Sunday, May 4, 2014

Cash or Credit?

     When you arrive to Philly, a whole new world of museums, shopping, and dining opens in front of you. But to fulfill all your plans you need to be ready financially. If you have enough cash, you are probably covered. But is it safe to always carry $100, $200 on you being prepared to buy something in case of emergency?
And let's face the reality, America is a debit/credit card country. You can pay with card almost everywhere, even the cab. An amazing thing is that you can even leave tip from your card by writing a number on a check. And if you go out with a big party, the waiter will (maybe not always easily especially because of your foreigner English) split the check by 6, 8, 10 parts and then put 2 parts for couples and 1 part for singles. Sooner or later you will need a card.
      If you decide to have a debit card, you need to open an account in a bank. To open an account without Social Security Number or without a job is not easy, and there are a lot more documents to be provided. But don't worry, after all you are an expat wife and you came here because of your husband, so go to the bank together and add your name to his account so you can have a joint account (side plus: from that moment on, you will have access to all his money) ;-). In order to have a joint account you just need to provide your home passport. The very same day you can have a temporary card while they will mail the permanent to your address. To use the card you might need some kind of identification. If you still don't have any American ID (you can read how to get one in our post "Your ID Please"), you should carry your passport with you. Or you can use debit card customizing option offered now by many banks. As I did, you can put your picture on it. Of course, it's not an official ID, but it will work most of the times (as a matter of fact, they never ask my ID for this card).
     Next step is a credit card. If you are here for some time, you have probably heard expressions like credit score and credit history. If you have long terms plans here in U.S., you better start building your credit history. In Russia it was easy, if you have a good salary, you never had credit and you don't have any pending debt, you could easily get car credit or mortgage, because you are "clean". Instead here, you can expect only minimum amount for the first-time credit. Anyway, as soon as you get a job, you can try to apply for "simple" credit card. Many institutions have cards that allow to re-build or start a credit history. By saying "simple", I mean that some credit cards are easier to get than others. Credit cards normally provide to the consumers several bonuses (like cash back, rewards points, airfare miles, etc.) the better, more tempting and greater are the rewards, the higher are the requirements for the applicant. For example, it's hard to get an American Express or miles rewards credit card from your airline (i.e. US Airways, Delta, etc). Most of credit cards application can be done on the institution website, and the decision time may vary: for basic cards it can be few minutes, for harder ones you'll get an answer by mail in several days . Never apply for several credit cards at once: when your credit-ability is being checked by more than one bank at the same time, it means that your shopping for credit because you need it and that might not be good for your application. Also, when requesting a credit card, your credit score is checked: every inquiry reduces your credit score a bit.
     In case your application is rejected, there is a way: secured credit card. You basically deposit your own money in a credit institution and they issue to you a guaranteed credit card. As soon as you got your first credit card, manage it carefully and use only 1/3 of your available credit. 1/3 of your credit is a recommended utilization ratio in order to build a good credit history. And yes, credit cards issued by shopping retailers, as Macy's, Bloomingdale and many others, may seem "simple" to get, because they are offered every time you do shopping, but they are very poor credit cards, with extremely high interest rates, and you definitely don't want them to build your own credit history. The length of your line of credit is a major factor in your credit score: you should never cancel your older credit card. That is why the choice of your first credit card is extremely important. You don't want to go for a "shopping" one. Anyway, when you start using your very own credit card every month and pay it every month on time, this should allow your credit score to improve and therefore, even if you started with little credit limit this should increase over time. Little tips: set the payment of recurring bills on your card, for example your phone bill, and set up automatic payments of your balance, they both look good for your credit history. As a matter of fact, after using my first credit card just for several months my credit score improved and without asking I got a limit increase; and bunch of other credit card companies started to mail their applications to my home address, including the more rewarding cards I wished before. So now when we are thinking about mortgage, me and my husband, both having a good credit score, can apply with joint income and have stronger application. 
     Finally, coming back to our cash/debit discussion, there are still places where you can pay only cash or there is a card minimum , but don't worry, we're in America, no merchant wants to loose your business: in these places you will definitely find ATM either near or even inside of the store, salon, etc. Only remember about tolls, if you drive a car and don't have EZpass, you can pay only cash!!! If you don't have any you will need to wait for an officer, who will issue you a ticket and you pay later online or with a check. So my advise is: get a card and carry $20 cash.