Is it better to buy a computer on my credit card, or on credit from the computer store?
Using your credit card: Applying for a store credit card: In general it is far better to not buy bigger items like a computer until you can pay cash, or pay for it on credit card (to get reward points) and then pay off the card the next month so you don't pay interest. Since you have a credit card, I recommend you use it for the purchase. It gets you two things at the very least: Gets the purchases reported as credit utilization. If you handle that correctly, you can improve your score Most card vendors give free extended warranty and return policies that a retailer or manufacturer does not without extra fees. I buy all my electronics using my cards and not only does that optimize my scores but I have been able to enjoy painless/better RMAs for defective products just because my AmEx card would have refunded me the money anyways and the retailers knew it (AmEx would have recovered it from them in the end so it was in their interest to resolve the matter within 30 days) As far as the money goes, it all comes down to the terms.  What is going to cost you the least?  Look for hidden fees and costs with the store credit.  You will need to read the fine print of the credit agreement some automatically sign you up for a service that will cost you extra money every month.   Compare what the costs are going to be over the term you will pay it off.  A good calculator to help you figure this out is http://www.amortization-calc.com/ It is designed with larger loans but works for smaller loans too.   Realize that you will have to add fees and finance charges into the total loan amount to get a good comparison. ** Unless you NEED a computer you should wait until you can afford to pay for it.  Charging these types of expenses tends to lead down to a pit of debt that is hard to get out of.  Wanting a computer really bad is not the same as a need. "The downside of the store card is that the ""deal"" for using the card is typically 6-12 months of ""no payments"" or ""no interest"". In reality, the ""deal"" is deferred payments/interest. The problem is, if you miss any payment, or fail to pay the computer off in full, you'll have to pay for the accrued interest -- at a rate typically 25% or higher. That means if you buy your computer for $1,000, and pay $999 at the end of 12 months, you may have to pay $250 in accrued interest. These cards can be great deals, just be really careful!" In my experience dealing with credit cards and store cards, you may find that the store card is much more flexible than the credit card in terms of the enforcement of the card agreement.  For instance, I've missed payments on credit cards and only been 1 day late and saw a rate increase, but on a store card when the same thing happened, it was like they didn't even notice.  Granted, this was a 100% store card with no VISA/MC logo on it, and it was through their bank. This may not be true of all store cards and your experience may differ, but I felt like the store card was more of a tool for acquiring the merchandise and helping the store make a sale than it was for some big bank to make money off of my interest. With credit cards, you are the product, and the bank makes money purely from interest. The store, on the other hand, makes money from selling the product, and credit helps increase sales. My suggestion is to avoid credit altogether as all debt is risk, but if you must use credit, you may have a better experience with the store card. Of course, don't forget to consider the interest rates, payment plan, and other fees that may apply as they may affect your decision in terms of which to go with. you should pay cash. always pay cash or debit card. never use credits unless absolutely required. if you so poor that you need credit card you must reduce your costs! don't buy anything except food, start making money, then you will buy everything! and you should buy cheapest food now
Is my understanding okay ? If so, it seems to me that this system is   rather error prone. By that I mean I could easily forget to make a   wire some day and be charged interests while I actually have more than   enough money on the check account to pay the debt. Which is where the credit card company can add fees so you pay more and they make more money. Don't forget that in the credit case, you are borrowing money rather than using your own. Another thing that bothers me is that the credit card apparently has a   rather low credit limit. If I wanted to buy something that costs $2500   but only have a credit limit of $1500, can I make a preemptive wire   from my check account to the VISA account to avoid facing the limit ?   If so, what is the point for the customer of having two accounts (and   two cards for that matter...) ? If you were the credit card company, do you believe people should be given large limits first? There are prepaid credit cards where you could put a dollar amount on and it would reject if the balance gets low enough. Iridium Prepaid MasterCard would be an example here that I received one last year as I was involved in the floods in my area and needed access to government assistance which was given this way. Part of the point of building up a credit history is that this is part of how one can get the credit limits increased on cards so that one can have a higher limit after demonstrating that they will pay it back and otherwise the system could be abused. There may be a risk that if you prepay onto a credit card and then want to take back the money that there may be fees involved in the transaction. Generally, with credit cards the company makes money on the fees involved for transactions which may come from merchants or yourself as a cash advance on a credit card will be charged interest right away while if you buy merchandise in a store there may not be the interest charged right away. I am 22 and was asking the same questions at age 18. I first started by getting a small credit card and paying it off before the end of each month. I use this credit card for groceries/gas small expenses. Then when I built up my credit more I then began to look for loans for expensive cars. The first being around 22k, the second around 41k. You may want to look at buying a much cheaper car. I would suggest that you look into starting a small credit card and get into a habit of paying it off every month and paying off your loans.  I would suggest saving as much money as possible to buy a car, the less amount of money you need to borrow the better. Having good credit is great, but nobody turns down people who wish to buy with cash. "While I think this is generally inadvisable, there are sites and communities dedicated to ""points churning"" credit card reward programs.  In general, no there is no easy way to get cash from a credit card, and receive the spending rewards, and not pay fees well in excess of your rewards value. However, there are people who figure out ways to do this kind of thing.  Like buying prepaid Visa cards $500 at a time from drug stores on a 5% bonus rewards month.  Or buying rolls of $1 coins from the US treasury with free shipping. The issue is the source of the fees.  When you spend money on your card the merchant pays a fee.  When you get cash from an ATM not only is there no merchant remitting a fee there is an ATM operator and a network both charging fees." What is my best course of action, trying to minimize future debt? Minimizing expenses is the best thing you can do. The first step to financial independence is making do with less. Assuming I receive this $3500, am I better off using the bulk to pay off my credit cards, or should I keep as much cash available as I can? This would depend on the interest rate that is associated with the credit cards and the $3500. If the $3500 has a higher interest rate than your credit cards, then do not use any of it to pay your credit cards. Paying back the money you borrow hurts but it's the interest rate that does you in. If the interest rate for the $3500 is lower than the credit card interest, then placing some of it on the credit cards may be a wise course of action. But this depends on how long you are out of work. If you could be out of work for an extended period of time, I would recommend holding on to all of the funds. Note on saving I know this goes against the grain, but I would actually not recommend saving several months worth of funds (maybe one month though). Most employers offer some type of retirement savings account (401(k), Thrift Savings Plan, etc.). I contribute 5% to this fund instead of putting the money in savings. This is an especially effective strategy if your employer offers matching contributions such as mine. Because the divedends for a savings account are so low, it is not a wise place to store your money in the long run. If I had placed my Thrift Savings Plan contributions in a standard savings account, I would now be $12,000 poorer. In addition to this, most long term investment accounts allow you to withdraw the money early in case of emergency, such as being without work. (I also find it too temping to have huge amounts of funds on hand). "https://money.stackexchange.com/a/79252/41349 https://money.stackexchange.com/a/79261/41349  Adding to @Chris H answer about damage limitation Online purchases could include phone/tablet app purchases, which could be an issue if you have children or you are a victim of fraud. First link from googling ""Kid racks up almost $6,000 on Jurassic World in-app purchases"" Adding to @Michael C. Answer I think credit cards perhaps can make it more difficult to budget, if you are more lazy/have limited savings.  These might happen more long term if you don't keep track of your spending. I.e. If your credit limit matches your monthly income, and if you pay off your card each month, I think it is harder to overspend as you don't have more credit available than you can afford to spend. However this is countered by that, a slightly higher credit limit may help to avoid fees from exceeding your credit card limit. I think due to that some/not all purchases are instantly ""banked"", i.e. the shop might send all of its monies to its bank at the end of the day or something like this, so you can just keep spending not realising you have exceeding your credit limit and get hit by fees." Twice I went into Best Buy this summer and found items less than online.  I finally bought a floor model Canon t2i for $500.  I mentioned to the guy that this was less than a used one on eBay.  He mentioned corporate had just hired a guy whose whole job is to browse the internet and make prices competitive, at least where they are able to. quid has expressed some of the disadvantages with this approach, but there is another. Vendors will not want to give you any goods you buy with your credit card until they are sure they will get the money. With your suggested approach buying something with a credit card now looks like: No vendor is going to stand for this for even moderate sized transactions, so in reality they will just decline your card if you have this facility enabled. To add to what others have said, INSTALLMENT CREDIT is a stronger factor when building credit. An installment credit is essentially a loan with a fixed repay amount such as a student loan and a car loan. Banks (when it comes to buying your first home) want to see that you are financially able to repay a big debt (car loan). But be careful, if you cannot pay cash, you cannot afford it. My rule of thumb is that when I'm charging something to my CC, I MUST pay it off when it posts to my account. I just became debt free (paid off about 15k in CC and student loan debt in 18 months) and I love it.