Applying for Credit Cards

Experts say that the majority of U.S. citizens have at least one credit card--and usually two or three. It's true that credit cards have become important sources of identification—if you want to rent a car, for example, you really need a major credit card. And used wisely, a credit card can provide convenience and allow you to make purchases with nearly a month to pay for them before finance charges kick in.

Whether you apply for a credit card, ask a phone representative to send you information, hook up with a card company's online applications or receive an uninvited application through the mail, it’s important to shop around. Experts say this should be a project on the scale of shopping for a car loan or mortgage! Fees, charges, interest rates and benefits can vary drastically among credit card issuers. And, in some cases, credit cards might seem like great deals until you read the fine print and disclosures.

f you're at least 18 years old and have a regular source of income, you are well on your way to qualifying for a credit card. If you've financed a car loan or other purchase, you probably have a record at a credit-reporting bureau. This credit history shows how responsible you've been in paying your bills and helps the credit card issuer decide how much credit to extend.

A credit card is an agreement between you and a financial group, such as a bank, that you will pay them back in the future so that you can spend the money first. The financial group lends you the money you need and in return expects you to pay them back over a period of time.

A credit card is a great financial tool. It can be more convenient to use and carry than cash and it offers you valuable consumer protections under federal law. A credit card is something very useful to have in an emergency situation. If you are out of money and you desperately need access to cash, you can always count on a credit card to bail you out (that is if you have not gone over your limit).

More and more transactions can now be executed on the phone or on the Internet. You can find some great deals on airfare, books, computers, concert tickets and much more. If you want to take advantage of these specials, you will have to do so using a credit card. Some people are still weary, not without reason, about releasing their credit card numbers for fear of all-too-common fraud. However, if you’re dealing with a reputable company, the security measures in place make Internet and phone purchases as safe as live purchases.

Some cards have some great benefits. For example, travel insurance might be an automatic benefit if you pay for your trip on your card. You may be fully covered or at least up to a certain amount by the card which saves you from purchasing extra insurance. Then, there are the infamous Air Miles, and tons of other promotions. Take advantage of the privileges.

Although credit cards have many advantages they are, on the whole, an expensive way of borrowing money. This is because the credit card company has no security on your debt (unlike your house in the case of a mortgage), and because of the flexibility that you enjoy repaying the balance.

You can use a credit card to buy things and pay for them over time. But remember, buying with a credit card is a loan—you have to pay the money back. In addition to the cost of what you bought, you will owe a percentage of what you spent (interest) and sometimes an annual fee.

When you’re trying to find the credit card that’s right for you, look at the:

• Annual percentage rate (APR). The APR is a measure of the cost of credit, expressed as a yearly interest rate. Usually, the lower the APR, the better for you. Be sure to check the fine print to see if your offer has a time limit. Your APR could be much higher after the initial limited offer.
• Grace period. This is the time between the date of the credit card purchase and the date the company starts charging you interest.
• Annual fees. Many credit card issuers charge an annual fee for giving you credit, typically $15 to $55.
• Transaction fees and other charges. Most creditors charge a fee if you don’t make a payment on time. Other common credit card fees include those for cash advances and going beyond the credit limit. Some credit cards charge a flat fee every month, whether you use your card or not.
• Customer service. Customer service is something most people don’t consider, or appreciate, until there’s a problem. Look for a 24-hour toll-free telephone number.
• Other options. Creditors may offer other options for a price—including discounts, rebates and special merchandise offers. If your card is lost or stolen, federal law protects you from owing more than $50 per card—but only if you report that it was lost or stolen within two days of discovering the loss or theft. Paying for additional protection may not be a good value. Resources