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10/14/07

How to Apply For a Credit Card

Applying for a credit card is a simple process. Everything can be done online nowadays. Additionally, you can receive an answer as to whether you are approved for the credit card, usually within thirty seconds. All you have to do is complete the application (which usually consists of you name, address, phone number, social security number, employment information, date of birth, etc.), click the submit button (if applying on-line) or mail in the application if submitting a hand written application, and wait for a response. The only part of this process that is difficult is determining what card is right for you.

There are many types of credit cards that offer many different types of options. First, you need to know if you want a charge card or a credit card. What is the difference? A charge card works just like a credit card except the balance is due in full at the end of a billing cycle, meaning that you cannot make payments over time. If you charge $1,000 during the billing period, $1,000 is due on your next bill. Charge cards are usually reserved for people with disposal income or people who have an established, high credit score.

A credit card, on the other hand, allows you to pay your balance over time at a set interest rate. The obvious advantage is that you can pay a charge over time. However, the additional advantage is that certain credit cards can be obtained even if you have no credit or bad credit.

Second, you need to determine your credit bonus. Do you want reward points that are redeemable for cash, airline tickets, and other merchandise, or do you want a low interest rate card? If you do not use you credit a lot or if when you do use your card you only use it for small purchases which you usually pay off in full, you may want to opt for the rewards card. This way you can build points towards rewards and the usually higher interest rate will not be a detriment because your balances are too low and because you always pay off the balance in full.

However, if you are just starting to establish your credit, you may want to go for the low interest card. This way, if you misuse your card, you will not get severely punished by the interest rate.
If you use your card a lot, look for a nice balance between rewards and low interest.

Third, should you have a card that charges an annual fee? Simply put, unless you have no other choice because your credit is bad, there is absolutely no reason to have a card that charges an annual fee. Do not get one!

Last, the type of card (Visa, MasterCard, American Express, Discover, etc) is important. I am not the biggest fan of Discover cards because they are not always accepted, but in all fairness to Discover card, I never have had any problems with customer service. If you are getting your first card, opt for the Visa or MasterCard. These two cards are accepted virtually everywhere, and the credit cards of the major banks in the United States are usually either Visa or MasterCard. It just makes sense.

Find out which card you want, submit the application, and get your shiny new card. Just remember not to abuse the privilege.

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