeting tool.

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5

I took the quiz that you linked too and answered with what I considered "ideal" answers with the exception of checking C for that particular question....

The first thing I saw was I needn't have bothered with giving the ideal answer as the result is self graded (paraphrased) as...all "A" great, mostly "A" good, mostly "B" you can do better, any "C" you probably have problems...regardless of your actual answers.

Secondly my ideal answers didn't agree with theirs.

Finally, neither my ideal nor theirs takes actual circumstances into account. For instance paying off your debt each month: there are quite a few cards that offer zero percent financing for extended periods of time, for those cards the ideal would be for the debt to be paid off before the terms change. Whether that should be steady progression towards zero or a ballon payment at the end, would depend upon your circumstances.

In short, look at this quiz as a rough guideline, not a nuanced evaluation of your credit handling capabilities.

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  • It is possible this question has been re-used from ancient times when cash was still used for many transactions. I would expect more than 20% to be the norm. I currently pay 100K a year in school fees and I don't make 500K. Further, I might be paying off the card from a sinking fund that has ballooned from prior years. (I am not 18). – mckenzm Jul 12 '15 at 21:37
  • @mckenzm: I think it's just intended to be a quick and dirty guide, not a perfect fit for all situations. – jmoreno Jul 14 '15 at 3:16

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