How to Get a Credit Card

Having a credit card makes it possible to shop online and can simplify the in-person transaction process. That might leave you wondering how to get a credit card. The process is simple and only requires a few personal details and a credit check. But you’ll want to do your research before applying to ensure you’ve chosen the best possible card based on your needs. Here’s what you need to know.

Understanding How Credit Cards Work

Once you’ve decided on getting a credit card, spend some time learning more about how they work and what to expect. Here’s an overview of some of the most crucial elements of managing a credit card.

• Credit card transactions: When you swipe a credit card, in milliseconds your card provider processes the authorization or denies the charge. The card provider looks at where you are in your credit line that month, the trustworthiness of the merchant and much more when putting the card through authorization. After using your card, you’ll see the transaction show on your account as pending for a few days and then posted. You’ll be responsible for paying the balance monthly on an agreed-upon date, often the 1st or 15th of the month.
• Roles each party plays in the credit card process: Three parties are involved in each credit card transaction. The first is your credit card issuer, which checks the transaction and decides whether to approve or deny it. The second is the merchant, which agrees to pay a processing fee to accept the credit card and is responsible for protecting your information from data breaches. Finally, there is the credit card holder who agrees to pay their credit card bills to the issuer monthly or at least make payments on what they owe. 
• Key financial terms to know: As you start exploring your credit card options, you’ll encounter several financial terms. The credit limit is how much money you can spend on your credit card monthly. Most credit card issuers won’t offer a credit limit higher than your monthly income, at least when you are applying for your first card. Interest rates are also important to understand. These apply when you don’t pay off the card in full each month and maintain a running balance. You’ll pay interest on the balance until you pay it in full. Some cards have a grace period where you won’t have to pay interest on the balance for missing a payment deadline or carrying a balance for a few days or a week.
• Essential credit card terms: Annual percentage rate (APR) is the interest rate you pay on the balance you carry over from one billing cycle to another. The higher the rate, the more you’ll pay in interest when failing to pay your card in full. The minimum payment is how much you have to pay that month before paying interest on the balance. Finally, the credit utilization ratio is how much of your credit line you’ve used each month. For example, if your balance is $500 and you have a $2,000 credit limit, you’ve used 25% of your credit limit.

Steps to Get a Credit Card

Learn how to open a credit card to make the process simple so you can start earning rewards on every purchase and building your credit. 

Check Your Credit Score

Before applying, check your credit score because this number tells lenders how creditworthy you are. The higher your score, the easier it will be to get a credit card with the best terms and rewards. The lower your credit score, the more limited your credit card options will be and the lower your credit line will likely be, at least for the first several months. Many issuers list requirements for credit cards so you don’t waste your time applying for cards you don’t qualify for.

Research Your Options

Learn more about your options, including credit card types. You might be eligible for a rewards card, secured card or student card. As you review these options, look at the interest rates, annual fees, rewards and benefits the card offers. 

Compare Cards

The Consumer Financial Protection Bureau (CFPB) offers the terms of credit card plans (TCCP) survey to help people choose a card with favorable terms and rates. Many online tools are available to help you compare credit cards, but none specifically aim to protect your financial well-being quite like the CFPB. 

Prequalification

Some banks offer prequalification checks that give you an idea of the cards you’re likely to be approved for without affecting your credit score. That means that the financial institution can review your creditworthiness without a hard credit pull to show you your options once you input some basic information.

Gather Required Documents

Now you need to pull the required documents to prepare for your full application. Some examples of documents you’ll want to have handy when applying include:

• Proof of identity, such as a driver’s license or passport
• Proof of income via a pay stub or tax return
• Information for any additional applicants for the card

Apply Online or In Person

Most credit card applications are now online, but some applicants prefer an in-person experience. You can apply for a credit card in person at your bank or the merchant supplying the card. For example, many large retail stores offer a credit card, which you can apply for at customer service or as part of the checkout process. Avoid impulsively applying for merchant cards though before doing a full review of their terms and conditions. 

Complete Application Form

Take your time applying for your credit card of choice. One mistake in the information you input could lead to a denial. On the review page, check the information carefully before submitting.

Wait for Approval

Once you submit your application, the bank will review it. Some financial institutions provide instant approvals, while others take a few days for processing. You can often check on your application status using the financial institution’s website. 

Review Terms and Conditions

If the credit card issuer approves your application, read the card’s terms and conditions carefully. Make sure you know the card’s interest rates, fees, credit limit and rewards program details before activating the card. You still have a chance to avoid large fees and penalties by not completing the process and canceling the card, though it might have a short-term impact on your credit.

Activate Your Card

Once approved, the bank will send you a card in the mail. Follow the activation instructions to get started using the card. Typically, you’ll need to call a toll-free number or activate the card online.

Start Using Responsibly

Use your credit card responsibly by making purchases you can afford to pay off in full each month. This helps you avoid accruing high-interest debt. Enjoy being able to complete purchases at merchants that list credit card required.

Pay on Time

Pay your credit card bill on time each month to build a positive payment history. A good payment history can help improve your credit over time and will protect you from paying high-interest rates on a revolving balance.

Monitor Your Spending

Keep track of your spending to ensure you stay within your budget and credit limit. Depending on how familiar you are with managing a credit card, you might check daily, weekly or monthly when paying the card. More frequent reviews of spending are better though because they’ll help you spot fraud quickly, which will prevent major financial impacts.

Build Credit Wisely

You should use your credit card to build a positive credit history. This will help with getting a line of credit for large purchases, such as a car loan or mortgage. To make your credit card a positive part of your financial wellness and credit history, aim to keep your credit utilization (the ratio of your credit card balance to your credit limit) below 30%.

Avoid Debt

Pay off your full balance each month to avoid interest charges and accumulating debt. Never spend more on your credit card than you have in the bank to avoid the credit card becoming a negative aspect of your overall financial wellness. Plus, when you take on debt for common purchases, you end up paying far more for that new shirt or weekly groceries because now you’re paying interest on the small purchase, making it a far larger purchase.

Review Statements

Regularly review your credit card statements for any errors or unauthorized charges. This will protect you from paying for someone else’s purchases in the case of fraud or to challenge a merchant’s mistake in overcharging or mischarging you. You’ll also catch recurring charges for services you might not use anymore so you can cancel them promptly.

What to do if Your Credit Card Application is Denied

Despite thorough research and requirement reviews, you might still apply for a credit card and receive a denial. When that happens, here’s what to do:

• Consider reasons for the denial: Some common reasons for credit card denials include a low credit score, insufficient income or discrepancies in the application. While you can’t immediately solve a low credit score or insufficient income, you can easily fix application discrepancies to reapply and hopefully get the card.
• Begin working on your credit: If you were denied a credit card because of poor credit, the best option is to focus on raising your credit score. To do so, you should pay off debt or close open lines of credit you aren’t using, such as old credit cards. If you already have other credit cards, ensure you aren’t using more than 30% of your credit line each month to improve your creditworthiness. Avoid opening many new lines of credit in short periods as that will also impact your credit score. If the reason for the denial was insufficient income, look for a better card from a provider that is more familiar with working with individuals with your income.
• Monitor your credit: Request your credit report every few months to check for fraud and challenge any open lines of credit in your name that you did not take out. This will help you build a healthy credit history and keep you accountable for working toward paying off your lines of credit to improve your score.

Building Healthy Credit Through Credit Cards

Credit cards can have a positive impact on your credit score when used appropriately. Applying for the right card with the best rewards and most positive terms is also important. Take your time when selecting a card to ensure it is the best possible one based on your needs.

Frequently Asked Questions