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Applying for a credit card is a lot easier today, thanks to the internet, but that doesn’t mean you shouldn’t prepare yourself for the process.
Know how to apply for a credit card, so you get approved by doing a little legwork and making sure you’re qualified for the card goes a long way.
How to Apply for a Credit Card
#1. Know Your Credit Score
Knowing your credit score helps you choose the right credit cards. Reward credit cards, for example, require good to excellent credit.
If you know you have a 650-credit score, you probably shouldn’t apply for a rewards credit card. If that’s what you had your eye on, though, work on improving your credit so you can get approved.
#2. Ask Yourself Why You Need a Credit Card
Before you apply for a credit card, ask yourself why you need it. Are you hoping to earn rewards? Do you need to establish credit?
Do you want cash back, or do you have bad credit? These are just a few of the common reasons you may need or want a credit card.
#3. Know the Different Types of Credit Cards
- Rewards: Many credit cards pay you back in rewards for using the card. Gift cards, cash back, and airline miles are just a few examples of rewards you can earn.
- Travel: If you travel often, consider a travel credit card that earns you miles on your favorite airline that you can turn into airline tickets or hotel stays.
- Traditional Credit Card: If you don’t need/want rewards, or this is your first credit card, stick with a traditional credit card and use it to build your credit.
- Cash Back: If you don’t like fussing with points and figuring out how to redeem them, consider a cash back credit card that pays a percentage of your purchases back in cash or statement credits.
- Balance Transfer: If you have credit card balances on high-interest credit cards, a balance transfer card with a 0% APR may help you get ahead on your credit card debt.
- Student: A student credit card works just like a regular credit card, but they usually have lower limits and easier qualifying requirements for college students.
- Small Business: A small business credit card is a traditional credit card but for businesses. It helps business owners build credit.
- Bad Credit: If you have bad credit, you may qualify for a ‘bad credit’ credit card which means it has lower credit limits, or it may even be a secured card that requires a deposit
#4. Decide What Credit Card to Apply For
After reviewing your options, decide which credit card type you want and look at your options. Check with your bank, the retailer you want a card with, or do a quick search online to find the right credit card to apply for.
#5. Review the Terms on the Application
- Annual Fee: Some credit cards charge an annual fee. It’s often not worth it unless it’s a reward credit card that will pay you a significant amount of rewards that exceeds the annual fee.
- APR: If you don’t pay your balance in full, it will accumulate interest. Credit card APRs can get as high as 29.99%, so make sure you look closely at the interest rate.
- Balance Transfer Fee: If you plan to transfer a balance, look at the balance transfer fee. It’s often up to 5% of the amount transferred.
- Cash Advance APR: If you use your credit card to access cash (we don’t recommend it), you’ll pay a much higher APR than you would for purchases, make sure you’re aware of the cost.
- Transaction Fee: Watch out for additional fees on transactions, like foreign transactions fees. This is a fee on top of the interest charged for the transaction. Most foreign transaction fees are 3% of the amount charged.
- Penalty Fees: If you miss your payment even by one day, you’ll pay a late fee. Read the fine print to see how much the mistake will cost you.
- Minimum Interest Charge: This is the minimum amount of interest you’ll be charged if you don’t pay your balance in full. Usually, it’s $1, but it varies by card.
#6. Are You Prequalified?
You can get prequalified for some credit cards by completing a quick form and allowing them to do a soft inquiry on your credit (this doesn’t hurt your credit score).
On the form, you’ll provide your personal information and your Social Security number. Even with a prequalification, you must apply for the credit card and get approved, but it’s a step in the right direction.
#7. Get Necessary Documents
When you apply for a credit card, you’ll need information including your annual salary, Social Security number, and information about your financial accounts or assets. If you don’t know all the information, you’ll need documentation to make sure you provide the right information.
#8. Apply for Your Credit Card
When you’re ready, complete the application for your chosen credit card. Make sure you disclose all income and assets to increase your chances of getting approved.
#9. Watch Out for a Hard Inquiry
Your credit score will fall initially when you apply for the credit card because of the hard inquiry. It won’t affect it a lot, but even a few points can make a difference depending on where your credit score started.
The inquiry itself will stay on your credit report for 2 years, but its effect on your credit score will only last for a short while.
What If My Credit Card Application Is Denied?
It happens all the time – don’t beat yourself up if your credit card application is denied. Find out why it was declined (you have a right to the information) and fix the issue.
If it’s simply that you didn’t qualify for that card, but you may qualify for other more traditional credit cards, you can apply for another one, but be careful.
Too many inquiries in a short amount of time can hurt your credit. Be selective about which credit cards you apply to, and make sure you know their qualification requirements before applying.
How Do I Get a Credit Card for the First Time?
It takes credit to get credit, which is kind of a double-edged sword. If you don’t have credit, many credit card companies won’t approve your application.
But there are ways to get approved.
- Apply for a retail store credit card – Start with a card from Target or your favorite big-box retailer as they are often easier to qualify for even if you have no credit.
- Apply for a secured credit card – A secured card requires a deposit from you which is also your credit line. If you default on your debt, the credit card company keeps your deposit. If you use it wisely, it can help you build credit and get a traditional unsecured card in the future.
Bottom Line: How to Apply for a Credit Card
It’s not hard to apply for a credit card, but you should do some work beforehand, perfecting your credit and making sure your qualifying factors are at their best.
Before you apply for just any credit card, do your research. Know what the card requires and compare it to your qualifying factors.
Keeping your applications to a minimum, only applying for the cards you know you’ll get will help your credit score in the long run.