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Credit cards are financial instruments that can be very helpful if you understand their dynamics. Given the migration from cash to other more secure and convenient payment methods, these products are more popular than ever in the United States.
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Hence, many aspire to sign up for them for their benefits or to supplement their finances.
When you are an adult with a stable job and a decent credit history, it is much easier to sign up for a credit card. Likewise, we will see what are the steps to follow to make the application and the minimum requirements.
Minimum requirements to sign up for a credit card
In general, the conditions associated with taking out credit cards in the United States vary little from one bank to another.
Partly because issuance is handled by a handful of companies (Visa, MasterCard, Elan or American Express) and because it is regulated by the Card Act of 2009, which establishes the guidelines to be followed.
Based on the above, we have:
Age of majority
Depending on the state where you live, it can be 21 years old or 18 years old with parental permission or with a verifiable source of income. This requirement is stipulated by law and is intended to prevent certain dangerous practices, such as promoting banking products to young people who do not have the means to assume such obligations.
SSN or ITIN
A Social Security Number is usually necessary to start a credit history and build credibility that allows you to have access to different financing instruments. Those who do not have a SSN, have the possibility of contracting one of the credit cards with ITIN number offered by some banks.
Favorable credit history
This applies more to those who want to contract an unsecured card, since most financial institutions require a score of 660 or higher.
Of course, there are also banking instruments for those who show scores below that figure. Those plastics in question have higher rates and smaller limits.
In some cases, the application asks for a credit history of at least 7 years showing good behavior. Often, the offers tell you how much score you will need, so it is important to be aware of what you can expect.
If you have no credit history or a low credit score, we recommend secured credit cards to star or rebuild it
Recurring source of income
When applying for a credit card in the USA, you will be asked for your estimated annual income. Since banks will not give you financing if you cannot repay, you have the option of informing them of the funds you receive on a more regular basis.
Reported income is one of the factors that lenders check when deciding whether to approve your application and what your available limit will be.
Even though it is an honor system, there will be instances where you will be asked to provide proof (W2, bank statements, pay stubs, etc.).
How to apply for a credit card?
The most important thing to start the process of applying for a credit card is to know your score first to have a clearer idea of your possibilities.
The process itself can be done in person, online or by phone. The biggest advantage of using the online form is that you can receive a response within minutes or the same day. That said, we have the following:
- Name, date of birth and SSN o ITIN.
- Gross annual income (before taxes).
- Living situation, monthly payments (rent or mortgage) and length of residence. This information is used to find out how much money you have available to set the limit. The length of residence is to verify that you are not an imposter and to know your level of stability (people who move a lot are a risk). If your application does not match your history, you will not be automatically rejected, but the institution will inquire further.
- Date and signature. As a legal document, this data serves as evidence before a court in case the bank has to collect a debt from you.
Other fields on the application
Some forms have additional sections:
- Authorized users. You can add people to your account. In this case, you must provide the information (DOBs and SSNs) and they will receive a credit card in their name. Remember that you will still be responsible for the debt.
- Balance transfer. If you are passing on a debt you owe, you need: creditor name, account number, payment address and amount. You can do this during the application or afterwards.
That's basically it and now you must wait for approval. While paper applications take 1-2 weeks, online processing is faster.
How to choose the best credit cards for you
If your big problem when comparing the many attractive credit card offers lies in the fact that there might be a better option that you inadvertently overlooked. It certainly won't be a regret you'll take to your grave, but it's a concern for many.
As we are committed to guiding you to financial success, these banking products can be of great help at any given time. That's why at Busconomico, where you can compare dozens of cards from today's top-rated banks, we want to help you with your research.
Here are some useful tips for you to make an intelligent and informed decision and choose the best credit card for you.
Tips to compare credit cards
If you really need a credit card to help your personal finances, you should make an effort to carry out a well-elaborated search and comparison.
In addition, you have to put aside emotions and presentiments to focus on concrete information. When comparing these products, keep in mind these suggestions:
You must know the different fees and charges
Just like you, we hate fees, but there are always ways to avoid the most important ones and prevent them from altering your finances more than they should.
Still, be aware of the most common fees, such as the annual fee, cash advance fee, late payment fee and foreign transaction fee.
Evaluate the financing cost of each credit card
Another interesting way to compare these financial instruments is to see how much it costs you to have this credit in monthly installments.
Since banks calculate interest on daily balances and not according to your final balance, you have to apply a bit of logic and mathematics. Although the rate of these plastics can vary.
Let's make an example:
Suppose the credit card has a rate of 20%, you owe $5000 dollars and the minimum payment is $500 and you pay $2,000 a week before the payment date. Here the following formula applies:
Average daily balance = (5,000 x 22 days) + ($2,000 x 7) = 124,000/30 = $4,133.
Average daily interest rate = 20% /365 (or 360) = 0.0547
Interest charged per month = $4,133 x 0.000547 x 30= $67.82
Establish the type of plastic for your needs
The wide variety of credit cards makes it essential to apply segmentation, as if it were marketing. As a single plastic does not cover the expectations of most consumers, there are cards for all tastes, lifestyles and priorities.
Among the most common types offered by banks, you can find the following:
Secured | These are products for those with no credit history or low credit scores. They are backed by cash deposits equivalent to the amount borrowed and report your behavior to the bureaus. |
With 0% APR for balance transfers
| They are designed for those who prefer not to pay what they owe immediately or for balance transfers. They do not charge you anything for consumption or balance transfer during the first 12 to 18 months. |
With Rewards and Cash Back
| Every time you pay your balance in full, you are entitled to a reward. These can be points, miles or cash for your purchases. You can also find those that give you a bonus when you sign up, which you receive if you reach a certain amount within a set period of time. |
Español: Las mejores tarjetas de crédito