How to Get a Credit Card: A Step-by-Step Guide for Beginners
“How do I apply for a credit card?” Even with the widespread use of digital payment methods, this question remains extremely common. In addition to convenience, credit cards offer several advantages compared to cash. If used smartly, a credit card can be used to improve your credit score, and you can also earn rewards for making purchases with it. What is more, it is a more secure way to keep money compared to always carrying cash with you.
Here, we discuss how to get a credit card, some tips to choose the right one for you, and the importance of a credit score.
What Are Credit Cards, and What Types Are Available?
Before we discuss how to apply for a credit card, let’s focus on the definition. Credit cards are financial products that allow their owners to borrow money from banks that issue them within a certain credit limit. In this way, credit cards are different from debit ones, as the latter are designed solely for spending your own money.
One thing to note is that not all credit cards are made equal or offer the same conditions. Such cards can be divided into a few main categories:
Secured credit cards
When you apply for this card, you have to make a security deposit, which will be used as your credit line. The advantage is that you don’t need to worry about reaching a higher credit score to get this card.
Travel rewards credit cards
In the case of this card, you will earn points for various purchases that can later be redeemed for travel-related purposes.
Cashback credit cards
Rewards of credit cards also come in the form of cashback. With some credit cards, you will get a certain percentage back from the selected categories of purchases, so it’s a great way to save money.
Student credit cards
This card is tailored to students and their needs. A student credit card is easier to qualify for, helps build a credit history, and may offer relevant advantages, such as cashback or discounts on learning platforms.
Business credit cards
As the name suggests, such credit cards are for those opening their businesses. Typically, these cards offer higher credit limits and may also have reward programs. Some business credit cards may have additional benefits, such as emergency assistance and spending tracking.
How to Get a Credit Card for Beginners: Factors to Consider
You might be asking, “How can I get a credit card that will suit my needs?” There are a few things that you should consider, including credit score requirements, fees, interest rates, and rewards.
You should first look up if a credit card charges annual fees and decide whether it will be worth it. Also, it’s a good idea to see whether there are any fees for late payments.
Credit score requirements
Some credit cards require a 680+ score, so if you have anything under this number, then you should consider other options.
Points or cashback
You can either collect points when you pay for goods or services and redeem them for other purchases or get cash back depending on the card you choose. When you look up cards, you should pay attention, as rewards can be more brand-specific or more general, which is often a better option.
0% APR or low interest
It is a good idea to look into cards that offer introductory 0% APR, which is a great option for making large purchases. There are also low-interest cards available for those who expect to carry a balance on them.
Importance of Your Credit Score and How to Improve It
When you apply for a credit card, a bank will closely examine your score and decide whether you are trustworthy enough to use this financial product. It is a good idea for you to look up your credit score before you apply for any card. This value is affected by everything from your outstanding balances to your credit line history.
You have an opportunity to view your credit report from reputable credit bureaus (Equifax, Experian, and TransUnion) either online or by sending a request directly to their addresses. You can ask for a free report at least once a year and more frequently if you send an online request.
If your credit score is not in the good range, your priority should be not how to get a new credit card but rather how to improve your credit score. Here are a few tips that can help:
Make sure to pay your bills on time
You should ensure that your monthly payments are performed without any delays every single time. This will be the largest contributor to having a good credit score.
Don’t overuse your credit
You should stick to the minimum credit usage to improve your score. If your maximum credit limit is $5,000, you should not charge more than 30% of this sum, which is $1,500.
Use a secured credit card responsibly
You can use a credit card as a way to improve your credit score, but this can go the other way easily, so it’s important to avoid any debt or late payments. Even if your credit score is not the best, you can get a secured credit card and start improving it from there.
These are the basic things you should know about how to select the right card and how to apply for a credit card in the USA for beginners. It is essential to consider everything from fees and rewards rates to the credit score requirements before you apply for a card. If you avoid late payments, a credit card will not only be convenient to use, but it can become a useful tool to improve your credit history and get some other benefits.
What is a credit card, and why does a newbie need one?
A credit card allows you to borrow money from a bank whenever you need and it offers a convenient way to pay for your purchases. It offers a high level of security and additional cash back or rewards that allow you to save money.
How do I assess my financial situation to determine if I'm ready for a credit card?
Firstly, it’s a good idea to assess your income and decide whether you will be able to pay off any credit you take. Secondly, you should look up your credit score to know what type of cards you will be eligible for.
What factors should I consider when researching and comparing credit card options?
If you wonder how to sign up for a credit card, it’s a good idea to compare your options first. The main factors that you should consider include credit score requirements, absence/presence of annual fees, rewards rate, APR, any welcome bonuses, and penalty fees.
How do I open a credit card if my credit score is not great?
The only solution is to improve your credit score. You can do this with a secured credit card that requires you to make an initial deposit and has less strict requirements for credit scores. By avoiding late payments and paying your bills in time with such a card, you can build a good credit history and then opt for options with better conditions.