June 7, 2024 • 33 mins
Join Michele Enriquez and special guests Andrew Farrell and Alexia Razo-Orrego as they unpack all things credit cards. Tune in for expert advice and real-life experiences with interest rates, credit limits, rewards, credit score impacts, and a little guidance on how to choose the right card for you. Regardless of if you are a seasoned cardholder or a newbie this episode was created to help you make educated and informed decisions that enhance your financial journey.
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Episode Transcript
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(00:02):
Thanks for joining today's episodeof Small Talks for Big Change, where
we help simplify financial topics tohelp with your financial wellness.
My name is Michelle Enriquez,your host here at Patelco Credit
Union, and greetings, everyone.
Welcome back to the showand thanks for tuning in.
Today, we're going to talk aboutall the things you should consider
when choosing a credit card.
(00:23):
And our conversation today is not goingto be useful for just people getting
started with the first time credit card,but hoping to ignite some thoughts for
people out there that might be lookingto maybe re diversify their credit card
mix or get an additional card as well.
We have two friends withus to talk it through.
We're joined by the Andrew Farrell,Community Engagement Specialist
(00:47):
and first time guest Alexia RazoUrbego, who is the Assistant Branch
Manager of our Dublin branch.
Alexia, welcome to the secretstudio that's been in this
building the whole time.
Thank you for having me.
I'm very excited to participate andbe able to share some of my knowledge.
I am fortunate to have come on board withPatelco about a year and a half ago, and
(01:09):
I have about 15 plus years of experiencein the financial industry, and I'm really
happy to be here and be able to sharesome of my experiences and what I do here.
Yeah, and our branch is here at thebuilding, so I didn't know if you
knew the podcast studio was rightbehind the branch, but welcome.
Welcome.
Thank you.
All right, Andrew.
It's always a pleasure to have you here.
Welcome back.
Thank you.
(01:29):
It's always a pleasure to be.
It's my fifth time here, Michelle.
Fifth time we're counting.
Oh yeah, we're counting.
We're counting.
Awesome.
So I'll kick us off, you guys.
I have an embarrassing story to tell.
The moment we figured out the topic forthis episode, I immediately recalled
the scenario with a past intern.
Who spent the summer with us and he hadasked me for some time to help talk him
(01:50):
through getting his first credit cardSo I scheduled a meeting with him And
then proceeded to completely overwhelmhim with every credit consideration.
He could possibly have Bobby ifyou're out there, I'm so sorry.
I overwhelmed you that day I hope thatcredit card that you eventually get
Applied for is working out for you.
(02:11):
You know, I feel like there'ssome things in life that we don't
have to be the full experts on.
I just give me the high level basicsand then let me consult an expert
and somebody just tell me what to do.
Right.
I, if you're the expert on it, I'lltake your best recommendation, but I,
I don't wanna be the expert on creditand all the credit card options.
I hear you.
So hopefully this episode is, you know,an attempt to redo that and to help
(02:35):
simplify it, which really is the whole.
Point of the whole show, isn't it?
Why don't we start off with, causewe're talking about getting started
with your first credit card, maybegoing back and looking at getting
a different credit card, but levelset, Andrew, what's the age that
you legally can get a credit card?
Yeah, so the legal age tobegin applying for credit and
building your credit score is 18.
(02:56):
, and I do suggest starting withestablishing credit as early as
possible, keyword, as long asyou're able to do it responsibly.
That means no, you know, maxing outcredit cards, no missing payments,
but if you're able to, you know,responsibly handle credit at 18,
that is a good time to get started.
Once you turn 18, getting startedwith your first credit card, it
can have, , Lots of good benefitsfor your credit growth longterm.
(03:18):
It helps accelerate your credit growthas you'll maximize the amount of time
that you'll have established credit andthat'll help boost your score quite a bit.
, if you are looking for advice on how toget started when the time is right, look
no further than Patelco Credit Union.
Any one of our 37 branches or ourvirtual branch are fully equipped
with super knowledgeable teammembers, Alexia being one of them.
(03:40):
Very, very happy to have youhere to get your insight as well.
But all these people canget you on the right path to
successful, healthy credit growth.
This can be both You know, establishingyour first time credit and starting to
build credit or rebuilding credit as well.
We have lots of financial guidancethat you can request with one of
our certified financial specialists.
You can make an appointment on ourwebsite under the financial wellness
(04:02):
tab and they can get into all thenitty gritty with you as well.
So, you know, lots of ways to startestablishing credit, to build new
credit, and to do it responsiblywith, you know, the trusted experts
that we have here at Batelco.
Awesome.
So 18's the age that you can get started.
Uh I went with, the managerfrom your branch out to a junior
(04:22):
high school class yesterday.
We taught seven classes, introducedthem to the concept of credit, and
the main point we wanted to leavethem with is like, hey, credit's gonna
be important to you in the future.
You're probably gonna want to buy a car.
You're probably gonnabuy, want to buy a house.
But understand that credit hasmore implications than just your
ability to borrow in the future.
(04:44):
It has implications for future employment.
Your credit report is somethingthat a future employer is
probably going to look at.
When you go to rent your first apartment,your future landlord might look at it.
So, , you can look at your creditreport to make assumptions about you.
So, there were a lot more thingsthat we were trying to leave these
young people with in anticipation of18 and getting started with credit.
So, the timing was just, , really goodand it happened to be your manager
(05:06):
that was with us, in the classroom.
But just, The thing, or the, thedirection that we were pointing these
young people to was to the branch.
When you're ready to kind of makethese big decisions, it might be
good to go in and talk to somebody.
So if you get a bunch of kids atyour branch asking for you, then
you understand the reason why.
But you help young people andjust members alike with this very
(05:29):
need all the time at the branch.
Tell us a little bit about kind of thatneeds assessment or the questions that
you ask when people come to you andsay, Well, I haven't got started with
credit, whether or not they're 18 or not.
How do I do that?
How do you go about kind ofuncovering what their needs are
to put them in the best match?
Absolutely.
, so at Patelco, like you were mentioning,every experience is different.
(05:50):
Every engagement and conversationthat's had is different.
It's different.
It's really tailored to whatthe individual needs are.
, some great questions that I wouldfollow up with when I'm actually
conversating with somebody is,what are your short term goals?
What are you trying toaccomplish within the next year?
What are you trying to accomplishwithin the next five years?
10 years and so on and soforth, , really giving them the
(06:13):
opportunity to see what their needsare, because when I'm evaluating a
situation, I want to make sure thatwe can meet their financial goal.
So I feel like that's avery important conversation.
The goals, , if they're tryingto accomplish something, what's
the timeframe and a realistictimeframe on what we could do?
So I also think that it's importantto have the conversation of,
(06:35):
affordability of what you can, , forcredit needs, what you can get.
So that's something that I wouldalso want to conversate, you know, if
there's employment, is there futureemployment that's going to be had?
But like I said, every conversation istailored to that individual's needs.
So different conversations for aretiree versus somebody who's brand
new into credit, or maybe somebodythat needs debt repair and how we can
(06:57):
help provide them solutions to those.
And really, , keeping our best interestin what Financial freedom looks like
for that individual and financiallyhow we can help them accomplish that.
And in talking with these youngpeople too afterward, the hands fly
up, they're asking questions, credit,the topic of credit usually always
(07:18):
stimulates a lot of questions becauseit's complex, it's convoluted sometimes.
One of the things that cameup, , was the fact that they didn't
want to wait until they're 18.
They understand that they couldpossibly be on a credit card
with their parents before 18.
Can you talk a little bit about authorizedusers and kind of the difference of
Being an authorized user versus beingan actual applicant or Absolutely.
(07:42):
So, , to be an authorized user,you'd have to be 16 years of age or
older to become an authorized user.
It would have to be authorized by theprimary credit holder to actually allow
that individual to Basically use the card.
The individual who is the primarycredit applicant, they would actually
be responsible for those transactionsthat are made by the authorized user.
(08:05):
This could benefit somebody, maybe ifyou're trying to teach somebody how to use
a credit card, maybe also, optimizing,good purchases versus bad purchases, but
also it could help maybe if you have aretiree who becomes ill and they need
an authorized user to maybe aid them toget groceries or to help them with their
simple tasks that maybe they are incapableof doing at that immediate moment.
(08:27):
I would say there's advantages likeassisting or to teach, but I also,
I think it's a huge responsibilityfor that primary applicant because
any transactions that are, that areposted on that card is ultimately the
responsibility of the primary user, andit's affecting their credit, whether it
be in a positive or in an adverse way.
(08:47):
So, if there is adverse usage,that's a consideration that a primary
would want to consider before sayinglet's have an authorized user.
You really want to have thatconversation about responsibility when
utilizing that cart because it willultimately reflect on the primaries.
credit report.
So the authorized user doesn'tget the benefit of reporting
purposes for that credit card.
(09:08):
So if there are on time payments,anything like that, it's not showing
on the authorized user's side of thecredit aspect for building credit.
So it might be an opportunity to justhave more of a teaching tool versus
something that is going to ultimatelyhelp this individual build their credit.
Yeah, and at the end of it, we were,you know, encouraging these young
(09:29):
people to have the conversationswith their parent or an adult.
If it makes sense to go the authorizeduser route in anticipation of you
having your own at 18, kind of dependson their level of responsibility,
but maybe also their parentscomfortability with even having them on.
But yeah.
An option, nonetheless.
Okay, cool.
So, let's switch gears a littlebit because yesterday, we
(09:52):
also talked with these folks.
Actually, when we're in the collegeclassroom, Andrew, this comes up a lot.
When we talk about the spectrum ofthe credit score and the factors that
go into What makes your credit score?
Credit mix always comes up,and I feel like it's the most
confusing for everybody to grasp.
You're the best at kindof breaking it all down.
(10:13):
So when it comes to credit mix andthe healthy credit mix, there's some
rules that we teach in the classroom.
I'd love for you toshare them on the screen.
Yeah.
So I want to talk about when they'recalculating your credit score, they take
into consideration five different factors.
, so just to make sure everybody is kindof on the same page with this, I want
to talk a little bit about what makesa credit score just to begin with.
(10:33):
There's payment history, which takesinto account whether you've made
at least your minimum payments.
in full and consistently and on time.
Amounts owed looks at the totalamount that you currently owe
across all accounts relative tothe credit that you have available.
Length of credit history basically meansthat the longer your credit accounts have
been open and in good standing the better.
(10:54):
That is a very good reasonwhy you should not ever close
your first time credit card.
Because once you close that ifyou've had it for you know, 10
years, 15 years, even if you're notusing it If you close it, you lose
all that positive payment history.
, new credit, this is where hardcredit polls come into play.
So this is kind of the way thelenders look at this is if someone
is applying for a lot of new creditfrequently, that can be a red flag
(11:17):
because it can sometimes be indicativeof like a financial pressure or like
overspending habits or things like that.
So every time you apply for credit,your score does get dinged a little bit.
The last category, the one thatyou mentioned is credit mix.
So this means that lenderslike to see that you can.
successfully manage a healthymix of different types of credit.
So this means like revolving credit, whichwould be credit cards, lines of credit,
(11:39):
things that you kind of borrow and payback, , as well as installment credit.
So these are things that you, you know,make your set payments on home loans, auto
loans, student loans, that kind of stuff.
So those are all the different factorsthat we use to, calculate credit.
When we're looking at having theright balance of credit lines.
First and foremost, a question that Iget all the time when I'm out in colleges
(12:01):
is, how many credit cards should I have?
What's the sweet spot?
It's a sweet spot.
And it's such a tricky question toanswer because, you know, we just
talked about all the factors, numberof credit cards is not on there.
So there's no real, black or whiteanswer, for how many you should have.
My general, I guess, frame ofthinking there is just don't have
any cards that are unnecessary.
(12:21):
The more cards that you have, thatmeans the more cards that you have to
manage, which could ultimately resultin like missed payments or missed
annual fees or things like that.
It can also mean a lot of hardpulls on your credit, which
can bring your score down.
Brand new credit cards also affectyour overall average length of
credit history since it brings downyour overall average credit age.
So basically just apply responsiblyand conservatively for the
(12:43):
credit cards that you do have.
The general rule is 30 percent usage.
That's kind of the rule of thumbfor, the amounts owed that you had.
So I mentioned earlier, one of thefactors in calculating a credit score
is amounts owed the rule of thumb there.
for good shape, 30 percent or less.
So that means that let's sayyou have three credit cards.
One has a 10, 000 credit limit.
(13:04):
One has 4, 000 and one has 6, 000.
Your total available credit betweenall those cards is going to be 20, 000.
That is your available credit.
You want to keep your balanceson all those cumulatively at 30
percent of that available or less.
So in that case, it'd be about 6, 000.
That is a green flag to lenders becauseit makes you look, on paper, like a
very, you know, responsible borrower.
(13:26):
And it can help boost your creditscore in the long term as well.
Yeah, and you used to work at thebranch, like Alexia did, right?
Most people don't know that.
That's not, in all of the, the largespectrum of things you need to know
about credit and how your creditscore is calculated, that's never the
most obvious, but also the most kindof counterintuitive for students.
Well, it's, it's weird because like,I think a lot of people think like,
(13:49):
Oh, I make my minimum payment on time.
I've never missed a payment.
Why is my credit score not 800?
And it's like, yeah, if you, ifyou make all your payments on time,
that factor of your credit score,the, you know, on time payments,
that'll be, you know, good and gravy.
But if your, you know, balancesare all maxed out, well, that
section is going to be okay.
That one's not going to look so good,which can, you know, have a negative
(14:10):
impact on your overall credit.
Okay, so 30 percent utilizationof your credit card.
Rule of three, so a good healthy mix.
Alexia, you're on that same page too.
Oh, absolutely.
As someone who processes loans,you're looking for a healthy mix
and that mix is probably three.
Okay, , we were trying to get the studentsyesterday in the classroom to get to
(14:30):
thinking of things from the standpointof somebody that would lend money.
So when you go and see somebody likeAlexia, and you're asking her to
borrow 10, 000 or 20, 000, what aregonna be the things that she's looking
at to make a determination aboutyou and your character as a person?
to want to lend money to you.
(14:51):
And we were comparing that to their reportgrade history in their report cards,
and the maximum GPA you can get is a 4.
0.
Kind of think of your credit scorelike, okay, the max is 850, but
think about your credit report inthe same way you might think about
your, , your grades, and your GPA.
Okay, cool.
So, now we have a better ideaof when to get started, when we
(15:13):
might need to add a credit cardif we're talking about credit mix.
And I feel like that comes up alot too when we have folks that
come to us and say, you know,I'm interested in buying a home.
I want my credit score to be inthe, like, best optimum position.
I might need to add another lineof credit and, In order to do that,
that's something that they can cometo you and ask advice on it, Alexia?
(15:36):
Absolutely, so, , definitely ifyou're interested in purchasing a
home, anything like that, you dowant to have a good credit score.
You also, like Andrew had mentioned, amix of installment versus revolving, and
making sure, like you had also suggested,making on time payments, but making sure
you're also at that 30 percent or less.
Um, That's all very important, but that'ssomething that can be evaluated for what
(16:01):
you specifically need as a member, whatyou're looking for, and then your time
frame of trying to accomplish that also.
And how we can get to you tothat point where you have, your
odds are going to improve to getthat loan that you're requesting.
Okay, cool.
Are we entering likeoverwhelming Bobby territory?
I think Bobby's fine.
(16:21):
Okay, I think Bobby's doing well.
Bobby again, we're out there likeI'm hoping we're not overwhelming
our listeners to with all of theinformation that you should have.
But it's all important.
Yeah, you know, if you're goingfor that, 850 credit score.
If you're trying to meet allof those financial goals, your
credit score and your creditreport is such a big part of that.
Okay, so we know when we need to adda card, get started, all of that.
(16:47):
Let's talk about all the optionsthat exist out there in the universe.
Okay Andrew, let me just ask, thiswasn't part of our outline, should you
just go open a credit card at everyretailer that asks you at the counter?
Is that a good strategy?
No, it is not.
So, beware of retail credit cards.
I'll say lots of times when you'rechecking out at any department
(17:07):
store, they will try to sell youtheir card to get you to save.
Yeah, right there.
And it's always a pretty good deal,like, you know, your purchases.
300.
If you open up our card, it'sonly going to be 80 today.
Let's go and do it.
It sounds so good.
It always sounds so simple, you know, sivehere and you'll save all this money today.
When you are given those offers, justmake sure you're thinking it through
as a long term decision, becausereally getting any credit card is
(17:31):
in fact a long term decision and notjust a way to save some quick cash.
, same goes with those mailers invitingyou to apply for credit cards.
A lot of those times you're probablygoing to be subject to a credit warning.
Some are pre approved to where it'snot an actual credit pool, but a lot
of times, , How do I say this gently?
Just because something implies thatyou're pre approved does not mean that
(17:52):
you actually are pre approved or thatyou're not going to have a credit pull.
So, sometimes verbiage used likeyou're invited to apply or like
you're pre screened or pre selected.
That doesn't necessarily meanthat you are pre approved.
, they still could give you acredit pull and that still could
negatively impact your credit.
Okay.
But I can come ask Alexia if Yeah.
Okay.
(18:13):
That's the case for me.
I know we do a lot of pre approval lettershere at Patelco, but somebody could come
to you and say, Hey, I got this in themail or I got this from you at Patelco
or wherever and they could Kind ofcheck check the validity of it with you.
Definitely I and also I would suggestwhen you get those flyers I mean
take it if you're with us, whichyou should be bring it to Patelco.
(18:35):
Let us look at it There's oftentimesfine print that's overlooked because
they're only sharing the parts thatare that that institution wants you
to actually see, but reading thatfine print and actually getting to
the nitty gritty of what is needed.
, is it going to be a hard pull?
Is it because it should bedisclosing that in that fine print?
(18:56):
But like Michelle, I mentioned we do offerpre approvals here at Patelco too, and
they do occur and we generally will tryto have that conversation with our members
as they walk through the door, whether itbe on the teller side or the banker side.
So that is something thatconversations that can be had but
also if you kind of just need theconsult of, I got this in the mail.
What can we do?
(19:16):
In terms of our, our interest ratesand our annual percentage rates that
we offer, they tend to be a lot lowerthan these larger retail institutions.
So it's a great opportunity to kind ofcompare, Is there fees associated or do we
have fees and just getting your options,I don't think you should just pick the
one that came in the mail that says you'regoing to have all these swanky things,
(19:38):
but there's probably strings attached.
So it's really important, I think, toconsult somebody who you can trust, and
that's how we really like to see ourselveshere at Patelco, somebody that you can
come to and really get that advice.
Is this a good option?
Maybe we have something that we couldprovide that's better, a stronger
or a better fit for that individual.
Yeah, that's good advice.
Andrew gives a great budgeting classand one of the things you recommend
(20:00):
in that class is taking a step back.
You get the information, you sit on itand you think about it, you consult an
expert and then you can make a decision.
So it's not, it's not noforever, it's a no for now.
No for now, exactly.
It's a no for now.
Okay, regarding rewards and options,right, we've got all the retailers
that are offering you credit cards.
You get all the things in the mail.
(20:21):
There's a lot of things out there.
I think a lot of what might be topof mind for people when considering
a credit card or an extra creditcard might be what's in it for them.
And credit card companies, frankly,they're fighting for everyone's business.
So it's in their bestinterest to offer these perks.
Andrew, you are self admittedly a sampler.
Yes.
Right?
For the sake of like being knowledgeable,but also for your own financial health.
(20:46):
You want to have the bestthing that's out there.
Yeah.
And I love free stuff.
Yeah.
I love free stuff too.
Who doesn't, right?
What is your prioritywhen it comes to rewards?
There's cash back.
There's miles.
There's all kinds of things.
So I think it just kind of depends onlike finding a card that offers rewards
that best aligns with your lifestyle.
, for me, I really like a travel rewardand I will say this about rewards.
(21:07):
So generally the way credit cardswork, you know, you, You swipe your
card, you spend the dollar, you get thepoints associated with those dollars
spent as soon as you spend them.
But, you are not actually payingany interest on those dollars spent
unless the balance carries over intothe next, like, statement cycle.
So, I mean, theoretically, you canbe, like, the way I do it, I put all
(21:29):
my purchases on my credit cards, Irack up all the rewards, but I pay my
balance off, like, constantly, so I'mnever paying any interest and I'm just
getting, like, free money out the wazoo.
It's fantastic.
, I have a, a travel credit card thatactually does have a small annual fee.
So one thing to consider when you arelooking for a credit card is annual fees.
(21:50):
, there could be some that offer reallygood rewards, really good points, but the
annual fee for it is like astronomical.
If you want to avoid annualfees, there are plenty of options
out there that you can do that.
Patelco has a really greatpoints rewards card that is It's
totally free for the annual fee.
You get lots of points back for like gasand groceries and all kinds of good stuff.
I do not think that annual fees arenecessarily the worst thing in the world.
(22:14):
Not everyone agrees with me on that.
Yeah.
So when I was looking for my travelcard, I compared like 10 different
ones and the one that I pickedultimately does have a small annual fee.
It's like less than ahundred dollars a year.
But the rate that I get.
points back on this card like more thanpays for the annual fee when I compare
that even factoring in that smallfee, I still net more rewards than I
(22:36):
would have on some of the free ones.
So I decided ultimatelythat was the way to go.
, but I, you know, I know that becauseI did my research, I, you know,
looked around, I didn't just takethe first card that came my way.
I made sure that I made a good, youknow, strategic decision and credit
cards, you know, it's a lot likegoing to And all you can eat buffet.
Like, you've been doingall you can eat buffet.
(22:57):
You don't, you don't juststock up on bread right away.
Like, you gotta, like,survey the surroundings.
You go for the prime rib, onceyou've, like, staked it all out.
And, and that's the samething with credit cards.
You know, it's, it's a game.
And you gotta, you gotta play to win.
Yeah, but you gotta do your research, too.
Again, Alexia and thebranch is a great team.
resource to do that with.
Bring all your options,sit down and talk about it.
(23:19):
We've got a service called CertifiedFinancial Specialists, where you
can come down, you don't fullyunderstand, or even if you fully
understand, you might just need anexpert to kind of bounce ideas off of.
That is literally the, the purpose ofthat position here at Patelco, is for
you to get personalized financial advice.
And, Regarding budgeting, making decisionsabout credit, et cetera, et cetera.
(23:41):
So, , come see Alexia at thebranch if you want to do that.
, Andrew, I love that.
For me, it's miles.
Miles is my priority.
And funny, because my mileagecard has an annual fee.
And I agree with you.
What I gain on the mileage outweighswhat I pay in the annual fee.
So I'm willing to, , pay the fee.
But different strokes fordifferent folks, right?
(24:02):
It could be cash back.
It could be Another cool thingwith rewards that A lot of
cards will offer like differentrewards for different categories.
So like, let's say you havemaybe two or three credit cards.
One might offer you, I don'tknow, five times cash back on
like groceries and dining out.
Another might offer you more rewardson like entertainment, for example.
(24:22):
So just, if you're looking to redeemrewards, which I think is a very
smart thing to do for credit, youreally can kind of bend the system
to your will and make it so that youare getting all kinds of free stuff.
Just make sure you're being as strategic,doing your research, Using specific cards
for specific purposes that are going toget you the most bang for your buck, and
you'll be, you know, you'll be golden.
Yeah, and Patelco's a greatplace to do that, right Alexia?
(24:43):
Because we've got both cardswith rewards and no annual fees,
so kind of a double whammy.
, the cool thing about our website too,where you can find information about our
credit cards, is that you can do sideby side comparisons on the webpage too.
So patelco.
org if you're interested incomparing our credit cards.
But regarding rewards, so you know,and Me and Andrew's kind of preference.
Do you have a preference when it comes torewards and how you use your credit cards?
(25:07):
I like to be, , low cost.
, so I'm one of those people,I do have a rewards card.
And similarly to both of you, I do payan annual fee, but it is under a hundred.
And I do use my pointsand I do redeem them.
So I, I, I agree.
It has to be a low cost annual fee andI have to be able to reap the rewards
just to piggyback off what Andrew said.
(25:29):
a rewards card is not go wildand do everything that you want.
I, I, I strongly agree with himsaying that if you're able to pay
that balance off, it's kind of likefree money almost because you're
paying your monthly balance off.
So you're not getting the interest,but you're reaping the rewards of
getting points that you can maybeapply to your, , balance or that you
could use for your mileage or to goshopping if you want to go to Sephora
(25:53):
or whatever, whatever makes you happy.
Yeah, so I totally agree with like Undera hundred, I would say that's kind of a, a
good route and just have that mindset thatif you're going to be making the purchase,
it might be in your best interest to beable to pay the balance off fully so you
can kind of get that free money and thinkof it like these points are like free
money for me to use on maybe those specialthings that you want to do versus throwing
(26:16):
them on the credit card each time.
Maybe not even special, just I wantto, I want to spend just for my
own mental health sometimes too.
Okay.
What are we not talking about?
What other than rewards or anythingelse should we be considering?
, I honestly think that there's a lotof people that might have had, , I'm
going to throw my own experiencein there, adverse experience as
a first time credit individual.
(26:37):
When I was, , fresh out of highschool, I did get a credit card
and it was with a major retailer.
And the first thing I wouldnote is that they gave me this.
limit, which might seem small to some,but 5, 000 that I could use immediately.
And I am mature now, and I can see.
(26:58):
, Patelco, we have a totallydifferent frame thought when we
come into the actual lending side.
We're here to not give you afurther financial struggle.
And, , when I'm doing Dealingwith youth coming into the lending
side and getting a credit card,generally we are very conservative
on what we offer that individual.
(27:19):
if you have a job and you're coming inat 18, it might be approved for 1, 000,
and that's something to think about.
I know some people might seem like,oh, that's small, but when you think
about it, the 30 percent usage,it's really a good opportunity to
teach somebody, , versus the 5, 000.
For me, I was in debt for manyyears after that paying it back.
So having that and then looking at theretailers, , the major retailers and
(27:42):
their annual percentage rate in comparisonto what we do, we're very, , thoughtful
when we actually do our, , Underwritingand we're looking at everything.
We are going to see can thisperson afford to pay it back?
We don't want you to have a lifetimestruggle that you're going to be
paying for years and years and yearsSo for us, I would say we're completely
(28:03):
very mindful of that individual what?
their needs are.
So I think that's something that, thatI would just really throw in there it's
more about the financial education andthat, , being a responsible shopper, being
a responsible credit user, and that'swhat we can give to our patelco members,
and jumping on board with us, is kindof that education along with the money.
(28:25):
That credit that you're needing or that,that loan that you're trying to get.
Yeah, that's great.
So putting you into something that'scommensurate with your lifestyle,
something that's comfortablefor your ability to repay.
I mentioned I was in the classroomyesterday with these kids and yes, they
did say, well, getting started withthe 100 credit card, what can I do with
that or a thousand dollar credit card?
I had to tell them the story.
(28:46):
These poor kids, we saw about.
70 kids yesterday, and I started offevery class by telling them, Hey, back
in the day when I went to school, youknow, back in the 1900s when I got my
first credit card, there weren't any rulesaround, Income or forms of repayment.
So I got started with the 30, 000 WhenI was 18 years old, that's insane.
(29:07):
Guess how much of that creditcard I spent It was all all of
it plus whatever student debt.
I had plus whatever other debt I hadSo at 22, I was in a big hole to start
but that kind of set up the rest of theclass You know got everybody's attention
to say, okay, I need to pay attentionto this but also kind of reinforced
(29:27):
The importance of starting small andthe importance of making sure that
we're putting young people, especiallyin a position where they're able to
repay this and use it responsibly.
And what 18 year old, like, If yougive them 30, 000 and no education, of
course they're going to spend it all.
I would do the same thing.
On top of that too, would you sayour rates are responsible also?
(29:49):
Absolutely.
, I've actually done side by sidecomparison on major retail,
financial institutions and it isastronomically different, I would say.
There's obviously an application processand a credit that we will check, but
just in comparison, it is Distinguishedlymuch lower coming to Patelco or bring
(30:10):
your statement and let us show you andthen kind of apples to apples what we can
do versus what your statement is doing.
Also, just to kind of touch back on a lotof statements when you're looking at them.
Just to go back on the 30, 000limit, if you're paying the minimum,
it usually tells you how long youwill pay if you pay the minimum.
That's a requirement.
Take a look at the amountof years you will be paying.
(30:33):
Just the infinity symbol.
Oh gosh, it's crazy because that'ssomething that you don't, like, maybe if
you're just like, oh, I'm making, likeyou said, the minimum payment, I'm doing
the right thing, I'm making the minimum.
Look at how long it's goingto take you to pay that back.
And then when you come to aninstitution that's actually
going to give you a responsible.
limit, you will see the difference andit's going to make that difference in
(30:55):
your life and it will ultimately help you.
I, I find, many successstories from members just saying
how much we've helped them.
, but like I said, apples to applescomparison, if that's what you need to
visually see it, bring your statement inand then let's see what we can do for you.
And, , Absolutely.
You're going to see a drasticdifference in the annual percentage
rates that are offered at Patelco.
(31:16):
Okay.
Awesome.
So, listeners out there, youdon't have to have all the answers
at the end of this episode.
Andrew, can you helpeveryone understand the hows?
So I think, I think I know what kindof rewards I want and I need to pay
attention to the interest rate andI should probably go see Alexia.
How do I get started?
Sign up with the person atthe counter and the retailer.
(31:37):
Not that you've learned nothing.
So not that I would say, first of all,if you're looking for a new credit card,
first and foremost, ask yourself why?
And if the reason is because I want topay for something I can't afford, then
that's perhaps a good time to reconsider.
If that is an actual, you know, why is it?
Financial investment for you.
If it is something that you reallyneed, you want to, you know, improve
(31:58):
your credit mix, you want to improveyour available credit, whatever the
reason, maybe you get some more rewards.
, first step, obviously do your research,compare and contrast, you know,
like Alexia said, apples to apples,look at the different cards that
are out there, and find one that'sgoing to be the most advantageous.
Talk to your, you know, trusted financialcontact, whether that be your financial
institution, or maybe you have a friendor family member who's just really
(32:20):
financially savvy, you know, run it bythem, make sure everything looks good.
And then when it's time to apply,I would say the best course of
action is to just actually sitdown with somebody, at Botelco.
Like I said, we have the 37 branches.
We also have our virtual branch.
So lots of ways that you canbe face to face with someone.
, they can answer any last minutequestions you have, , and then make
sure the application is done in a, youknow, thoughtful and responsible way.
(32:41):
Okay, now I'm thinking back on it.
Maybe I didn't totally overwhelm Bobby.
I feel like all of this informationwas super necessary and pertinent.
We could go on for anothercouple hours on, , this, right?
So maybe it wasn't so bad.
I'll have to contact Bobby.
I think Bobby was grateful.
Yeah, I think he was.
Okay, so what's the bestfirst place to find Bobby?
(33:02):
We've got a lot of information on patelco.
org.
If they want to do that side byside comparison of our credit
cards, they can do that there.
, they can also come in and talk with Alexiaat our Dublin branch, but we also mention
these certified financial specialiststhat you can come down, , in addition to
everyone else at the branch that can help.
You can apply online ifyou feel like you're ready.
(33:23):
You can put your application in online.
, what else are we missing?
I think that about covers it.
Come see us.
Come talk to us.
Apply online and letus help along the way.
Alexia, it was really greatto have you in the studio.
Thanks for sharing yourexpertise with us today.
Thank you for having me.
I appreciate you both.
It was wonderful.
Come see me.
(33:43):
And Andrew, always great to have you.
I love taking the tips I hearyou share in the classroom and
bring it to the podcast studio.
Thank you for having me.
It was a good time.
Alright, everyone, that concludes today'sepisode of Small Talks for Big Change,
where we help simplify financial topicsto help with your financial wellness.
We'll see you next time.
Botelco Credit Unit is insured by NCUA.
Thanks for joining today's episodeof Small Talks for Big Change, where
we help simplify financial topics tohelp with your financial wellness.
My name is Michelle Enriquez,your host here at Patelco Credit
Union, and greetings, everyone.
Welcome back to the showand thanks for tuning in.
Today, we're going to talk aboutall the things you should consider
when choosing a credit card.
(00:23):
And our conversation today is not goingto be useful for just people getting
started with the first time credit card,but hoping to ignite some thoughts for
people out there that might be lookingto maybe re diversify their credit card
mix or get an additional card as well.
We have two friends withus to talk it through.
We're joined by the Andrew Farrell,Community Engagement Specialist
(00:47):
and first time guest Alexia RazoUrbego, who is the Assistant Branch
Manager of our Dublin branch.
Alexia, welcome to the secretstudio that's been in this
building the whole time.
Thank you for having me.
I'm very excited to participate andbe able to share some of my knowledge.
I am fortunate to have come on board withPatelco about a year and a half ago, and
(01:09):
I have about 15 plus years of experiencein the financial industry, and I'm really
happy to be here and be able to sharesome of my experiences and what I do here.
Yeah, and our branch is here at thebuilding, so I didn't know if you
knew the podcast studio was rightbehind the branch, but welcome.
Welcome.
Thank you.
All right, Andrew.
It's always a pleasure to have you here.
Welcome back.
Thank you.
(01:29):
It's always a pleasure to be.
It's my fifth time here, Michelle.
Fifth time we're counting.
Oh yeah, we're counting.
We're counting.
Awesome.
So I'll kick us off, you guys.
I have an embarrassing story to tell.
The moment we figured out the topic forthis episode, I immediately recalled
the scenario with a past intern.
Who spent the summer with us and he hadasked me for some time to help talk him
(01:50):
through getting his first credit cardSo I scheduled a meeting with him And
then proceeded to completely overwhelmhim with every credit consideration.
He could possibly have Bobby ifyou're out there, I'm so sorry.
I overwhelmed you that day I hope thatcredit card that you eventually get
Applied for is working out for you.
(02:11):
You know, I feel like there'ssome things in life that we don't
have to be the full experts on.
I just give me the high level basicsand then let me consult an expert
and somebody just tell me what to do.
Right.
I, if you're the expert on it, I'lltake your best recommendation, but I,
I don't wanna be the expert on creditand all the credit card options.
I hear you.
So hopefully this episode is, you know,an attempt to redo that and to help
(02:35):
simplify it, which really is the whole.
Point of the whole show, isn't it?
Why don't we start off with, causewe're talking about getting started
with your first credit card, maybegoing back and looking at getting
a different credit card, but levelset, Andrew, what's the age that
you legally can get a credit card?
Yeah, so the legal age tobegin applying for credit and
building your credit score is 18.
(02:56):
, and I do suggest starting withestablishing credit as early as
possible, keyword, as long asyou're able to do it responsibly.
That means no, you know, maxing outcredit cards, no missing payments,
but if you're able to, you know,responsibly handle credit at 18,
that is a good time to get started.
Once you turn 18, getting startedwith your first credit card, it
can have, , Lots of good benefitsfor your credit growth longterm.
(03:18):
It helps accelerate your credit growthas you'll maximize the amount of time
that you'll have established credit andthat'll help boost your score quite a bit.
, if you are looking for advice on how toget started when the time is right, look
no further than Patelco Credit Union.
Any one of our 37 branches or ourvirtual branch are fully equipped
with super knowledgeable teammembers, Alexia being one of them.
(03:40):
Very, very happy to have youhere to get your insight as well.
But all these people canget you on the right path to
successful, healthy credit growth.
This can be both You know, establishingyour first time credit and starting to
build credit or rebuilding credit as well.
We have lots of financial guidancethat you can request with one of
our certified financial specialists.
You can make an appointment on ourwebsite under the financial wellness
(04:02):
tab and they can get into all thenitty gritty with you as well.
So, you know, lots of ways to startestablishing credit, to build new
credit, and to do it responsiblywith, you know, the trusted experts
that we have here at Batelco.
Awesome.
So 18's the age that you can get started.
Uh I went with, the managerfrom your branch out to a junior
(04:22):
high school class yesterday.
We taught seven classes, introducedthem to the concept of credit, and
the main point we wanted to leavethem with is like, hey, credit's gonna
be important to you in the future.
You're probably gonna want to buy a car.
You're probably gonnabuy, want to buy a house.
But understand that credit hasmore implications than just your
ability to borrow in the future.
(04:44):
It has implications for future employment.
Your credit report is somethingthat a future employer is
probably going to look at.
When you go to rent your first apartment,your future landlord might look at it.
So, , you can look at your creditreport to make assumptions about you.
So, there were a lot more thingsthat we were trying to leave these
young people with in anticipation of18 and getting started with credit.
So, the timing was just, , really goodand it happened to be your manager
(05:06):
that was with us, in the classroom.
But just, The thing, or the, thedirection that we were pointing these
young people to was to the branch.
When you're ready to kind of makethese big decisions, it might be
good to go in and talk to somebody.
So if you get a bunch of kids atyour branch asking for you, then
you understand the reason why.
But you help young people andjust members alike with this very
(05:29):
need all the time at the branch.
Tell us a little bit about kind of thatneeds assessment or the questions that
you ask when people come to you andsay, Well, I haven't got started with
credit, whether or not they're 18 or not.
How do I do that?
How do you go about kind ofuncovering what their needs are
to put them in the best match?
Absolutely.
, so at Patelco, like you were mentioning,every experience is different.
(05:50):
Every engagement and conversationthat's had is different.
It's different.
It's really tailored to whatthe individual needs are.
, some great questions that I wouldfollow up with when I'm actually
conversating with somebody is,what are your short term goals?
What are you trying toaccomplish within the next year?
What are you trying to accomplishwithin the next five years?
10 years and so on and soforth, , really giving them the
(06:13):
opportunity to see what their needsare, because when I'm evaluating a
situation, I want to make sure thatwe can meet their financial goal.
So I feel like that's avery important conversation.
The goals, , if they're tryingto accomplish something, what's
the timeframe and a realistictimeframe on what we could do?
So I also think that it's importantto have the conversation of,
(06:35):
affordability of what you can, , forcredit needs, what you can get.
So that's something that I wouldalso want to conversate, you know, if
there's employment, is there futureemployment that's going to be had?
But like I said, every conversation istailored to that individual's needs.
So different conversations for aretiree versus somebody who's brand
new into credit, or maybe somebodythat needs debt repair and how we can
(06:57):
help provide them solutions to those.
And really, , keeping our best interestin what Financial freedom looks like
for that individual and financiallyhow we can help them accomplish that.
And in talking with these youngpeople too afterward, the hands fly
up, they're asking questions, credit,the topic of credit usually always
(07:18):
stimulates a lot of questions becauseit's complex, it's convoluted sometimes.
One of the things that cameup, , was the fact that they didn't
want to wait until they're 18.
They understand that they couldpossibly be on a credit card
with their parents before 18.
Can you talk a little bit about authorizedusers and kind of the difference of
Being an authorized user versus beingan actual applicant or Absolutely.
(07:42):
So, , to be an authorized user,you'd have to be 16 years of age or
older to become an authorized user.
It would have to be authorized by theprimary credit holder to actually allow
that individual to Basically use the card.
The individual who is the primarycredit applicant, they would actually
be responsible for those transactionsthat are made by the authorized user.
(08:05):
This could benefit somebody, maybe ifyou're trying to teach somebody how to use
a credit card, maybe also, optimizing,good purchases versus bad purchases, but
also it could help maybe if you have aretiree who becomes ill and they need
an authorized user to maybe aid them toget groceries or to help them with their
simple tasks that maybe they are incapableof doing at that immediate moment.
(08:27):
I would say there's advantages likeassisting or to teach, but I also,
I think it's a huge responsibilityfor that primary applicant because
any transactions that are, that areposted on that card is ultimately the
responsibility of the primary user, andit's affecting their credit, whether it
be in a positive or in an adverse way.
(08:47):
So, if there is adverse usage,that's a consideration that a primary
would want to consider before sayinglet's have an authorized user.
You really want to have thatconversation about responsibility when
utilizing that cart because it willultimately reflect on the primaries.
credit report.
So the authorized user doesn'tget the benefit of reporting
purposes for that credit card.
(09:08):
So if there are on time payments,anything like that, it's not showing
on the authorized user's side of thecredit aspect for building credit.
So it might be an opportunity to justhave more of a teaching tool versus
something that is going to ultimatelyhelp this individual build their credit.
Yeah, and at the end of it, we were,you know, encouraging these young
(09:29):
people to have the conversationswith their parent or an adult.
If it makes sense to go the authorizeduser route in anticipation of you
having your own at 18, kind of dependson their level of responsibility,
but maybe also their parentscomfortability with even having them on.
But yeah.
An option, nonetheless.
Okay, cool.
So, let's switch gears a littlebit because yesterday, we
(09:52):
also talked with these folks.
Actually, when we're in the collegeclassroom, Andrew, this comes up a lot.
When we talk about the spectrum ofthe credit score and the factors that
go into What makes your credit score?
Credit mix always comes up,and I feel like it's the most
confusing for everybody to grasp.
You're the best at kindof breaking it all down.
(10:13):
So when it comes to credit mix andthe healthy credit mix, there's some
rules that we teach in the classroom.
I'd love for you toshare them on the screen.
Yeah.
So I want to talk about when they'recalculating your credit score, they take
into consideration five different factors.
, so just to make sure everybody is kindof on the same page with this, I want
to talk a little bit about what makesa credit score just to begin with.
(10:33):
There's payment history, which takesinto account whether you've made
at least your minimum payments.
in full and consistently and on time.
Amounts owed looks at the totalamount that you currently owe
across all accounts relative tothe credit that you have available.
Length of credit history basically meansthat the longer your credit accounts have
been open and in good standing the better.
(10:54):
That is a very good reasonwhy you should not ever close
your first time credit card.
Because once you close that ifyou've had it for you know, 10
years, 15 years, even if you're notusing it If you close it, you lose
all that positive payment history.
, new credit, this is where hardcredit polls come into play.
So this is kind of the way thelenders look at this is if someone
is applying for a lot of new creditfrequently, that can be a red flag
(11:17):
because it can sometimes be indicativeof like a financial pressure or like
overspending habits or things like that.
So every time you apply for credit,your score does get dinged a little bit.
The last category, the one thatyou mentioned is credit mix.
So this means that lenderslike to see that you can.
successfully manage a healthymix of different types of credit.
So this means like revolving credit, whichwould be credit cards, lines of credit,
(11:39):
things that you kind of borrow and payback, , as well as installment credit.
So these are things that you, you know,make your set payments on home loans, auto
loans, student loans, that kind of stuff.
So those are all the different factorsthat we use to, calculate credit.
When we're looking at having theright balance of credit lines.
First and foremost, a question that Iget all the time when I'm out in colleges
(12:01):
is, how many credit cards should I have?
What's the sweet spot?
It's a sweet spot.
And it's such a tricky question toanswer because, you know, we just
talked about all the factors, numberof credit cards is not on there.
So there's no real, black or whiteanswer, for how many you should have.
My general, I guess, frame ofthinking there is just don't have
any cards that are unnecessary.
(12:21):
The more cards that you have, thatmeans the more cards that you have to
manage, which could ultimately resultin like missed payments or missed
annual fees or things like that.
It can also mean a lot of hardpulls on your credit, which
can bring your score down.
Brand new credit cards also affectyour overall average length of
credit history since it brings downyour overall average credit age.
So basically just apply responsiblyand conservatively for the
(12:43):
credit cards that you do have.
The general rule is 30 percent usage.
That's kind of the rule of thumbfor, the amounts owed that you had.
So I mentioned earlier, one of thefactors in calculating a credit score
is amounts owed the rule of thumb there.
for good shape, 30 percent or less.
So that means that let's sayyou have three credit cards.
One has a 10, 000 credit limit.
(13:04):
One has 4, 000 and one has 6, 000.
Your total available credit betweenall those cards is going to be 20, 000.
That is your available credit.
You want to keep your balanceson all those cumulatively at 30
percent of that available or less.
So in that case, it'd be about 6, 000.
That is a green flag to lenders becauseit makes you look, on paper, like a
very, you know, responsible borrower.
(13:26):
And it can help boost your creditscore in the long term as well.
Yeah, and you used to work at thebranch, like Alexia did, right?
Most people don't know that.
That's not, in all of the, the largespectrum of things you need to know
about credit and how your creditscore is calculated, that's never the
most obvious, but also the most kindof counterintuitive for students.
Well, it's, it's weird because like,I think a lot of people think like,
(13:49):
Oh, I make my minimum payment on time.
I've never missed a payment.
Why is my credit score not 800?
And it's like, yeah, if you, ifyou make all your payments on time,
that factor of your credit score,the, you know, on time payments,
that'll be, you know, good and gravy.
But if your, you know, balancesare all maxed out, well, that
section is going to be okay.
That one's not going to look so good,which can, you know, have a negative
(14:10):
impact on your overall credit.
Okay, so 30 percent utilizationof your credit card.
Rule of three, so a good healthy mix.
Alexia, you're on that same page too.
Oh, absolutely.
As someone who processes loans,you're looking for a healthy mix
and that mix is probably three.
Okay, , we were trying to get the studentsyesterday in the classroom to get to
(14:30):
thinking of things from the standpointof somebody that would lend money.
So when you go and see somebody likeAlexia, and you're asking her to
borrow 10, 000 or 20, 000, what aregonna be the things that she's looking
at to make a determination aboutyou and your character as a person?
to want to lend money to you.
(14:51):
And we were comparing that to their reportgrade history in their report cards,
and the maximum GPA you can get is a 4.
0.
Kind of think of your credit scorelike, okay, the max is 850, but
think about your credit report inthe same way you might think about
your, , your grades, and your GPA.
Okay, cool.
So, now we have a better ideaof when to get started, when we
(15:13):
might need to add a credit cardif we're talking about credit mix.
And I feel like that comes up alot too when we have folks that
come to us and say, you know,I'm interested in buying a home.
I want my credit score to be inthe, like, best optimum position.
I might need to add another lineof credit and, In order to do that,
that's something that they can cometo you and ask advice on it, Alexia?
(15:36):
Absolutely, so, , definitely ifyou're interested in purchasing a
home, anything like that, you dowant to have a good credit score.
You also, like Andrew had mentioned, amix of installment versus revolving, and
making sure, like you had also suggested,making on time payments, but making sure
you're also at that 30 percent or less.
Um, That's all very important, but that'ssomething that can be evaluated for what
(16:01):
you specifically need as a member, whatyou're looking for, and then your time
frame of trying to accomplish that also.
And how we can get to you tothat point where you have, your
odds are going to improve to getthat loan that you're requesting.
Okay, cool.
Are we entering likeoverwhelming Bobby territory?
I think Bobby's fine.
(16:21):
Okay, I think Bobby's doing well.
Bobby again, we're out there likeI'm hoping we're not overwhelming
our listeners to with all of theinformation that you should have.
But it's all important.
Yeah, you know, if you're goingfor that, 850 credit score.
If you're trying to meet allof those financial goals, your
credit score and your creditreport is such a big part of that.
Okay, so we know when we need to adda card, get started, all of that.
(16:47):
Let's talk about all the optionsthat exist out there in the universe.
Okay Andrew, let me just ask, thiswasn't part of our outline, should you
just go open a credit card at everyretailer that asks you at the counter?
Is that a good strategy?
No, it is not.
So, beware of retail credit cards.
I'll say lots of times when you'rechecking out at any department
(17:07):
store, they will try to sell youtheir card to get you to save.
Yeah, right there.
And it's always a pretty good deal,like, you know, your purchases.
300.
If you open up our card, it'sonly going to be 80 today.
Let's go and do it.
It sounds so good.
It always sounds so simple, you know, sivehere and you'll save all this money today.
When you are given those offers, justmake sure you're thinking it through
as a long term decision, becausereally getting any credit card is
(17:31):
in fact a long term decision and notjust a way to save some quick cash.
, same goes with those mailers invitingyou to apply for credit cards.
A lot of those times you're probablygoing to be subject to a credit warning.
Some are pre approved to where it'snot an actual credit pool, but a lot
of times, , How do I say this gently?
Just because something implies thatyou're pre approved does not mean that
(17:52):
you actually are pre approved or thatyou're not going to have a credit pull.
So, sometimes verbiage used likeyou're invited to apply or like
you're pre screened or pre selected.
That doesn't necessarily meanthat you are pre approved.
, they still could give you acredit pull and that still could
negatively impact your credit.
Okay.
But I can come ask Alexia if Yeah.
Okay.
(18:13):
That's the case for me.
I know we do a lot of pre approval lettershere at Patelco, but somebody could come
to you and say, Hey, I got this in themail or I got this from you at Patelco
or wherever and they could Kind ofcheck check the validity of it with you.
Definitely I and also I would suggestwhen you get those flyers I mean
take it if you're with us, whichyou should be bring it to Patelco.
(18:35):
Let us look at it There's oftentimesfine print that's overlooked because
they're only sharing the parts thatare that that institution wants you
to actually see, but reading thatfine print and actually getting to
the nitty gritty of what is needed.
, is it going to be a hard pull?
Is it because it should bedisclosing that in that fine print?
(18:56):
But like Michelle, I mentioned we do offerpre approvals here at Patelco too, and
they do occur and we generally will tryto have that conversation with our members
as they walk through the door, whether itbe on the teller side or the banker side.
So that is something thatconversations that can be had but
also if you kind of just need theconsult of, I got this in the mail.
What can we do?
(19:16):
In terms of our, our interest ratesand our annual percentage rates that
we offer, they tend to be a lot lowerthan these larger retail institutions.
So it's a great opportunity to kind ofcompare, Is there fees associated or do we
have fees and just getting your options,I don't think you should just pick the
one that came in the mail that says you'regoing to have all these swanky things,
(19:38):
but there's probably strings attached.
So it's really important, I think, toconsult somebody who you can trust, and
that's how we really like to see ourselveshere at Patelco, somebody that you can
come to and really get that advice.
Is this a good option?
Maybe we have something that we couldprovide that's better, a stronger
or a better fit for that individual.
Yeah, that's good advice.
Andrew gives a great budgeting classand one of the things you recommend
(20:00):
in that class is taking a step back.
You get the information, you sit on itand you think about it, you consult an
expert and then you can make a decision.
So it's not, it's not noforever, it's a no for now.
No for now, exactly.
It's a no for now.
Okay, regarding rewards and options,right, we've got all the retailers
that are offering you credit cards.
You get all the things in the mail.
(20:21):
There's a lot of things out there.
I think a lot of what might be topof mind for people when considering
a credit card or an extra creditcard might be what's in it for them.
And credit card companies, frankly,they're fighting for everyone's business.
So it's in their bestinterest to offer these perks.
Andrew, you are self admittedly a sampler.
Yes.
Right?
For the sake of like being knowledgeable,but also for your own financial health.
(20:46):
You want to have the bestthing that's out there.
Yeah.
And I love free stuff.
Yeah.
I love free stuff too.
Who doesn't, right?
What is your prioritywhen it comes to rewards?
There's cash back.
There's miles.
There's all kinds of things.
So I think it just kind of depends onlike finding a card that offers rewards
that best aligns with your lifestyle.
, for me, I really like a travel rewardand I will say this about rewards.
(21:07):
So generally the way credit cardswork, you know, you, You swipe your
card, you spend the dollar, you get thepoints associated with those dollars
spent as soon as you spend them.
But, you are not actually payingany interest on those dollars spent
unless the balance carries over intothe next, like, statement cycle.
So, I mean, theoretically, you canbe, like, the way I do it, I put all
(21:29):
my purchases on my credit cards, Irack up all the rewards, but I pay my
balance off, like, constantly, so I'mnever paying any interest and I'm just
getting, like, free money out the wazoo.
It's fantastic.
, I have a, a travel credit card thatactually does have a small annual fee.
So one thing to consider when you arelooking for a credit card is annual fees.
(21:50):
, there could be some that offer reallygood rewards, really good points, but the
annual fee for it is like astronomical.
If you want to avoid annualfees, there are plenty of options
out there that you can do that.
Patelco has a really greatpoints rewards card that is It's
totally free for the annual fee.
You get lots of points back for like gasand groceries and all kinds of good stuff.
I do not think that annual fees arenecessarily the worst thing in the world.
(22:14):
Not everyone agrees with me on that.
Yeah.
So when I was looking for my travelcard, I compared like 10 different
ones and the one that I pickedultimately does have a small annual fee.
It's like less than ahundred dollars a year.
But the rate that I get.
points back on this card like more thanpays for the annual fee when I compare
that even factoring in that smallfee, I still net more rewards than I
(22:36):
would have on some of the free ones.
So I decided ultimatelythat was the way to go.
, but I, you know, I know that becauseI did my research, I, you know,
looked around, I didn't just takethe first card that came my way.
I made sure that I made a good, youknow, strategic decision and credit
cards, you know, it's a lot likegoing to And all you can eat buffet.
Like, you've been doingall you can eat buffet.
(22:57):
You don't, you don't juststock up on bread right away.
Like, you gotta, like,survey the surroundings.
You go for the prime rib, onceyou've, like, staked it all out.
And, and that's the samething with credit cards.
You know, it's, it's a game.
And you gotta, you gotta play to win.
Yeah, but you gotta do your research, too.
Again, Alexia and thebranch is a great team.
resource to do that with.
Bring all your options,sit down and talk about it.
(23:19):
We've got a service called CertifiedFinancial Specialists, where you
can come down, you don't fullyunderstand, or even if you fully
understand, you might just need anexpert to kind of bounce ideas off of.
That is literally the, the purpose ofthat position here at Patelco, is for
you to get personalized financial advice.
And, Regarding budgeting, making decisionsabout credit, et cetera, et cetera.
(23:41):
So, , come see Alexia at thebranch if you want to do that.
, Andrew, I love that.
For me, it's miles.
Miles is my priority.
And funny, because my mileagecard has an annual fee.
And I agree with you.
What I gain on the mileage outweighswhat I pay in the annual fee.
So I'm willing to, , pay the fee.
But different strokes fordifferent folks, right?
(24:02):
It could be cash back.
It could be Another cool thingwith rewards that A lot of
cards will offer like differentrewards for different categories.
So like, let's say you havemaybe two or three credit cards.
One might offer you, I don'tknow, five times cash back on
like groceries and dining out.
Another might offer you more rewardson like entertainment, for example.
(24:22):
So just, if you're looking to redeemrewards, which I think is a very
smart thing to do for credit, youreally can kind of bend the system
to your will and make it so that youare getting all kinds of free stuff.
Just make sure you're being as strategic,doing your research, Using specific cards
for specific purposes that are going toget you the most bang for your buck, and
you'll be, you know, you'll be golden.
Yeah, and Patelco's a greatplace to do that, right Alexia?
(24:43):
Because we've got both cardswith rewards and no annual fees,
so kind of a double whammy.
, the cool thing about our website too,where you can find information about our
credit cards, is that you can do sideby side comparisons on the webpage too.
So patelco.
org if you're interested incomparing our credit cards.
But regarding rewards, so you know,and Me and Andrew's kind of preference.
Do you have a preference when it comes torewards and how you use your credit cards?
(25:07):
I like to be, , low cost.
, so I'm one of those people,I do have a rewards card.
And similarly to both of you, I do payan annual fee, but it is under a hundred.
And I do use my pointsand I do redeem them.
So I, I, I agree.
It has to be a low cost annual fee andI have to be able to reap the rewards
just to piggyback off what Andrew said.
(25:29):
a rewards card is not go wildand do everything that you want.
I, I, I strongly agree with himsaying that if you're able to pay
that balance off, it's kind of likefree money almost because you're
paying your monthly balance off.
So you're not getting the interest,but you're reaping the rewards of
getting points that you can maybeapply to your, , balance or that you
could use for your mileage or to goshopping if you want to go to Sephora
(25:53):
or whatever, whatever makes you happy.
Yeah, so I totally agree with like Undera hundred, I would say that's kind of a, a
good route and just have that mindset thatif you're going to be making the purchase,
it might be in your best interest to beable to pay the balance off fully so you
can kind of get that free money and thinkof it like these points are like free
money for me to use on maybe those specialthings that you want to do versus throwing
(26:16):
them on the credit card each time.
Maybe not even special, just I wantto, I want to spend just for my
own mental health sometimes too.
Okay.
What are we not talking about?
What other than rewards or anythingelse should we be considering?
, I honestly think that there's a lotof people that might have had, , I'm
going to throw my own experiencein there, adverse experience as
a first time credit individual.
(26:37):
When I was, , fresh out of highschool, I did get a credit card
and it was with a major retailer.
And the first thing I wouldnote is that they gave me this.
limit, which might seem small to some,but 5, 000 that I could use immediately.
And I am mature now, and I can see.
(26:58):
, Patelco, we have a totallydifferent frame thought when we
come into the actual lending side.
We're here to not give you afurther financial struggle.
And, , when I'm doing Dealingwith youth coming into the lending
side and getting a credit card,generally we are very conservative
on what we offer that individual.
(27:19):
if you have a job and you're coming inat 18, it might be approved for 1, 000,
and that's something to think about.
I know some people might seem like,oh, that's small, but when you think
about it, the 30 percent usage,it's really a good opportunity to
teach somebody, , versus the 5, 000.
For me, I was in debt for manyyears after that paying it back.
So having that and then looking at theretailers, , the major retailers and
(27:42):
their annual percentage rate in comparisonto what we do, we're very, , thoughtful
when we actually do our, , Underwritingand we're looking at everything.
We are going to see can thisperson afford to pay it back?
We don't want you to have a lifetimestruggle that you're going to be
paying for years and years and yearsSo for us, I would say we're completely
(28:03):
very mindful of that individual what?
their needs are.
So I think that's something that, thatI would just really throw in there it's
more about the financial education andthat, , being a responsible shopper, being
a responsible credit user, and that'swhat we can give to our patelco members,
and jumping on board with us, is kindof that education along with the money.
(28:25):
That credit that you're needing or that,that loan that you're trying to get.
Yeah, that's great.
So putting you into something that'scommensurate with your lifestyle,
something that's comfortablefor your ability to repay.
I mentioned I was in the classroomyesterday with these kids and yes, they
did say, well, getting started withthe 100 credit card, what can I do with
that or a thousand dollar credit card?
I had to tell them the story.
(28:46):
These poor kids, we saw about.
70 kids yesterday, and I started offevery class by telling them, Hey, back
in the day when I went to school, youknow, back in the 1900s when I got my
first credit card, there weren't any rulesaround, Income or forms of repayment.
So I got started with the 30, 000 WhenI was 18 years old, that's insane.
(29:07):
Guess how much of that creditcard I spent It was all all of
it plus whatever student debt.
I had plus whatever other debt I hadSo at 22, I was in a big hole to start
but that kind of set up the rest of theclass You know got everybody's attention
to say, okay, I need to pay attentionto this but also kind of reinforced
(29:27):
The importance of starting small andthe importance of making sure that
we're putting young people, especiallyin a position where they're able to
repay this and use it responsibly.
And what 18 year old, like, If yougive them 30, 000 and no education, of
course they're going to spend it all.
I would do the same thing.
On top of that too, would you sayour rates are responsible also?
(29:49):
Absolutely.
, I've actually done side by sidecomparison on major retail,
financial institutions and it isastronomically different, I would say.
There's obviously an application processand a credit that we will check, but
just in comparison, it is Distinguishedlymuch lower coming to Patelco or bring
(30:10):
your statement and let us show you andthen kind of apples to apples what we can
do versus what your statement is doing.
Also, just to kind of touch back on a lotof statements when you're looking at them.
Just to go back on the 30, 000limit, if you're paying the minimum,
it usually tells you how long youwill pay if you pay the minimum.
That's a requirement.
Take a look at the amountof years you will be paying.
(30:33):
Just the infinity symbol.
Oh gosh, it's crazy because that'ssomething that you don't, like, maybe if
you're just like, oh, I'm making, likeyou said, the minimum payment, I'm doing
the right thing, I'm making the minimum.
Look at how long it's goingto take you to pay that back.
And then when you come to aninstitution that's actually
going to give you a responsible.
limit, you will see the difference andit's going to make that difference in
(30:55):
your life and it will ultimately help you.
I, I find, many successstories from members just saying
how much we've helped them.
, but like I said, apples to applescomparison, if that's what you need to
visually see it, bring your statement inand then let's see what we can do for you.
And, , Absolutely.
You're going to see a drasticdifference in the annual percentage
rates that are offered at Patelco.
(31:16):
Okay.
Awesome.
So, listeners out there, youdon't have to have all the answers
at the end of this episode.
Andrew, can you helpeveryone understand the hows?
So I think, I think I know what kindof rewards I want and I need to pay
attention to the interest rate andI should probably go see Alexia.
How do I get started?
Sign up with the person atthe counter and the retailer.
(31:37):
Not that you've learned nothing.
So not that I would say, first of all,if you're looking for a new credit card,
first and foremost, ask yourself why?
And if the reason is because I want topay for something I can't afford, then
that's perhaps a good time to reconsider.
If that is an actual, you know, why is it?
Financial investment for you.
If it is something that you reallyneed, you want to, you know, improve
(31:58):
your credit mix, you want to improveyour available credit, whatever the
reason, maybe you get some more rewards.
, first step, obviously do your research,compare and contrast, you know,
like Alexia said, apples to apples,look at the different cards that
are out there, and find one that'sgoing to be the most advantageous.
Talk to your, you know, trusted financialcontact, whether that be your financial
institution, or maybe you have a friendor family member who's just really
(32:20):
financially savvy, you know, run it bythem, make sure everything looks good.
And then when it's time to apply,I would say the best course of
action is to just actually sitdown with somebody, at Botelco.
Like I said, we have the 37 branches.
We also have our virtual branch.
So lots of ways that you canbe face to face with someone.
, they can answer any last minutequestions you have, , and then make
sure the application is done in a, youknow, thoughtful and responsible way.
(32:41):
Okay, now I'm thinking back on it.
Maybe I didn't totally overwhelm Bobby.
I feel like all of this informationwas super necessary and pertinent.
We could go on for anothercouple hours on, , this, right?
So maybe it wasn't so bad.
I'll have to contact Bobby.
I think Bobby was grateful.
Yeah, I think he was.
Okay, so what's the bestfirst place to find Bobby?
(33:02):
We've got a lot of information on patelco.
org.
If they want to do that side byside comparison of our credit
cards, they can do that there.
, they can also come in and talk with Alexiaat our Dublin branch, but we also mention
these certified financial specialiststhat you can come down, , in addition to
everyone else at the branch that can help.
You can apply online ifyou feel like you're ready.
(33:23):
You can put your application in online.
, what else are we missing?
I think that about covers it.
Come see us.
Come talk to us.
Apply online and letus help along the way.
Alexia, it was really greatto have you in the studio.
Thanks for sharing yourexpertise with us today.
Thank you for having me.
I appreciate you both.
It was wonderful.
Come see me.
(33:43):
And Andrew, always great to have you.
I love taking the tips I hearyou share in the classroom and
bring it to the podcast studio.
Thank you for having me.
It was a good time.
Alright, everyone, that concludes today'sepisode of Small Talks for Big Change,
where we help simplify financial topicsto help with your financial wellness.
We'll see you next time.
Botelco Credit Unit is insured by NCUA.
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