Why Do I Need a Credit Card?

The world of credit can seem scary, but if used smartly and responsibly, it can lay the foundation for your future. With this 101 guide, learn the ins-and-outs of the credit card you’ll be putting in your wallet.

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Credit cards get a bad rap.

They are often blamed for bringing out the worst compulsive shopper in each of us.

But a credit card isn't a financial product to be afraid of.

Used responsibly, credit cards offer a lot of benefits that far outweigh the risks.

Fear of bad credit, debt, and other financial pitfalls might make you wary about establishing a line of credit in the first place.

But for most, this is just fear of the unknown.

If you're considering applying for a card for the first time, the world of credit might seem more complex than it really is.

I went into my first credit card experience by surprise.

I was getting gas one night just before work, and when I went in to pay, the cashier asked me if I had their branded credit card.

I could get ten cents off per gallon if I paid with their card, it was easy to apply, and the decision was instant.

I could use the card for that purchase, and for me, this was like a winning scratch off lottery ticket.

I had ten bucks, and needed a lot more than that to fill my tank.

I got approved, filled up the tank, and headed to work.

I managed to keep the card for years with no monthly balance, and it helped me learn to budget my paychecks to be able to pay off my gas purchases once per month instead of every time I had to buy gas.

So, while it might not seem like too much of an issue now, one day you might want to take out a mortgage and the bank is going to look at your credit history to decide whether or not to trust you with their money.

approval rates for mortgage applications

If there's no credit history to look at, that can cause you some serious issues from high-interest rates to closed doors at the next car dealership, dream job, or even romantic partner.

Even worse, you could have an emergency that lands you out of work and in the hospital.

While you're in bed, the bills start piling up, and you're stuck without a line of credit to lean on.

Despite this, more and more people are beginning to turn away from credit cards, with 63% of people aged 18-29 going without one, as Catherine Alford points out for Society of Grownups.

And while this might keep credit card debt away, it may not be the financially smartest move.

Even if you've never applied for a card before, you still can.

In fact, in the age of the internet, your first credit card might be just a few clicks away, and this guide will help you take your next step in understanding why you need a credit card.

Why Do I Need A Student Credit Card?

The foundation of a strong financial future can start with a credit card

A rock-solid future can be built on plastic.

The logic is simple: you're as good as your reputation, and your credit is just that – your financial reputation.

If you knew you could trust your friend, you'd lend her your keys.

I the bank knows they can trust you, it'll loan you its money.

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If you're thinking to yourself that people shouldn't buy what they can't afford at this moment, that's good!

In fact, you're the perfect candidate for a credit card — a responsible consumer.

But the reality is, some things cost a lot more money than most people can pay at once, which is where good credit comes in!

If the car you're looking at costs $10,000, is that money you'll be able to pay in one go?

For a lot of us, it wouldn't be possible even if we wanted to.

new vs used buyers: time spent buying a vehicle

But that doesn't mean you have to settle on the bus.

It means you need a loan or line of credit. And it's with big purchases like these that a credit card comes in.

We had the opportunity to buy a really nice vehicle, with low miles and just a couple years old.

But, we did not have the cash to spend outright.

After looking into the interest rates on certain auto loans, and the process, we decided to use one of our credit cards to purchase the vehicle.

Why? For a few reasons.

First, the interest rate was super low- lower than the auto loans we were offered.

Second, there was no penalty for paying off the credit card balance like there would have been had we paid off the auto loan earlier than the loan term.

For us, it was a no-brainer, but an option we did not immediately consider until we took time to sit down at home and weigh all of our options without sales pressure.

Good Credit Can Lead to Larger Loans

Taking out a mortgage is easier with good credit.

The reason being, the bank is trusting you with its money and wants to make sure you'll pay it back.

If you have a lengthy history of paying your monthly statements on time, you're more likely to get the loan you're looking for.

Good credit will not only help you secure the loan you're looking for but ensure you don't pay more than you have to on your mortgage.

Insurance premiums go up as your credit score goes down.

Buying the right insurance is already a big financial decision, and just like taking out a loan, your trustworthiness is considered when deciding the premium you'll pay.

The line of thinking is that if you have a bad credit score, you might live a riskier life in other ways as well.

And if you're life has higher risks, you pay a higher premium.

This means the lower your credit score, the higher your premium — and vice versa.

In fact, bad credit can cost you tens of thousands of dollars in higher interest payments, according to Stacy Johnson of Money Talks News.

Take the example of a home mortgage of, say, $200,000 over 30 years with a fixed interest rate.

"Show up at the lender's office with a credit score in the 620-639 range, and you'll pay 5.34 percent interest.

"If you make minimum payments, your total interest bill for that mortgage will amount to $201,610.

"But if you waltz in with a score in the 760-850 range, you'll only pay 3.751 percent and your total interest bill declines to $133,484," Johnson says.

"That means that over the life of that loan, that lousy score cost you $68,126 — enough to finance your own business, put a kid through college or retire at least a year earlier."

Most students will need loans to attend college.

It pays to go to school, but it can cost a lot too.

When it comes to loans and textbook rewards, a good credit history is going to be important when your son or daughter gets ready to go off to college

For many families, that tuition is being paid for by a loan from the bank.

And as we've mentioned, a healthy credit will decide the amount the bank loans you at a particular interest rate.

It goes without saying education is the strongest investment one can make for the future, and the best way to show lenders you're good for the money is by maintaining a healthy credit history and FICO score.

One of the easiest ways to do that is with a credit card you use responsibly.

Also, some cards specifically meant for students sport nice rewards programs (described below) to offer students a variety of benefits.

Some cards even reward good grades, which can net students a little extra cash at the end of the school year!

In fact, being a student is a wonderful time to start building credit. Most freshman start at 18, at which point they can own a credit card so long as their parents cosign.

Like Lea DeRosa argues on Tayne Law Group's blog, building a strong credit score while in college can provide a lot of help with economic independence after graduation.

Employers can check your credit report. Applying for a job is stressful enough, but if you have a recent history of bad credit practice, it's possible, though unlikely, that it could cost you a job.

Thanks to regulation, employers cannot see your credit score, but they can ask for a recent credit report.

The reasoning is to make sure there's no illegal activity, like embezzling happening with the potential new employee.

But even if you're not breaking the law, trouble repaying debts might leave a bad impression.

While a credit card might have been the reason you're struggling to repay debts in the first place, certain cards like a secured credit card (described below) can help you revive your credit score in a short time.

While credit cards are the quickest way to hurt your credit score, they're also the quickest way to help improve it.

If you and your spouse take out a loan together, both scores are considered.

If you marry someone with bad credit, your score doesn't drop.

But it could limit your ability to take out a loan together.

One of the greatest economic benefits of marriage is two incomes.

It allows you greater financial freedom and when you go to take out a loan, the lender has two credit scores to call on.

How to improve your financial life as a couple

That's great news – if your spouse has good credit.

While we were planning our future, my wife and I discussed how we could position ourselves to be able to afford certain things like a new home or new car.

For us, it was not easy at the time because my wife was in a graduate program and could not work.

Plus, she had mounting student loan debt.

But, with a little discipline, we were able to put money away every month to help manage the debt being created by her student loans.

By paying off these loans quicker, her credit score rose significantly.

If only one person has a good score, the bank will see half of the marriage as a credit risk.

If that bad credit is yours, when you go to settle down, you're holding the person you love back financially.

Luckily responsible use of a card can help push your score to where it's helping you and your loved one.

Even the best card is only as good as the person using it

Owning a credit card is a responsibility and one that comes with its share of economic risk and reward.

Good card ownership can serve as the start to a strong economic future, whereas misuse can land you in serious debt.

7 good and bad credit card practices

The rewards of good card ownership

Responsible usage helps your credit score.

Responsible use of a credit card can be the quickest way to restore or build good credit.

In fact, a credit card is one of the fastest ways to build good FICO score.

With the right practices, it's possible to go from no credit to a good score in under a year.

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Even if you've never swiped a card in your life, paying off your monthly credit card bills (in full) translates into a healthy credit history.

To learn more about your score breakdown and how you can use it to your advantage, check out this killer infographic.

A credit card can save you money. There's more than one way your wallet's new plastic passenger can save you cash.

More and more cards are featuring unique rewards programs that offer consumers cash-back or miles on various purchases.

If a credit card has no annual fee, and gives you cash-back, so long as you pay your balance in full every month you're actually making money by doing what you would normally have done without a credit card.

For example, if you receive 6% cash-back on something as necessary as groceries, and spend $300 on groceries a month, your rewards should be over $200 a year.

Even if the card had a high annual fee of $100, you'd still be making $100 just for buying groceries.

But remember!

You need to make sure you're on top of your payments.

Otherwise, these perks won't save you in the long run.

The pitfalls of unsafe card ownership

If you don't pay off your balance, your debt will increase.

All money lent comes with a string attached, and that string is interest.

If you use your card to make a $1,000 purchase, depending on the card, you'll eventually owe the creditor that money back (typically at next month's billing cycle).

But if you don't pay it back in full, or only make the minimum payment on your card, the balance left will likely begin accruing interest.

Credit card interest by employment status

Interest is the percentage of the amount owed by which that amount owed increases, which for credit cards, is per month.

In other words, if you pay 5% interest on 10 dollars each day, each day you'll owe 50 cents more.

For credit cards, interest is called your Annual Percentage Rate (APR, described below).

If your card's APR is a high 29.99%, and you've steadily had $1,000 of debt all year, come New Years you owe that plus over $300 more due to interest.

All of this is to say, if you don't pay your credit card bill, it will end up costing you more in the long run.

It's easily the biggest pitfall of credit, but it shouldn't stop you from the possibility of being a responsible cardholder.

The only thing worse than no credit history is a bad credit history. Having no credit history can send mixed messages to lenders.

Maybe you're young and just starting out on your own, living off the grid, or maybe you can't figure out how this whole credit thing works to begin with and decided to just opt out.

It's not a great message to lenders, but also everyone starts with no credit.

Having a bad credit history, on the other hand, is a red flag for lenders that indicates you might not pay back the money you borrow.

For example, if your line of credit limit is $5,000 and you spend $4,000 of that in one month, credit bureaus take note of that sort of thing – 80% of your line of credit was spent quickly and might mean you won't pay it back.

Not surprisingly, responsible credit card use can not only build a credit history, it can be one of the best ways to restore one.

There are different types cards for different types of people, so pick carefully

There's different plastic for different habits. While most people are familiar with unsecured cards, the world of credit cards offers lots of options.

If you're looking to build good credit or are brand new to credit for example, a secured card can offer a big boost.

If you're looking for more rewards instead, need a higher credit limit, or already have some significant debt to pay off before building up your credit, an unsecured card might work better.

And if you're nervous about the plastic altogether, consider a debit card.

Just be aware that a debit card won't actually improve or hurt your credit.

It actually has nothing to do with your credit!

It's simply a faster way to pay straight from your checking account.

Secured cards can give you a solid ground on which to build good credit

The best card if you have no history. A secured card is often suggested as one of the best and safest ways one can build up their credit history, sometimes even if they have none to begin with.

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Paying the card's monthly statements is almost foolproof (described below) so that you're always sure to be on time.

And this keeps your credit healthy.

A security deposit backs the credit line. A secured card is secure because it requires a security deposit, which typically matches the credit limit you'll be approved for the card.

So, if you put $200 down as a deposit, the card's limit will also be $200.

The deposit exists to provide credit card issuers with some type of collateral they can hold on to it just in case you don't pay off your balance.

So long as you use the card regularly, you can increase your score quickly!

The credit limit is usually lower, but so too are the fees and rate. In a way, a low limit is a calculated blessing.

If you can only borrow $200, the amount you'll owe back will be small as well.

But if you're hoping to make bigger purchases more often, this won't be the kind of card you'd want.

That being said, many secured cards come with the option to increase your limit by increasing the deposit after some months of responsible behavior.

Plus, the deposit usually allows the card company to offer lower interest rates and fees.

Unsecured cards often offer rewards and higher limits to responsible spenders

Unsecured cards can offer rewards programs. Cards increasingly offer rewards programs to get more people to apply and spend more.

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These programs often offer some type of reward for cardholders who buy certain types of items, often to a set limit.

The rewards might come in the form of redeemable points, miles on your next flight, or cash-back.

While cards with rewards often come with higher APRs and sometimes an annual fee, if you're responsible enough, those rewards can make up for it and any other downsides.

Attractiveness of credit card features

For example, if you are receiving $600 worth of rewards a year, which might be possible through more sought-after cards, even with a $100 annual fee, you're still $500 ahead!

But remember, more than likely these bonuses typically require you spend a certain amount within the first few months of opening the card.

If you don't spend that much in the first place, overspending to get the bonus will likely cancel out your savings.

Unsecured cards come with higher limits.

Sometimes $200 isn't going to cut it.

If you're looking to get the most out of a card, you may need to break the $1,000 cap, at which point you're probably looking at an unsecured card.

Most unsecured cards come with higher limits on your credit line – though of course the limit you're granted will also be determined by your score.

A balance transfer card can help you consolidate debt and save on interest payments

A balance transfer is when you take the debt from one card and transfer it over to another.

This often comes with a fee, but if done right can have you paying lower interest on your debt.

Many cards, both secured and unsecured can transfer balances and accept these transfers.

But most have high fees and rates attached.

There is, however, a specific balance transfer credit card, which will help you transfer your debt to a lower- or no-interest card without breaking the bank.

These cards typically offer an introductory offer of 0% APR on balance transfers for a certain amount of months, during which you can pay off your balance without accruing more fees.

But watch out: once the intro period ends, the APR will jump really high!

While hopefully you don't find yourself in credit card debt, if you do, you know there are options like transferring your balance to a lower-interest card.

Your card will use a strip, a chip, or both to communicate and secure your information

For a long time, credit cards have been easily identified by the magnetic stripe which runs across it's back.

Recently, cards have begun to include a microchip making them safer and more efficient to use.

Cards that include both the stripe and the chip are called EMV cards (or chip cards), standing for Europay, MasterCard, and Visa, the originators of the standard.

Smart chip cards are often of the dip-variety, as in they are dipped into a reader during payment.

Some cards, however, are contactless, using radio frequency from a microchip to communicate with card readers.

These chips are called RFIDs and can save you time by allowing you to just hover your wallet, or phone, over the reader to pay for your items.

5 things to keep in mind when comparing cards

A high APR means higher interest. Those new to the world of credit have no doubt seen the term APR – every credit card description has it listed somewhere.

It's usually a number between 10 and 25, though sometimes more or less, and it stands for Annual Percentage Rate.

What it's referring to is the percentage of interest you'll pay on your credit card debt yearly.

Even though you're billed monthly, credit card interest is often listed as an APR, and therefore it's the annual percentage of that interest that you're seeing.

APR is also not always static, sometimes even after having already been approved, the APR may change halfway through the year – that's what's known as a variable APR since it varies.

To make it even more complicated, there are typically a number of different APR rates for different types of credit card actions — including purchasing, transferring a balancing, taking out a cash advance, and getting hit with a late penalty.

Ultimately, the ideal credit card owner is making full payments monthly, and so never sees a card's APR come into effect.

But it's still important to have an idea about the APR for any card you're applying to.

If an APR is high, and you start struggling to make payments, that interest might grow before you have a chance to stop it.

When you're late on payments, fees kick in and interest starts building. Even the most responsible cardholder is only human, and humans make mistakes.

Most common credit card feesAll cards will have a minimum payment you have to make on your balance, and if that minimum isn't met, a late fee is charged.

Even if the late fee is low, or better yet, nonexistent, there's still interest, which depending on your APR can be quite high.

If you continue to miss payments, then the interest will also continue to grow, plus any additional fees that get added on.

So, if you have a card with a 21.99% APR and you had an October where you spent $500 and were too busy to pay it back, that's an extra $9 that month in interest plus any fees you might see in early November.

If the fee is $30, you've now lost $39 on the $500 owed.

That $9 might not seem like much compared to the balance.

But the amount magnifies the moment it becomes a habit.

If you're not paying off your monthly balance, those numbers can grow out of control.

By building responsible credit card habits now, you can make sure it's a financial aid to your future.

Some cards have fees in places others don't.

When choosing between any options, transparency is a virtue, and it's not different with credit cards.

Unfortunately, lots of fees can make this a difficult task for those new to the credit-world, especially when you're unaware of what the fees are for.

When in doubt, ask questions.

Chances are, you can do an online search and find reviews specific to the very credit card you have questions about.

While some cards have fewer fees than others, some of the most common include annual fees, late fees, balance transfer fees, and sometimes foreign transaction fees for those traveling abroad (more on fees below).

It's always important to research what kind of fees a card has before applying.

That way you're clear about what money, if any, is owed when.

A creditor can make a soft pull or a hard pull. Credit reports are recorded by three separate credit bureau, Equifax, TransUnion, and Experian.

These credit bureaus put together data about your credit and produce a report and credit score which lenders then can use to assess your creditworthiness.

When a lender wants to check your score, the report is pulled from the credit bureaus and reviewed.

There are two types of "pulls" a lender can do — a hard pull and a soft pull.

If you weren't pre-approved for a card (more on this below), the creditor will have to perform a ‘hard pull'. If this happens once in a while, the effect is negligible. But if you have multiple hard pulls done in a year, this will begin to negatively affect your score.

Similarly, a soft pull is one that has no effect on your credit score and is often done for those who are already pre-approved for a card. While they function the same way, a soft pull is preferable to a hard one.

Listen to what people are saying about your card. Just like with anything in life, when it comes to credit cards, the customer is always right.

Most of the time you can find customer comments, complaints, and questions right on the card's website. Some banks and creditors will have a forum dedicated just to customer discussions.

Similarly, social networking platforms like Reddit will have personal finance sub-threads just for discussing topics like credit cards and rewards programs.

Many cardholders will also go to sites like ficoforums.myfico.com to discuss card benefits and credit in general.

Choosing the right rewards program means understanding how you spend

Credit cards are all square and wallet-sized literally, but as the saying goes, they come in all shapes and sizes.

There is no one card fits all and many people have multiple cards.

But even if you're new to credit, the key is picking the card that's best for you.

As mentioned above, secured cards offer security, while rewards cards offer, well, rewards.

When you are getting your first card, a bit of self-knowledge can go a far way in picking the perfect piece of plastic.

The 3 Most Common Rewards A Card Can Offer

A rewards card is a card that rewards you for using it.

Usually, when you buy certain items it gives you a certain percentage cash-back, or redeemable points or miles.

How frequently rewards are redeemed

Cards that give cash-back put money in your wallet.

Cash-back rewards are one of the most popular ways credit card companies treat cardholders.

They work by giving you back a certain percentage of what you paid for items in a particular category, usually to a certain dollar limit.

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For some cards, there may be more than one category that gets more cash-back than others.

For other cards the category may switch monthly, or every quarter year.

As long as you are up-to-date on what you get cash-back on, it's possible to save quite a bit of money.

So, if you have a card that promises 5% cash-back on any item purchased at a supermarket, and you spend $100 on groceries each week, each week you're getting $5 back.

While it might seem small now, those savings quickly add up.

Depending on the card, you may have a few options about how you get your cash-back.

You might be able to have the creditor deposit the cash-back directly into your bank account or send you a check via mail.

Similarly, you could have it automatically attached to your balance, helping you dig into your debt while you spend!

Certain credit cards offer points as rewards for purchases.

Points work similar to cash-back in that you receive them for purchasing certain things.

The only difference is that points can also be exchanged for a variety of items, including gifts and gift cards.

Also unlike cash-back, points can expire and are worth different amounts depending on the credit card issuer

Points can sometimes be exchanged for cash-back, so it's possible to see how much a single point is worth in US dollars, which can be helpful if you're comparing cards.

Usually, points are then redeemed through the credit card's website.

Some cards will offer miles to help with your next flight.

If you're someone who flies often, a card that rewards you with miles might be the perfect fit.

By giving you air miles with every purchase in certain categories, cards like these can make your next flight cheaper.

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Following the same logic as above, if a mile is about 2 cents, and you get one for every dollar spent on plane tickets, you're saving 2% of every flight.

If you have a $300 flight, that's 6 dollars saved.

Many cards come with sign-on bonuses as well, which can boost your miles quite a bit.

What you'll find is it's not hard to put together a free flight on your creditor after a short while.

Think about your purchase habits before picking a rewards program

Not everyone cooks, not everyone goes out to eat, and not everyone drives.

And yet there's a rewards card for people who go to the supermarket, go to restaurants, and put gas in their car.

If you're going to play the rewards card game, you need to maintain a clean balance, and you need to know what it is you're spending most of your hard earned cash on.

If you're not a fan of airplanes and prefer the road trip to the Hawaii flight, a card that focuses on cash-back for gas probably makes more sense than a miles rewards card.

The crucial 4 things you need to know about credit card fees and rates

Whether or not a card has a rewards program, it most definitely will have a number of fees that are important to consider.

There are many different kinds of fees and if you're new to credit cards, it's smart to familiarize yourself with them.

credit card fee income

Some cards will charge you an annual fee once a year.

If the card has a really solid rewards program, it's common that an annual fee will accompany it.

This fee could be anything from $25-$450, depending on the quality of the card and sign-up bonus offered.

This is a fee you'll pay the credit card company once a year, most likely a year after you've activated your card.

While it's unlikely the fee will outweigh the rewards offered on most cards, it's still important to take the time and do the math.

For example, if a card offers you cash-back so that you get about $200 cash-back a year, and the annual fee is $99, you're really only getting $101 back.

$101 is good, but it might not be as good as some of your other options. It's always important to keep this in mind.

Some cards might come with annual fees closer to $500, but they make sure to include the benefits to match, including airline, hotel, and car rental perks. It's rewards like these that can make a $450 fee worth it in the end.

Balance transfers often come with transfer fees.

Balance transfers (described above) are a neat way to help ease credit card debt if you ever find yourself in the ditch.

If you have debt on a card with a high APR and you're struggling to get it paid off, a balance transfer to a card with a lower APR might help ease the burden, but you need to make sure it makes economic sense.

So, if you have $1,000 of debt on a card with a 21.99% APR, after a month you owe $18.33 more than your balance of $1,000.

If your balance transfer fee is 5%, it will cost you $50 to make that transfer to a card with lower interest.

Now, if you can pay off your balance that month, the transfer fee makes a transfer not worth it.

But if you can take advantage and pay off your outstanding balance within the timeframe of the 0% APR introductory offer, it might be worth it.

It's also important to know that after paying the transfer fee, you will still have to pay the interest as it accumulates on the new card.

So don't use your balance transfer credit card for new purchases!

It always helps to do the math first and read all the fine print to know if some fees are worth it.

Some cards may have foreign transaction fees for when you're abroad. This fee is fairly straightforward.

If you use your card outside the US, you might have to also pay 3% of the purchase cost to your credit card company.

Math isn't going to help you too much here.

The question is whether or not you are outside the US often.

If you are, you might want to consider a card that has no foreign transaction fees included.

Credit card interest is called APR.

Even though credit card interest is calculated into the billing cycle monthly, the percentage increase on the money owed is labeled ‘APR,' which is calculated annually (hence Annual Percentage Rate).

Even if you're not into math, the logic is simple: if you have a higher APR, you will pay higher interest.

That means if you start missing payments it's a bit more difficult to dig yourself out

That said, of all the additional costs listed here, this is the only one that can be avoided by responsible card usage.

By paying off your monthly balance in full, you will never have to worry about your card's APR, allowing you to focus on other fees and rewards.

Also, some cards will boast 0% APR intro periods, whereas a nice hello the bank won't make you pay interest on your credit for the first few months.

While this can be very nice, if you aren't careful, it can create a false sense of security in terms of money.

Paying attention to fees can help save you money.

But they can be tricky.

Even though they are always stated somewhere on the card's website, they might be written in a smaller font and surrounded by legal jargon.

Things like APR or annual fees will always be obvious, but something like a balance transfer fee might be somewhat hidden.

The same goes for foreign transaction fees and late fees.

So at the end of the day, it's best to read the fine print.

Check out the fine print cheat sheet in this quick tips guide to credit cards for families if you want to learn more.

Eligibility, Application, and Approval

Now that you know what it is you're looking for in a credit card, eventually you'll want to apply.

Luckily, applying for a card is quite easy and often just requires a quick trip to the card company's website!

how credit score affects credit card approval

If you are pre-approved, you're good to go

The best situation when applying for a credit card is to be pre-approved.

This is exactly what it sounds like – the bank feels you are trustworthy for a line of credit ahead of time, performs a soft pull of your credit report from one of the credit bureaus, and you're well on your way to having a card!

When I opened my first checking account, I asked about getting a credit card to link to my account.

The bank offered a pre-approved card with a limit up to a percentage of my monthly income, based on having direct deposit set up for my pay checks.

It was a win-win for me and for the bank, and I was able to start establishing more credit without getting into debt.

There are multiple ways to find out whether or not you're pre-approved.

Sometimes you might get a letter in the mail congratulating you on being pre-approved for a new card.

The bank had already found you creditworthy and sent you an invitation.

If you didn't get an invite to have a credit card – no need to worry!

Most bank's websites and even some 3rd party sites offer services online to check if you qualify.

By entering the correct info, in just a few minutes you can see which cards you're pre-approved for.

Age and income affect card eligibility

You can begin owning a credit card at 18.

The legal age to independently own and use a credit card is 21.

However, if your parents co-sign onto your card and you have proof of income, you can have a card as young as 18.

Any younger and the most you can be is an authorized user – with your parents' permission.

For the most part, there is no minimum age to use a credit card, and when there is, it's usually around 15.

As for 18-year-olds with their parents cosigned on their card, it's important not to make late payment – your actions will affect your parents' credit score as well.

Your income affects the card you're eligible for, and the limit of your credit.

A job means money, and money means you can pay back the balance on your card.

average credit card debt by income

If you are only making $30,000 a year, you shouldn't expect a card that goes too far beyond $5,000, depending on your credit history.

Also, if you're married, that's two incomes the bank has to rely on when establishing your line of credit.

Unfortunately, the opposite is true as well.

If you're single, your gross income is naturally going to be smaller, and so is your credit limit.

If you have no job or get paid very little, you can expect a credit limit to match it.

And while that might seem like a bad thing, it's for both the bank's security and your own.

If you fail to make payments in the future, you're better off with a smaller limit resulting in a smaller balance.

Also, if you have little to no income, it will be much harder to get approved for premium cards, though that doesn't mean you shouldn't own any credit card.

There are cards with lower limits, such as secured cards, that might serve as a nice place to start.

Most of the time you can apply right online

Applying online is easiest. In the age of the internet, applying for a credit has become as easy as a few clicks.

Oftentimes, all you need to do is go to a bank's website, see if you are pre-approved, and even if you aren't you can still apply.

The application forms online will usually ask for different information, so take some time to process it, after which the card issuer will usually contact you regarding the next step.

It could take up to two weeks to get your card. From the day you were approved, it will usually take about 10-14 days to get your card.

Fourteen days is the common waiting time for standard applications, but some credit card providers offer more expedited services.

After applying and waiting the proper time, the new card will make its way to you by mail.

If you don't get approved, don't give up. Not getting approved can be annoying and can occur for any number of reasons.

But it doesn't mean you shouldn't have a card – maybe even the card you applied for!

If you get rejected, it's worth double checking with the bank and seeing if it has a reconsideration line you can call.

Most credit card providers will have one and it can offer you a chance to re-plead your case.

When a hard pull is done on an applicant, the creditor sees hard numbers before they see a person's face, but via the reconsideration line, you have a chance to humanize your application.

If that doesn't work, it may be that you have to start building up your credit and getting some of your finances in order.

Some banks may request that you build a stronger history with them first as well, and might offer you a less premium card to start.

While that might not be the quickest way, over time it may get you an even better card than you were shooting for!

Consider a charge card as an alternative. If you're fresh out of college, young, credit score-less, and being denied by banks for a credit card, it might be worth it to consider a charge card, as Lucky points out over at One Mile at A Time.

A charge card is easier to get approved for as your less risk to the bank, which will help build your creditworthiness in the long run.

Just make sure you keep an eye on your account so you know how much money is left!

Getting Approved

A credit card can seem like an intimidating tool to keep in your wallet, but if you're wary of debt you might be the perfect person to own one.

Think of my real life gas card example.

A gas card is truly a great way to start because unless you do not own a car, chances are you need gas at least once per week.

A line of credit can offer you a brighter and stronger financial future, giving you a chance to either clear up past debt or establish a history of credit where there was none before.

Even if you've never used a credit card before reading this – now is the perfect time to apply for one online.

Was anything missing from what someone new to credit cards ought to know?

Was there a benefit to having a line of credit that you never thought of before?

Let us know in the comments below!

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