There are now online resources that bring together cards so you can review them and shop for the best option. These sites also let you select your preferences, whether a low APR, a travel points program, or cash back offer. [1] X Research source Look for cards that target your credit situation or age. For example, you can search for cards that are good for students or seniors or even cards for certain professional organizations.
Store credit cards often carry high interest rates and give less perks than normal credit cards. They may also not be accepted as widely. [2] X Research source A store card can work for you if used wisely, however. For instance, you can benefit from discount offers if you shop at the store regularly or make big-ticket purchases there. A store credit card or gas station credit card can also help to build up your credit if you make your payments on time. If you decide to get one of these cards, be sure to pay off charges immediately to avoid the higher interest rate. [3] X Research source
Getting a pre-approved offer means that a credit card company has already looked at your credit score, borrowing history, and other details. The offer may also be customized for your age, income bracket, or personal interests. Pre-screened cards are almost always approved – but not necessarily with the APR and terms advertised in the mail-out. [5] X Research source Some companies also advertise with “Invitations to Apply. ” These offers are not pre-approved and are not firm offers of credit. You may be denied. [6] X Research source
Unfortunately, credit card scams are common. Be sure that you recognize the company. Don’t fall for promises that you’ll get a credit card if you have poor credit and never pay anything up front. Find a card that works for you. Look for rewards programs and perks that you can use, consider how widely retailers will accept the card, and read the fine print. [7] X Research source
Email offers will come with a link to the online application. You can also call the toll-free number or fill out the paper application if your offer came in the mail. Provide any offer codes when you apply for the card. Most letters or emails will have a code including letters and numbers to access the specific offer made to you.
Start early. Length of credit is a big factor in getting future credit and qualifying for cards. Lenders want to see that you have a track record in paying off your debts. Student or secured credit cards are good ways to establish and build your credit, as are retail and gas station credit cards. With good management, you can upgrade to a major credit card with lower interest rates and larger spending limits. [9] X Research source
Don’t miss outstanding payments, obviously. Card companies will charge you late penalties and, possibly, raise your interest rate if you pay late. Also, payments 30 or more days late can end up on your credit report. [12] X Expert Source Derick VogelCredit Advisor & Owner, Credit Absolute Expert Interview. 26 March 2020. The best thing to do is to pay off balances early and in full, before the monthly deadline.
Having a large debt-utilization ratio (i. e. big balances on your card) sends a bad message to lenders. It suggests that you spend more than you can pay. Try to keep your ratio low. [15] X Expert Source Derick VogelCredit Advisor & Owner, Credit Absolute Expert Interview. 26 March 2020. Most experts say that your debt-utilization ratio shouldn’t be more than 30% at the most. This means a $3000 balance on a $10000 credit line. A ratio of zero will greatly improve your credit score. [16] X Research source
Some experts recommend that you limit yourself to two personal credit cards, keeping one for normal purchases and the other for emergencies. More cards mean more temptation to spend and more risk of high debt. [18] X Research source However, others argue that it’s possible to have many credit cards, so long as you always pay on time and use them wisely. [19] X Research source Whichever path you choose, make sure not to apply for many credit cards at once. Every time you apply for a card, it initiates a “hard inquiry” on your credit report, which lowers your score. Too many hard inquiries in a short period will actually damage your credit. [20] X Research source
Avoid the temptation that comes with a credit card. It’s OK to use it now and then, but don’t spend beyond your financial means. Pay off your balances on time, every time. This will more than anything will assure you of good credit and sound finances. [21] X Trustworthy Source US Consumer Financial Protection Bureau U. S. government agency for protecting consumers in the financial sector Go to source [22] X Expert Source Derick VogelCredit Advisor & Owner, Credit Absolute Expert Interview. 26 March 2020.
Bank credit cards are usually reserved for established customers. You’ll need an account. Having a checking account at the bank can help, in particular. If you are a long-time customer, the bank may ask you first about a credit card. As banks seek to diversify, they are trying to build up credit card portfolios and entice customers with good introductory interest rates and extra rewards. [24] X Research source Another benefit of having a bank credit card is that you may be able to link the card to your normal accounts, making payments easier to manage.
Ask questions and listen for important details. You’ll want to be clear about each card’s profile. What is the yearly interest rate (APR)? Is there an annual fee for holding the card? How much is the credit line? What is the minimum payment you can make toward outstanding balances? Make sure to know if the card’s APR is “introductory” or “fixed. ” Lenders will often offer a low introductory rate to attract customers, which will then go up after a period of months or years. Ask about rewards. Some credit cards will earn you air miles with each purchase. Some offer cash back or points that you can redeem for merchandise. Weigh what options you have. [25] X Research source Non-profit financial institutions like credit unions often offer lower APRs and lower penalty rates on credit cards. You will probably have to be a member of the credit union to qualify, however. [26] X Research source
Secure cards require collateral. This means that you will have to give the bank a deposit for your credit line ($500 for a $500 credit line, for example, or $1000 for a $1000 line). Secure cards work like normal credit cards. Your deposit won’t count toward payments, but is just there for security. Your bank will periodically review your account. If you pay on time, they may eventually offer you a normal credit card with a larger line of credit. [28] X Research source Be aware that your bank keeps a close eye on secured card accounts. You’ll have to make all of your monthly payments, or the bank may be able to keep your deposit. [29] X Research source
You will have to provide personal information, but also details on your citizenship, employment, and finances. Be prepared to answer questions about your annual income but also the monthly cost of your housing and how much you have in “liquid assets,” i. e. how much money you have in cash, savings or checking accounts, or certificates of deposit. Submit the application and wait for your bank’s decision. This may take a couple of weeks. If approved, they will usually send the card in the mail. You’ll have to activate the card before using it. Activation is easy and only takes a few minutes. Just follow the instructions that come with the new credit card.
