If at the beginning of credit cards history a rectangular piece of plastic with a magnetic stripe was perceived by many as image overkill, then nowadays most of the people in the United States do not see themselves without a credit card. In addition, credit card advertising is everywhere and in all forms: in print, on television and radio, in shopping centers, in mailboxes, on websites and even in the most popular TV shows. The charterer of this advertisements is banks (or payment systems), which spend a lot of money so that the population receives all the necessary financial information and thus goes with the times.
Today, in America, almost every citizen has an average of two credit cards. If you multiply this number by almost 330 million inhabitants, you get just huge numbers.
Ask yourself if you are ready for a credit card
Before you begin any attempts to get a credit card, ask yourself honestly how disciplined you are and whether you are ready to use it as efficiently as possible. If not, it is probably worth starting with developing new good financial habits. At the same time, there are several reasons to get a first credit card:
- Emergency situations. A credit card can become the very lifesaver that will help you “finish off” your salary if, after all the payments, you have no money left for everyday purchases.
- For the “repair” and the formation of a good credit history. Every time you pay for your purchases with a card, this is reflected in your financial dossier as well as the fact of timely debt repayment. The more such records, the more favorable the new creditor will treat you.
- To earn bonuses or get discounts. With each purchase, they will give you a bonus for you in one form or another. You will get it if you initially chose a card with the incentives that you need. And, of course, do not make these incentives a priority when using a credit card.
Credit card requirements
Getting the very first credit card can be difficult. Without an existing credit history, a young person will have very small chances when applying for a card.
Many bank cards have qualification requirements that exclude applicants without credit histories. How should you start creating your credit history, if so many banks that issue credit cards refuse to lend to those who have never taken a loan? There are ways to get a card without a credit history.
Get a card with a guardian or sponsor
If you are only 18 years old and don’t have a stable income, then one of the best ways for you to get a credit card without any data in the credit history is to find a close friend or family member with a good credit history so that he becomes a sponsor. Another way, get one of your parents to become a guardian.
A sponsor is a person who agrees to take responsibility for payments on your credit card. This will make you less secure for lenders and may increase your chances of getting the first card. However, the guarantee carries a set of risks, both for you and for your sponsor. If you miss a payment, it may hurt your credit rating and the surety rating. In addition, your missed payment can lead to an awkward and tense situation and harm your personal relationship with your sponsor.
Application for your first credit card
Before applying for a credit card, you must pay attention to the important parameters:
- Credit card limit. That is the maximum amount which can be spent. Banks give out new credit cards with a small limit, while old clients can count on larger amounts.
- Interest rate. It is worth noting that for such a banking product the highest interest rates are set, the size of which averages 15–25% per annum.
- Grace period. Such a period is established for all credit cards when no interest will be charged on the use of credit funds. Usually, it lasts about 1-2 months from the moment of withdrawing money from the card. This is very profitable because you can use bank money and not pay interest if you have time to repay the debt. It is unprofitable for banks to grant a grace period on credit cards but they are forced to do this because of high competition.
- Commission. Credit cards establish fees that allow banks to earn income. They can be very different – for card servicing (usually charged once a month or once a year), for SMS alerts, for providing statements, for money transfers to other cards and for withdrawals.
- Limitations. Sometimes banks impose various restrictions on credit cards, for example, allow them to be used only for online purchases or limit the maximum amount that can be paid during the month to repay debt.
- Method of repayment. Before you get a credit card, you need to understand in advance how you will pay it off. There may be many options – in cash at the bank cash desk that issued the card, at the cashier of partner banks, through the Internet banking system or through terminals.
If you decided to get a credit card, let our staff help you and find the most suitable and profitable product!