Applying For Credit Cards

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So you want to get a credit card...WHY?

Credit makes the world go around, at least in the financial sector. It is good for businesses so they can sell more stuff which allows them to create jobs. It is good for banks because it makes them rich. Whether or not it is good for you, the consumer, is a different matter altogether.

Credit cards can be issued by a bank, retailer or consumer store to allow consumers the ability to purchase goods and services. These credit cards set a specific limit, interest rates and time period for repayment. Your ability to obtain a credit card and the terms will largely depend on your credit rating. The better your credit, the better your terms.

You can apply for a credit card online, by phone, in person, or by mailed form. The offers are plenty, but whether you qualify for them is another matter. Before you start applying for every offer coming your way, you need to educate yourself on the process. Too many inquiries on your credit report will backfire, so make sure you know what you are doing before you rack up too many inquiries on your report.

Find out what is on your credit report before you do anything. If you live in the US, go to annualcreditreport.com. It allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. If there are any negative entries, you can have them removed if they are not valid. A good report will mean better terms and offers from credit companies.

Once you have cleared as much of your credit report as possible, do some research before you put in an application. Find out about different credit card plans, rates and terms on the Internet and from personal finance magazines and newspapers. It also helps to look up the Better Business Bureau for a history of complaints, but if you are looking at forums which are not regulated take the complaints and praise with a grain of salt. While the comments may come from an honest place, it often only tells one side of the story. However, if you see a lot of the same type of complaints and it is backed up by a neutral party like the BBB, then you may want to consider not doing business with that company.

Find out what the qualifications for that card will be before you apply. It makes no sense applying for a card where the chances are good you will be rejected. It will mean needless inquiry on your credit report which will make it harder for you to be accepted.

Read the fine print. The credit companies often love to tempt people with very low interest rates, but only in the fine print you will see it is temporary and conditional and may not apply to you. You might think you are applying for a card at 5% interest and be shocked to learn in 6 months your interest is now 25% because you were late by 2 days.

The fine print will also let you know about monthly/annual fees, fees for dealing with customer service, fees for getting your records and so forth. That is how the banks make extra money from their services.

How would you like to apply? If you send personal information through traditional mail, there is always a chance sensitive information, like your social security number, might end up in the wrong hands. If you apply online, if the site is not secure when sending information (look for the gold lock on the bottom right of your browser to make sure you are on a secure site), people can see your information if they are hunting for it. Most often the Internet will give you a decision within minutes. Phoning your information is often the safest route and will give you almost instant results.

Do not apply for more credit than you can pay back. It can be tempting to apply for many credit cards at once if you have the good credit and you might get dozens of cards sent to you. If you are tempted to spend them all to their limit you might find yourself in a difficult situation in paying them all back. Remember, the banks are not looking out for YOUR best interests, but their own.