How to Get a Credit Card

The use of credit cards has evolved over the years, thanks to technological development in society. It has not only revolutionized consumer spending but also changed the face of business. In today’s times of digital payments and cashless transactions, credit cards have almost become a necessity and represent an essential part of the global business activity.

Credit cards have become an essential part of your everyday life- right from purchasing groceries to renting a house; they are a convenient form of payment. Moreover, with regular use and prompt payments, they also help you build a solid credit history.

Getting Your First Credit Card

If you are applying for your first-ever credit card, you need to educate yourself beforehand about its requirements. To get a credit card, you need to be responsible to manage your cash flow and track your expenses. You need to meet some basic financial requirements to get approval for the best credit cards. Let’s get started with the process of applying for a credit card and tips on how to keep your financial future healthy.

Know Where to Get Your First Credit Card

With different types of credit cards floating in the market, you need to understand what would best suit your needs. If you have a well-settled job with a good amount of savings, you can easily get a standard credit card approval. They have a minimum interest rate and let you build a decent credit history for the future. If you do not have a good credit history, you can apply for a secured credit card where you need to make a deposit against the credit limit of your account. If you are a student with a part-time job, you can choose to get a student credit card, but with a higher interest rate.

Know Your Application Requirements

Once you have decided the card you want, you need to fill your application. You can either go to a bank to apply for a credit card or fill an online application. A typical application asks you for your personal information, including your date of birth and place of residence for identity verification, Social Security Number, annual income, and housing situation (homeowner or renter). Your housing situation and monthly disposable income will determine your credit limit.

Get Your First Card with Moderate Credit

Each credit card has its own set of requirements for approval. When you are getting your first credit card, you should look for options with moderate or less credit payment. With timely monthly payments for these cards, you can improve your credit history and be better prepared for the future.

Have a Consistent Source of Income

Credit card applications require your estimated monthly income. Banks will not lend you any money if they are not sure of how you will repay the debt. Your reported income is one of the key factors considered by banks to approve your application and decide your credit limit.

Build a Positive Credit History

Most standard credit card applications get approved if you have a good credit score of 700 or more. Banks might still accept your applications with a lower credit score, but they will restrict your payment limit and charge you a higher interest rate. Some of the best offers require at least five years of credit history. Hence, it is essential to build a positive credit history over the years so that you can make the most of your credit card.

Getting Multiple Credit Cards

In the US, a single credit card is sometimes not enough to manage your expenses. While using specific credit cards for particular purposes seem convenient, it might be challenging to juggle with multiple payments and interest rates. A credit card acts as a loan from your bank, with the primary difference being that it is a permanent debt and not restricted to a particular period like loans. Here are a few things to keep in mind if you’re going for owning multiple credit cards.

Access to More Credit

For every new credit card you get, you receive a new credit limit. Your credit utilization ratio is calculated by dividing the amount of credit you are currently using by the total amount of credit available to you. It is advisable to keep your credit utilization to 30% on each card you have. This can also help in improving your credit score, and increase your chances of getting more credit when needed.

Access to More Rewards and Benefits

Having multiple credit cards makes you eligible for various rewards on every purchase you make. Most banks function on the same rewards platform, which means that you can earn more rewards with different credit cards. But not all cards are similar- some might offer higher rewards for grocery shopping, while some might offer higher rewards on apparel shopping. This way, you can avail of various deals and maximize your benefits.

Managing Payment Due Dates

Your payment history counts as an essential factor of your credit score. Hence, it is crucial to pay your credit card bills on time and avoid any late fees. With multiple credit cards, it might be challenging to manage multiple due dates. When you miss a payment, it leads to a negative impact on your credit score. Many issuers allow you to choose a payment date as per your convenience, or, you can automate your payments to ensure they happen on time and retain your credit score.

Though nothing stops you from using multiple credit cards, you need to understand your credit limit. If you have a low credit score, you should not opt for multiple credit cards. If you are wondering what to do when you have a bad credit score, let’s look at some alternatives to getting a standard credit card.

Credit Cards for Bad Credit

Banks and financial institutions will not issue a credit card if you have a low credit score because you pose a risk of non-payment. Let’s discuss how you get a credit card for bad credit.

Secured Credit Cards

Secured credit cards allow you to get a credit limit against your collaterals of the same value. It is the best variant if you have a low credit score and serves as a way of improving your credit score. With consistent repayments and credit ratio, you can transition to a standard credit card.

Easier Credit Card Approval By Your Primary Bank

You can also approach your bank for easier credit card approval. They might approve your credit card application if you have been a long-term customer, but with a higher interest rate. They will have a better understanding of your finances and risk profile.

All in all, the options to get credit cards for bad credit are limited. However, you can still go for these options and use them as a medium to improve your credit scores for the future.