Wednesday, February 1, 2023

What Credit Card Should I Apply For

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Bank Of America Application Restrictions

“What Credit Cards Should I Apply For?” And When to Apply for Them

According to cardholder reports, Bank of America uses a 2/3/4 rule: You can only be approved for two cards within a 30-day period, three cards within a 12-month period and four cards within a 24-month period.

This rule only applies to Bank of America® credit cards, though, not all credit cardsso, if youve taken out four cards from other credit issuers in the past year, you can still apply for a new card with Bank of America.

If You Want To Earn Rewards: Rewards Travel Or Cash Back

A rewards credit card is a good match for you if you pay off your balance in full every month and never incur interest. These cards typically have higher APRs, but offer larger sign-up bonuses and give you points, miles or cash back on every dollar you spend.

» MORE: Find the best rewards credit card with this flowchart

Applying For A Credit Card And Waiting For Approval Or Denial Can Feel As Scary As Taking A Final Exam Or Giving A Public Speech

Knowing how to apply for a credit card is one thing, but knowing what issuers are looking for before you apply for a new card is really the first step to success.

When youre applying for your first credit card, youre essentially asking a card issuer to take a chance on you, says credit educator John Ulzheimer of The Ulzheimer Group.

Ulzheimers advice? Be realistic with your expectations.

Its very unlikely youre going to get a large , and you may not even get a modest credit limit, Ulzheimer says and thats OK. Building credit is a process, and you have to start somewhere.

Just remember: Depending on your credit , you may not be ready to apply for a credit card right now, but you can take proactive steps that may help you get approved in the future.

If you think youre ready, weve outlined how to apply for a credit card in eight steps. It all starts with checking your credit.

Here are the steps to apply for a credit card.

  • What if your application is denied?
  • Recommended Reading: Cabela’s Rewards Card

    Be Careful When Applying For A Secured Card From An Unknown Financial Institution

    In particular, beware of secured card offers from issuers outside Canada. If you have problems with the companys services, it may be more difficult to resolve them.

    A secured credit card requires that you provide a security deposit to the financial institution that issues the credit card.

    Your credit limit is normally set as a percentage that is equal to or higher than your deposit. Depending on the credit limit you request, the security deposit may range from a few hundred to a few thousand dollars.

    If you don’t make your payments, the financial institution may use your deposit to pay the money you owe.

    You may want to consider a secured credit card if you:

    • are a newcomer to Canada and have no credit history
    • have filed for bankruptcy in the past
    • want to rebuild your credit score after past credit problems

    To build your credit history or improve your credit score, make all your payments on time.

    Secured cards without a recognized brand name such as VISA, MasterCard or American Express may have limited uses. Only a small number of stores may accept such cards. Or, you may be limited to making purchases from a specific location.

    How Long You Should Wait Before Applying Again

    How Long Should I Wait To Apply For Another Credit Card ...

    Applying for multiple credit cards in a short time span can ding your credit score. It can also raise a red flag if it seems like youre desperate for access to additional credit. Having too many credit inquiries on your credit report also suggests that youre a risky borrower whos more likely to default.

    If youve recently applied for a credit card, it may be a good idea to wait six months before trying to open another account. But how long you should wait to apply depends on your credit score. If you have good credit, you can probably get away with submitting another credit card application within three months or less. If you have bad credit, however, your best bet is to focus on building credit. Raising your credit score enough to qualify for the card you want could take as many as 12 months.

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    Can I Be Approved For A Credit Card With No Credit History

    There may be suitable credit card options for people with no credit history. If you have no credit, you might want to consider a student credit card, which offers a low credit limit for you to get started. If you aren’t a student and have little to no credit, you may find secured credit cards useful as your first cards.

    Could I Use A Sign

    Getting a lump sum of cash could make it easier to swing your holiday expenses. If you know you’ll spend more than usual in the coming months on gifts, decor, parties, and other holiday-related items, then it may be a good time to apply for a credit card with a sign-up bonus.

    Say you have your eyes on a new card that offers $500 cash back for spending $3,000 within three months of opening your account. If you normally only spend $800 a month on a credit card, you might struggle to meet that spending limit. But if you expect to spend an extra $700 on holiday purchases this year, hitting that limit may be a breeze. And that way, you get a pile of cash to help offset your extra spending.

    That said, if you’re going after a sign-up bonus, make sure the spending threshold is within reach. You’re better off applying for a card with a smaller bonus that won’t require you to spend more than you truly need to.

    A new credit card could make your holiday expenses more manageable. But if you apply for a new credit card ahead of the holidays, be sure it’s the right one. Take a little time to research offers and compare cards to reap the most benefits.

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    Chase Freedom Unlimited: Best For Future Value

    Sign-up bonus: $200 bonus after spending $500 in their first three months from account opening. Plus, earn 5% cash back on grocery store purchases on up to $12,000 spent in the first year.

    Annual fee: $0

    Rewards: Earn 5% back on travel booked through Ultimate Rewards, 3% back on dining and drug stores and unlimited 1.5% cash back on all other purchases.

    Why its a great first credit card: The Chase Freedom Unlimited is a great starter card because its buildable. When you have this card by itself, youre earning at least 1.5% cash back on all purchases. However, as you get more comfortable with credit card rewards, this is an easy card to pair with other Chase cards to round out a complete credit card strategy.

    When you combine this with the Chase Sapphire Preferred, Chase Sapphire Reserve or the Ink Business Preferred Credit Card, you can merge the rewards you earn on the Freedom Unlimited with your other point balances to effectively convert your cash-back earnings into full-on Chase Ultimate Rewards points which means you can transfer the points you earn on it to one of Chases 10 airline or three hotel partners or redeem them for added value directly in the Ultimate Rewards travel portal. Ultimate Rewards points are some of the most valuable points for travel redemptions, and who doesnt love free travel?

    Sign-up bonus: 20,000-mile bonus after spending $500 on purchases in the first three months of account opening.

    Annual fee: $0

    To Figure Out If An Annual Fee Is Worthwhile:

    How Often Should I Use My Credit Card? â Credit Card Insider
  • Take the total amount of money you spend within a year that could be charged to the credit card you’re considering
  • Estimate the total value of rewards you would earn by charging the purchases from step 1 on the card
  • Subtract the annual fee from that value
  • Divide the result by the total amount of spending from step 1, and multiply by 100 to get a percentage
  • The final figure is what we call the “rewards rate.” If this rate is below 1%, youll probably be better off choosing a no-annual-fee card though you should always compare the rewards rate against other options, to see what the best deal would be for your spending habits and needs.

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    How To Determine The Right Accounts For Your Relationship

    If youre in a committed relationship, you may commingle finances. As you decide what new card or cards to add to your wallets and whether to add each other as authorized users on some of your cards, be sure to consider the points discussed above to create a good mix of cards. In particular, make sure youre maximizing your earnings on most purchases and working toward obtaining the right points, miles or other rewards to reach your goals.

    Related: Savvy rewards travelers focus on transferable points for the most flexibility

    Exceptional Credit Card Perks You Can Get With Excellent Credit

    As you pore over the best credit card offers and options, youll probably notice that many provide a wide array of benefits. These perks can vary from card to card, but theyre definitely worth considering. Just remember that credit cards with the best benefits tend to charge high annual fees, which can run between $95 and a whopping $695.

    Which benefits should you care the most about? Here are some of the top perks offered on the most popular premium credit cards:

    Finally, one of the biggest benefits of credit cards for people with excellent credit is that they often come with the most lucrative sign-up bonuses. In fact, some of the best credit cards out there offer sign-up bonuses of 100,000 points or more when you can meet a minimum spending requirement within the first several months of opening the account.

    Read Also: What Is The Annual Fee For First Premier Credit Card

    Self Credit Builder Account + Secured Visa Credit Card: Best Low Apr Card For People With No Credit

    Why we picked it: This hybrid financial product, which starts off as a credit-builder loan and could transition into a secured credit card , touts a low APR for the no credit category.

    Pros: You can avoid having to put down the upfront security deposit required of most traditional secured credit cards, as youll be making three monthly installments payments instead.

    Cons: Youll pay a one-time account fee of $9 to $15, which varies by the product. Plus, youll have to wait at least three months to have access to your secured credit card.

    Who should apply? Thanks to its relatively low APR, this non-traditional credit-building loan/secured card could be a good fit for someone who may carry a balance.

    Additional info on the Self Credit Builder Account + Secured Visa® Credit Card

    Capital One Quicksilver Cash Rewards Credit Card: Best For Using Abroad

    Should I Upgrade My Existing Card or Apply for a New One ...

    Sign-up bonus: Earn $200 after you spend $500 on purchases in the first three months of account opening.

    Annual fee: $0

    Rewards: Earn unlimited 1.5% cash back on every purchase.

    Why its a great first credit card: If youre hoping to stay in the cash-back rewards universe, the Quicksilver is a great beginner credit card. Youre getting cash back on every purchase, which makes it a simple and straightforward card to have in your wallet. It has no annual fee and even waives foreign transaction fees, too. Once youre more comfortable with credit cards and you can always add other cards with higher bonus category earnings to your lineup. Using the Quicksilver as a card for all spending that doesnt fall into another bonus category is simple, straightforward and rewarding what more can you ask for in a first credit card?

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    Compare Your Credit Card Options

    That covers most of the work behind how to choose a credit card. Now, it’s time for the fun part. Pick the top credit cards in the category you’ve chosen so you can compare them.

    Let’s say you’re shopping for cash back cards. You’d choose credit card products that earn cash back and view the best options. Then, you’d look at each card’s cash back rate, sign-up bonus, and annual fee.

    A great way to speed up the process of how to choose a credit card is a comparison tool. Here’s one option:

  • Go to The Ascent’s Compare Cards page.
  • Choose your credit rating and the type of credit card you’re looking for.
  • When you’re done selecting cards, click “Compare.”
  • That will give you a full breakdown of those cards. You can then quickly check which cards have the cheapest annual fees, which earn the most rewards, and any other features that can help you answer the question, “What credit card is best for me?”

    You Want To Take Advantage Of Rewards Programs

    Cards that dont offer rewards are a complete waste of your time, Heard says. She recommends thinking about what rewards would benefit you the most, and whether you want to pay an annual fee to get them.

    Cards that dont charge an annual fee generally come with lower introductory bonuses than cards that do and may not be as generous with rewards points on day-to-day spending. But be careful that you dont sign up for more rewards cards than you can manage to juggle.

    Heard advises most people to keep no more than three to five credit cards total in their wallets. Ulzheimer says two rewards cards seems more than enough one for airline points and one for cash back.

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    Should You Use One Credit Card To Pay Off Another

    If youre looking to pay off one credit balance using another card, this generally isnt possible. Banks dont allow you to pay your credit card balance using another credit card. Typically, payments via check, electronic bank transfer or money order are the only acceptable methods of payment.

    But a balance transfer credit card is the exception to that rule. If you can transfer a balance from a high-interest credit card to one with a 0% APR offer or even a lower ongoing interest rate, you can save money.

    What Is A Balance Transfer

    Should You Apply for a New Credit Card Now?

    A balance transfer lets you save on existing high-interest debt by transferring your balance to a card with a lower interest rate or one with a 0% APR offer on balance transfers. Sometimes there is a balance transfer fee to move debt from one card to another, typically between 3% to 5% of the amount being transferred.

    This fee will add on to your debt load, so do the math before deciding to transfer your debt to another card. If the amount youre paying in balance transfer fees is greater than what youd save on interest by doing the transfer, then its probably not a good money move.

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    Mbna True Line Gold Mastercard*

    People looking to reduce the amount of interest they pay should consider a low-interest credit card like the MBNA True Line Gold card. You wont earn anything for your spending on the card, but the interest rate is just 8.99%, which is significantly lower than the average of 19.99% most other credit cards charge. If youre currently carrying a balance on a credit card with a higher interest rate, then you should also consider taking advantage of the optional balance transfer at the time of application. Balances transferred wont be charged interest for a full six months, which could save you bundles.

    • Annual fee: $39
    • Purchase interest rate: 8.99%
    • Balance transfer offer: Optional balance transfer at 0% interest for the first 6 months

    NOTE: this offer is not available for residents of Quebec

    Understanding Apr And Interest

    If you pay off your credit card every month, you dont have to worry about interest charges piling up. However, sometimes things happen and you end up carrying a balance on your card at least for a few months. In those cases, its important to understand what your APR is and how much interest youll be charged on your card.

    When you carry a balance, your credit card issuer will charge you a percentage of that each month until you pay off your card. The amount of interest you are charged is based on a credit cards annual percentage rate .

    Typically speaking, a card will advertise a variable APR rate that is listed as a range. Variable means that your rate can change over time based on an index interest rate such as the prime lending rate thats determined by the Federal Reserve Board . The better your credit score, the lower your APR on your credit card will likely be.

    Related: The complete history of credit cards, from antiquity to today

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    Always Keep Your Credit Score In Mind

    Before you apply for any credit card, it’s essential that you take a moment to check your credit score. The last thing you want is to apply for a credit card you don’t qualify for and get an unnecessary hard inquiry on your credit reports. Hard inquiries typically have a temporary negative effect on your credit scores.

    If you compare cards using Experian CreditMatch, you can view the cards you have a good chance of being approved for based on your credit scores. Once you know which cards are within reach, it’ll be easier to pick one based on your other criteria.

    Get Your First American Express Us Card

    How Many Credit Cards Should I Have?

    Once you have a bank account and address, you can actually start applying for cards now.

    You need to open a few accounts to start building credit history from scratch, and the easiest issuer to begin with is American Express US. Amex is a global company, and they offer their cardholders a number of easy ways to transfer their membership to another country whenever they relocate.

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