Since over 60% of Americans name credit card debt as a major source of stress in their lives, it’s no wonder you might feel a little apprehensive about applying for one. Does it serve any purpose besides causing stress? To decide if getting a credit card is the right decision for you, keep reading to learn the benefits of having one and how to apply for a credit card.
Benefits of having a credit card
Credit cards have gotten a bad rap because of high-interest consumer debt — but having a credit card doesn’t mean that you have to get into uncontrollable debt. Actually, a credit card can be a tool to maximize your financial well-being if you learn to use it the right way.
- Establish credit: Establishing good credit is vital to your long-term financial well-being. If you ever need a loan, want to buy a house or a car, or enjoy the many other perks that come along with a good credit score, you should consider learning how to apply for a credit card and use it responsibly.
- Have an extra financial safety net: If you find yourself in a financial emergency (like the coronavirus pandemic, for instance), having a credit card can be a vital financial safety net. Did your car brakes give out? Do you need to help a loved one with urgent medical expenses? You may want to apply for a credit card so you can cushion your emergency fund if disaster strikes.
How to apply for a credit card
Now that you’re convinced that having a credit card is important to your financial fitness, take these steps to apply for a credit card.
1. Get your information together
Before you apply for a credit card, you’ll need to gather information about yourself.
- Check your credit score: If you already have a credit card, you’ll have access to free monthly reports on your FICO score. Review this number to see in what shape your credit score is in. A better score can get you access to lower monthly interest rates and other deals, but having less-than-perfect credit isn’t necessarily a deal-breaker. You can even use some credit cards to fix your credit score and apply for better deals later on.
- Get your personal IDs together: Depending on where you live, you’ll probably need your social security number, tax identification number, driver’s license, and/or passport in order to apply for a credit card. If you plan on having a co-signer, you’ll need their information, too. Non-citizen residents of countries like the US (like DACA recipients) can also get access to credit.
2. Figure out what type of card best suits your needs
There are a ton of credit card options on the market today, each promising to offer you the best deal. But how do you know which offer is right for you?
Don’t snatch up the first deal you see. Do your research before applying for a card. Are you a frequent traveler? There are cards for travel rewards. Do you own a small business? Check out cards for small business owners. Are you in university? Research cards for college students. Be patient in your research so that you can find the best card to maximize rewards and flexibility.
3. Complete the application to apply for your credit card accurately
Credit card companies may consider your income, previous payment history, current debts, and other factors when determining if they want to give you access to a credit card. All of these factors help them to understand how likely you are to make payments.
While it might seem like a good idea to embellish on your earnings when you apply for a credit card — don’t. This could lead you to be charged with the very serious crime of credit card fraud in a lot of countries. Be honest and you will find the appropriate deal for you.
Also, remember that when you apply for a credit card your credit score might suffer because of a hard inquiry into your credit. This occurs when lenders look at your financial data and history. But don’t worry, even if you lose a few points on your credit score because of this, it’s possible to recuperate by using your credit card responsibly.
