Applying for a credit card can seem confusing if you don't know exactly what to do, especially if you are new to the United States. Not only are there innumerable types of credit cards, each of them has different rules to follow, different interest rates and different characteristics. Whether you opt for a credit card for the store where you shop, for gasoline or for one issued by a bank, it is better to inform yourself carefully before proceeding.
Steps
Part 1 of 2: Research
Step 1. Decide what kind of card you need by thinking about how you will use it
Here are some examples:
- Standard credit card. Do you want one to increase your monthly purchasing flexibility? Maybe you're just tired of going to the ATM every other day. These credit cards are unsecured, which means you won't have to pay a security deposit to prove you can pay off the debt.
- Credit card for a product or service. This is useful if you want to get benefits at a certain retail store, gas station, or if you fly with an airline in order to exchange your points for clothes, miles and vacations.
- Credit card for business. Do you need to open a line of credit for the small business you just started? These credit cards feature special bonuses that can attract people who own a company.
Step 2. Take a look at the interest rates and benefits of each card:
- Annual rate. Many companies charge $ 15-50 to use their credit card. If it is used frequently, if you transfer a specific balance to the card, or if you simply ask, sometimes you have a chance to get the exemption.
- Annual Percentage Rate (APR). This rate represents the sum of the fees and interest you can pay in addition to what you borrow. If, for example, it amounts to $ 50 after spending $ 500, then the APR is 10%. It can be fixed or variable.
- The fixed one generally seems a little higher, but you will know what to expect each month.
- The variable one is based on the current published index.
- Period of Grace. This is the time interval between the transaction being posted to your account and the moment interest begins to be charged. Typically, 25 days pass from the billing date, unless you defer payment.
- Finally, there are the fees to pay for opening your account and for when you go over your credit limit. Most companies will fine you for paying late and exceeding your credit limit, but it is very rare that you are charged an account opening fee.
Step 3. Know your creditworthiness, which ranges from a minimum of 300 to a maximum of 900
This score is used to express individual creditworthiness or the likelihood of a debt being repaid. If your score is 650, then your creditworthiness is average; if it is less than 620, then it is poor. Your creditworthiness will affect your chances of getting a credit card.
Step 4. Be aware that having a credit card may encourage you to spend more money, more than you have
Studies have shown that people who use credit cards tend to spend more than those who pay in cash (https://www.npr.org/templates/story/story.php?storyId=92178034). Scientists think that the experience of using real money is fundamentally different from the experience of committing to pay later.
- Scientists also know that people who, for example, buy a laptop with a credit card are less likely to remember the details of its cost than people who buy it with cash.
- Either way, you don't need a scientist to tell you that getting a credit card pushes you to buy things you can't afford. If you are financially irresponsible, this could have devastating consequences.
Step 5. Find information on the credit cards that interest you
Look for them online to compare interest rates, deadlines, penalties and rewards.
Step 6. Read the reviews on the internet regarding the customer service of the various credit cards
Obviously, reading real life stories will be useful to avoid falling into any pitfalls.
Step 7. Consider the rewards offered with the different cards
As mentioned earlier, some of them allow you to earn points for airline miles and give you many other incentives. Some credit cards, however, only give points after you've spent a certain amount, so you won't always get a good deal.
According to the federal government, about 46% of American households are in debt with credit cards. As people who sign up for points programs show a tendency to spend more money than users who don't, it is better for people in debt to steer clear of these programs
Part 2 of 2: Choosing a Credit Card
Step 1. Find out about payment deadlines
Some credit cards require you to pay the full amount in one go, others twice a week, and still others monthly. Knowing when to pay will help you avoid forgetting deadlines. By exceeding the limit, you may have to pay more and decrease your creditworthiness.
Step 2. Find all the information you need to apply for the card, such as your driver's license number, social security number, work phone numbers, your previous residence and personal references
Some credit cards require only a minimal amount of information, such as your name and identification number, while others require a more extensive request.
Step 3. Consider what kind of request you prefer and the urgency of your need for one
Decide if it is more convenient for you to request it online, by phone, in person or by sending a copy of the request by post. Some methods, such as online or in person, will offer you an immediate decision, while others, especially those that involve sending them by post, have a few weeks' wait
Step 4. Make sure all information is accurate
Many people don't think about filling out application forms and don't double-check the information. Make sure everything is accurate first, otherwise the request will be denied. These mistakes are more common than you think.
Step 5. When the card arrives, treat it as if it were real money
Set yourself limits, such as "I'll use this credit card for gas, bills and grocery shopping" or "I'll use this credit card to buy airline tickets." Be responsible and everything will be fine. If you are careless about deadlines and payments and exceed your limit, having a credit card is going to be hell.
- If you can, pay off your debts right away. This will keep your creditworthiness stable in the eyes of the companies. It is a good habit to have.
- If possible, don't go to the limit on your credit cards, which means you won't have to spend all the money available. If you can, download a debt to another credit card or pay it in cash.
Advice
- Beware of high interest rates: check the national average.
- Keep all the necessary documentation on hand when filling out the application.
- Read the privacy statement before submitting the request - you may have skipped it. Always analyze the fine print.
- Always use secure and authenticated sites when giving your personal information on the internet.
- Pay your credit card on time after receiving the invoice. If you pay late, you run the risk of paying higher interest rates and incurring penalties and your creditworthiness will be reported.
