How to Apply for a Credit Card and Get Approved
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Credit cards are more than physical cards that you use to purchase things and pay later; they are like a personal loan that is designed to help you. The greatest thing about credit cards is that, in most cases, it is much easier to get approved for one than to be approved for a personal loan, and requires fewer qualifications.
It is essential to know what to do to qualify for a credit card before applying so that when you do actually apply and after all the waiting, you get approved eventually. There are a few things that you can do to raise your odds of being approved. This is what we will help you with; keep reading to know everything you need to do before applying for a credit card.
Whether you're applying for your very first card, or if you already have a credit card and want to apply for a new one, the process is almost the same. Either way, you need to know that the first few steps lay the foundation for getting accepted or rejected.
To avoid making any rushed decisions, you should understand the criteria upon which we base our comparison when concluding which credit cards are the best. Our comparison has two dimensions: costs vs. benefits. If you compare what you pay to what you get in return, you will be able to make a well-informed decision about which credit card is the right one for you.
Below, we will break down any costs you should expect to be charged and all the benefits you may get in return:
- Annual fee: Many credit cards will charge you a fee yearly for having the card. This fee can be as small as $90 or as big as $550, more or less. Some other credit cards don't charge fees in the first year and start from the second year. And many other cards do not have annual fees at all.
- Interest charges (APR): When you don't pay your monthly statement in full, your remaining balance will be subject to an ongoing variable APR that you can find on the cardholder agreement. Interest rates vary between different cards and issuers, but they usually range from 13.99% to 23.99%, more or less. Many cards offer a promo period where you get an introductory 0% APR on purchases, balance transfers, or both, for a number of months from account opening.
- Balance transfer fees: When you transfer your balance from an old card to a new one, it will usually be subject to transfer fees that can range from 3% to 5%, with a minimum fee of $5 or $10.
- Late payment fee: Every time you miss a payment, your issuer will penalize you with what they call "late fees." Your first late fees will be somewhere around $25, and if you keep missing payments, your fees will only increase. Late payment fees vary from one issuer to another.
- Over-the-limit fees: If you try to go over your credit limit, your issuer will usually deny your transaction. However, they will tell you that you can go over the limit for a specific fee; it is then up to you if you want to proceed or not.
- Foreign transaction fee: When you use your card outside the U.S., you may be charged a fee for every transaction. Some cards have higher fees than others, and some have no foreign transaction fees at all.
- Sign-up bonuses: Oftentimes, if you have a Good or Excellent credit score, you will qualify for a one-time bonus upon signing up. For example, you may be given an offer where if you spend $7,000 within the first six months, you get $750 back.
- Cash back: If your card offers cash back rewards (and most cards do), then you will be given back a percentage of your purchases. For example, some cards offer a fixed 3% on all purchases; some offer 5% on groceries and gas and 2% on all other purchases, and so on. Your points can be redeemed for statement credits, gift cards, money that can go directly into your bank account, and more.
- Frequent-flyer points: These cards are also known as travel rewards credit cards. If you are a frequent traveler, you can greatly benefit from these cards to earn points and miles for all travel-related expenses. You can redeem your points for hotel stays, airport lounge access, flights, and so on.
- Other perks and benefits: Some credit cards offer extra benefits, like discounts on certain services and places, free introductory memberships for streaming services, Uber points, and so on.
After going over the costs and benefits of different issuers and credit cards, you will be able to determine which card fits your needs best. This step is called comparison shopping; you will be comparing different credit cards to weigh your options and make sure that a card's benefits outweigh its costs for you.
With so many credit cards on the market, it may be confusing to find the right one. To help you in your search, we have created a list of our top picks and recommendations for the best credit cards.
After you decide on an issuer, you can check if you are prequalified for their credit cards in general or the specific credit card you have in mind. To do this, you need to go through a process that requires some work from your side. In most cases, you will need to fill out an online form, which may include some personal information, including your social security number. This process will trigger a soft inquiry that will not affect your credit score in any way.
After you check your credit score, your rating may say "preapproved" or "prequalified," which means that you have met all the issuer criteria. However, this does not guarantee that you will be approved if you actually apply to the credit card later on.
When applying for a new credit card, there is some information that you will need to provide. The information varies between different issuers, but in general, below is what you may be asked to provide when dealing with major credit card issuers:
- Personal information
- Full name and date of birth
- Social security number
- Residential address
- Contact details
- Financial information
- Account details (savings and checking accounts)
- Monthly mortgage or rent payment
- Any other existing credit accounts or debts
- Employment and income information
- Employer info
- Gross income
- Additional card-related info
- If you are applying for a new card to transfer your balance from an old account, you need to mention that.
Again, you should remember that the needed information will vary from one issuer to another.
When you apply for a new credit card, you should be prepared that this will trigger a hard inquiry. Hard inquiries show on your credit report and can affect your credit score; it can lower your credit score by a few points, and this may stay on your credit report for as long as two years.
Do not fret, though, as in most cases, hard inquiries do not affect your credit score as much as you fear they would. Besides, their effect on your credit report will either decrease over time or disappear completely. But in any case, you need to be prepared for that so you don't think something went wrong when it happens.
If you get approved by the credit card issuer, then congratulations! Make sure to know the advised practices you need to maintain from thereon to enjoy your credit card worry-free. Credit cards are different from usual debit cards in that you will be using them to make purchases that you are 100% liable to pay back; if you're not cautious in using them, you might end up drowning in debt.
Below are three practices that if you stick to, you will always be on the safe side:
Always pay your bills on time or in full
If you always pay your bills on time or in full, you will make sure that you do not face any extra interest, late fees, or end up with poor credit scores. In fact, you will start building towards a high credit score and an impressive credit report that will allow you to get better benefits in the future.
When you receive your monthly statement, it can be very tempting to pay the minimum amount, which can be as low as $25. However, you should know that doing this will accrue interest with time and eventually leave you with high-interest debt.
Each month, your issuer will provide you with a closing date and payment date; the closing date means the last day on which you can make any purchases, and the payment date is the day you need to pay your statement.
Keep your balance low and only purchase what you know you can afford
It can also be tempting to purchase things without thinking about what you will need to pay at the end of the month or billing cycle. However, you should always spend smartly to make sure that what you charge is relatively low when compared to your available credit limit. This way, you ensure that you will be able to pay on time and more than the minimum, which will also help raise your credit score in turn. Your credit utilization plays a huge role in affecting your credit score, as it makes up 30% of the factors that affect it.
Monitor your monthly statement
If you keep track of your monthly statement, you will always be aware of your balance to make sure it stays low. You will also be able to stay on a budget so that you do not get any unpleasant surprises at the end of the month. In addition to that, you can check for fraud so that you can detect any suspicious transactions before it's too late.
If you make sure to stick to these practices, you will always be prepared for your monthly statement, which will protect you from falling into debt.
If you do not get approved for the credit card you have applied for, it is not the end of the world; many people apply for credit cards and get rejected and try for other credit cards and get approved.
You can also weigh your options, as it may be better for you to apply for traditional unsecured cards or secured credit cards that require a cash deposit as collateral for your account.
Disclaimer: Several.com may receive a commission from card issuers.
This article includes the author's opinions, reviews, and analyses alone that have not been reviewed, endorsed, or approved by any of these entities. Please note that the information regarding each card's offer is believed to be accurate as of the date it was written and as card offers change regularly; reasonable efforts are made to maintain accurate information.