How To Get a Credit Card
The first step to getting a credit card is to check your credit score and credit report to ensure you’re in good standing. Then, you can compare credit card offers, choose one that works for you and apply online, over the phone or in person. It’s important to understand all the terms and conditions before you sign a card agreement.
Steps to Getting a Credit Card
Getting a credit card can be an important step toward reaching your financial goals. Credit cards can help you build credit and earn rewards for purchases you’re already making.
To apply for a credit card, you’ll need to gather information about your personal financial situation, such as your credit score and income. You’ll also find it helpful to understand the various credit card offers that are available, so you can decide which one is right for you.
Step 1: Understand What You Need Before You Apply
Before you decide to apply for a credit card, you’ll want to look at your credit score. This is a number that represents how likely you are to pay back a loan on time. Your credit score is used by lenders, credit card issuers and other institutions to determine your creditworthiness.
Credit card companies use your credit score to decide whether to approve card applications, so having a strong score is important if you want to apply for a credit card. You can access your credit score for free on websites like Mint and Credit Karma.
If you have a poor credit score or no score at all because you have no credit history, you may still be able to qualify for a credit card. In this situation, you’ll want to look for a credit card designed to help people build their credit, such as a secured credit card or student credit card.
You’ll need to provide certain information to complete a credit card application. Most applications will ask for personal details such as your name, address and Social Security number; your employment status and annual income; and any financial accounts or liabilities you have. Make sure you have this information with you when you apply for your credit card.
Step 2: Compare Credit Card Offers
Credit card issuers offer a wide variety of credit products to fit the needs of different consumers. There are a lot of offers out there, so it’s worth shopping around to find the card that best suits your personal financial situation.
First, you should determine which feature of a credit card is the most important to you. Maybe you’ll want a card with a low APR, so you pay less in interest over time.
Or, if you plan to pay off the card and never carry a balance, you might be more interested in a card that offers rewards. Consumers who travel often might want a card that earns airline miles, while others might prefer to get cash back on their purchases.
- Annual percentage rate
- The annual percentage rate, or APR, is the interest you’ll pay if you carry a balance on your credit card. Offers might list a range of APRs, and you may not know which rate you’ll be approved for before you apply. A typical APR will fall between 15% and 23%.
- Check for hidden fees in the fine print of the credit card offer. Common fees associated with credit accounts include annual fees, cash-advance fees, balance-transfer fees and late payment fees.
- Rewards and perks
- Many credit card companies offer attractive sign-on bonuses for new customers. Some might have rewards programs that offer cash back, travel miles or points that can be redeemed for merchandise or gift cards.
Step 3: Understand the Terms of the Card
Comparing the rates and rewards offered by different credit card issuers will help you narrow down your decision. Before you decide which credit card you should apply for, there are a few more things to understand before you sign a contract.
- Credit limit
- Your credit limit is the maximum amount the credit card issuer allows you to charge to your account. This limit is different for every cardholder and is set by the issuer based on factors like your income and credit history. You can have your credit limit extended if you pay your bills on time every month.
- Grace period
- When you receive your monthly statement, you’ll have a certain number of days to pay the balance on your credit card. This is known as the grace period. Grace periods vary by credit card issuer but are usually between 14 to 25 days.
- Minimum payment
- Your monthly statement will also tell you the minimum payment you must make that month to meet the terms of your agreement. If possible, you should always try to pay more than the minimum payment, if not the full amount, to avoid racking up debt.
Because there is a possibility that your application may get denied, you may think it’s a good idea to apply to multiple credit cards at once and see which one gets approved — but this can be detrimental to your credit. Applying for multiple lines of credit around the same time sends red flags to lenders and can result in a drop in your credit score.
Step 4: Apply for the Credit Card
Once you’ve decided which credit card you want to get, the application process should be straightforward. The specific documents and information you’ll need may vary depending on the card issuer, but the basic steps are the same.
For most credit cards, you can fill out an application online or by mail. If you’re applying for a credit card from a bank or credit union, you may be able to apply in person at a physical branch. You’ll provide the necessary documentation, which likely includes information about your employment status and annual income.
When the issuer receives your application, they’ll pull your credit report to see if you qualify for the card based on your financial history. After processing your application, the issuer will let you know whether you’ve been approved to receive a credit card.
You should receive your new credit card in the mail within one to two weeks of being approved, along with information about your credit limit and other details.
Step 5: After Approval
After you receive your credit card, you’ll be able to charge purchases made online and in stores. Take note of the credit limit on the card and the dates of your billing cycle. Be sure not to go over the credit limit and to pay the balance before the grace period ends.
Credit cards can be a great tool for building your credit score, as making payments on time is the most important factor in scoring models like the FICO score. Because paying on time is so important, you might opt for setting up automatic payments with your credit card account.
When you set up autopay, you’ll schedule an automatic withdrawal from your bank account each month to pay the credit card bill. You can either set it up to pay a custom set amount or the total statement balance for that month.
Even if you set up automatic payments on your credit card, you should still go over your statement periodically. This way, you can not only confirm that your payment went through, but also keep an eye out for unauthorized charges to dispute if necessary.
How To Apply for a Credit Card With Bad Credit
If you have a low credit score or not enough credit history, you may have trouble getting approved for credit cards through traditional means. Fortunately, there are some alternatives for getting a line of credit if you can’t get approved for a credit card.
You might have better luck getting approved for a secured credit card or a student credit card. These types of cards are designed for people who need to build their credit scores up. A secured credit card works like a traditional credit card but requires a refundable security deposit to open the account. A student card might have benefits like no annual fee and the ability to access your credit score.
Retail credit cards are another option for those looking to build credit before applying for an unsecured card. Retail credit cards can usually only be used at a certain store, such as a department store or grocery store chain. These cards typically have a lower credit limit and less requirements to apply.
If you’re not ready to have a credit card of your own, you can become an authorized user on a friend’s or relative’s credit card. With this, you can use the line of credit offered by the card, but you won’t have to go through a rigorous approval process. Authorized user accounts do show up on your credit report, so you can still build up your credit history without having a card of your own.
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