Thursday, August 11, 2022

What Kind Of Credit Card Do I Need

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Gas Rewards Credit Card

What Type of Credit Card Do I Choose? *Credit Card Basics*

If you have a long daily commute or work as a contract driver through Uber or Lyft, a gas rewards credit card could be a good fit. This type of rewards credit card typically offers good to great rewards on gas purchases.

Note that some gas rewards cards may restrict the amount of rewards you can earn or offer more rewards during certain months. This type of credit card is generally good for those who drive a lot and can benefit from the rewards.

An example of a rewards credit card that offers great cash back rewards for gas purchases is the Blue Cash Preferred® Card from American Express, which offers 3% cash back at U.S. gas stations. Youll also get 3% cash back on transit , along with 6% cash back on select U.S. streaming subscriptions, 6% cash back at U.S. supermarkets on up to $6,000 spent per year, and 1% cash back on all other purchases.

What Else Do I Need To Remember When Applying

Depending on the type of credit card youre applying for, you may be required to provide proof of your income and other supporting financial documentation for approval.

  • Supporting documentation. After you have submitted the initial application , you may be required to provide documentation that supports the information provided. This typically includes identifying documents with a photo, several recent paystubs and/or tax documents.
  • Document submission. Check out how the process works for verifying your documents. In some cases, you may be able upload copies online via a secure service, while in others you might have to bring them into a branch.
  • Instant approval. Most credit card applications you submit online will provide you with a response within 60 seconds. Remember that if you are approved at this stage, you may still have to provide the supporting documents in order to receive and activate your card.

If you do the research first and gather together all of the information required, filling out a credit card application online will only take a few minutes. And thanks to the convenience of 60-second approval times, you could know within 15 minutes of clicking Apply now whether you will be getting a brand new credit card.

Key Information You Should Get

When you are given information about a credit card, it should include a summary box with standard key information about the card. This should include the interest free period, interest rate and other charges. This is so that you can easily compare different cards.

You can find more information about the credit card summary box including an explanation of what all the terms mean, on the UK Cards Association’s website at:

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What Is A Debit Card

A debit card is a payment card that makes payments by deducting money directly from a consumers checking account, rather than on loan from a bank. Debit cards offer the convenience of credit cards and many of the same consumer protections when issued by major payment processors such as Visa or Mastercard.

There are two types of debit cards that do not require the customer to have a checking or savings account, as well as one standard type.

  • Standard debit cards draw on your bank account.
  • Electronic benefits transfer cards are issued by state and federal agencies to allow qualifying users to use their benefits to make purchases.
  • Prepaid debit cards give people without access to a bank account a way to make electronic purchases up to the amount that was preloaded onto the card.

Frugal consumers may prefer to use debit cards, because there are usually few or no associated fees unless users spend more than they have in their account and incur an overdraft fee. By contrast, credit cards generally charge annual fees, over-limit fees, late payment fees, and a plethora of other penalties, in addition to monthly interest on the cards outstanding balance.

For Rewards Travel Or Cash

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  • How do I spend my money? Look for a card that delivers the highest rewards for the categories you spend the most on. If youre a big spender, consider getting a card with an annual fee, if your rewards earnings would offset the cost. If youre planning to use the card abroad, look for one with no foreign transaction fees and chip-and-PIN capability, rather than the chip-and-signature technology thats standard in the U.S. This goes for other types of cards too.

  • How complicated is this credit card? If you dont want to contend with limited award seat availability, spending caps, rotating bonus rewards and loyalty tiers, consider a card with flat-rate cash-back rewards.

  • How quickly will I earn rewards, and how much are they worth? Read NerdWallets rewards valuations to find the answers to these questions.

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Know Your Customer Requirements

Card issuers have put in all these input requirements since federal law requires them to get information from their prospective customers and verify and record this input. Thats why they ask for all your personal details when you apply.

Thats pretty standard. Its the requirement for documentation to back up this information that is more subjective, and this is based on each issuers particular policies, and the judgment of the person processing the application.

The requirement to get customer input is based on the so-called know your customers provision of the USA Patriot Act. This regulation aims to stop terrorists before they act, and punish acts of terrorism.

Considering that money is a vital fuel for terrorism, the governments aim is to make it difficult for terrorists to obtain financing or launder their money through financial institutions.

To this end, the law establishes the basic standards that financial institutions have to go by when a customer opens an account with it. Considering that the law only sets the baseline for verification, its then up to each institution how much more stringent it will be. Thats why card issuers policies for applicant documentation run the gamut.

See related: My card issuer of 25 years suddenly wants to know more about me

What Is An Interest

Some cards offer 0% on purchase deals, which charge no interest on purchases for a limited time, with the longest deals now standing at 27 months.

These cards are perfect for spreading the cost of a large purchase, or for making lots of smaller ones, over the interest-free period.

These cards only work if you are disciplined enough to put money aside to repay the debt in full at the end of the 0% period, because otherwise the card will revert to its headline interest rate, which in most cases is reasonably high.

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Which Is The Best Credit Card For You

  • Your spending pattern: Your monthly spending pattern is a significant factor in choosing the right credit card.
  • The reward type: Credit cards offer rewards in terms of cashback, rewards points & air miles.
  • Fees and charges: Compare the interest rate on different cards and the fees and charges that apply.
  • Offers on the card: Some cards have great offers and discounts when you use them to shop on a particular website or when you use it in a specific store.
  • Welcome bonus or gift: Some banks offer welcome gifts and joining bonuses on applying for a credit card. Gifts could be the latest gadget or bonus points and miles.
  • Payment options: Most cards will allow you to make payments via multiple channels.

The Process To Apply For A Credit Card Online

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You can Compare & Apply for a Credit Card on BankBazaar by Following 4 Simple Steps:

  • Step 1: Compare credit card offers
  • Step 2: Select from the top cards offered by leading Indian banks
  • Step 3: Check your eligibility by entering a few personal details
  • Step 4: Enjoy instant approval online after filling out your application form

Alternately, you can also apply for a card online on the bankâs website by following these steps:

  • Step 1: Visit the bank’s website.
  • Step 2: Explore the cards offered by the bank.
  • Step 3: Use the comparison tool if available to compare their features and benefits
  • Step 4: Select the card that is the right one for you and hit the ‘Apply’ button.
  • Step 5: Fill in the required details and upload all necessary documents.
  • Step 6: Submit your form.

Note: Each bank may have a different application procedure. Visit the bank’s website for more details regarding how to apply for their card online.

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How To Cancel A Credit Card

To cancel a credit card, you can contact the issuer and ask them to close the account. Youll have to pay off any outstanding balance in full before the account can be closed. Keep in mind that closing a credit card can have an adverse impact on overall credit score. If youre thinking about closing a card that youve held for a long time, your credit history makes up a portion of your score so closing it can ding your credit.

You may want to consider asking the issuer if you can do a product change to a card without an annual fee or to one thats a better fit for your spending patterns.

Does It Matter Which Credit Card You Get

Yes, it matters which credit card you get. Getting the right credit card for your spending habits and financial capabilities can end up saving you hundreds or even thousands of dollars a year. For example, if you dont typically pay off your balance in full every month, you may find yourself in serious debt if you choose a credit card that has a high interest rate.

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Different Cards Different Benefits

Having an array of credit cards can allow you to earn the maximum available rewards on every purchase that you make with a credit card.

For example, you might have a Discover it Cash Back card to take advantage of its rotating 5% cash-back categories so that in certain months, you can earn 5% back on purchases such as groceries, hotels, restaurants, and gas . You might have another card that always gives you 2% back on gasuse this card during the nine months of the year when Discover isnt paying 5% cash back on gas.

Finally, you might have a card that offers a flat 1% back on all purchases. This card is your primary card for any purchase where a higher reward isnt available. For example, you might be able to earn 5% on all clothing purchases in October, November, and December with your Discover card the rest of the year, when no special bonus is available, you would use the 1% cash-back card.

Of course, you dont want to go overboardif you have too many accounts, its easy to forget a bill payment or even lose a card. The problems that can result from such oversight will quickly ruin any savings that you might have earned.

How Credit Score Affects Your Credit Card Choice

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are one of the biggest limiting factors in choosing what credit card you should apply for. If your FICO Score isn’t high enough, youll be instantly denied a wide range of products.

For example, the Chase Sapphire Preferred® Card is one of the best credit cards, but also requires you to have Excellent credit a score of at least 700 or better.

No matter what your credit score is, though, your credit card options will still boil down to the same card categories weve outlined above rewards cards versus low interest cards. The only thing that changes is your pool of options the lower your score, the fewer cards youll likely get approved for.

Secured credit cards

Secured credit cards are a special subset of card products intended for those with limited or damaged credit histories. If you’ve never had an open line of credit or have defaulted on a loan in the past, this may be the option to look for.

In order to open a secured credit card account, individuals are required to put down a security deposit that will double as their line of credit. These cards are intended to be a temporary option that allows users to build up their credit history. Once your score bounces back to being Average Credit Score in America: 2021 Report, youll be able to apply for a better card that doesn’t require a deposit.

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Annual Fees: Whether It’s Worth It

Annual fees bring higher rewards rates and bigger sign-up bonuses but the steeper the fee, the more youd have to spend on travel to make it worth the investment.

Say you want to get a card with a $400 annual fee. It earns 5 points per travel purchase, and when redeemed, each point would get 1 cent of value. Drop $1,500 on a nice hotel, and you’ll earn $75 worth of rewards. Sign-up bonuses aside, though, youd have to spend more than $8,000 a year to come out ahead on that deal.

Now say you decide on a card with an $80 annual fee instead. Sounds much more reasonable, right? Well, not necessarily. Say it earns 2 points per travel purchase, worth 0.5 cent when redeemed. Not counting any sign-up bonus, youd still have to make $8,000 in travel purchases on the card to earn enough rewards to make up for the cost of the card. And after that, youd earn points at a much slower rate than you would with the $400 card.

Before dropping a chunk of a paycheck on a card, consider the annual fee within the larger context of the cards earning structure. For a frequent traveler, a costlier card may be worth the expense.

Other Credit Card Advantages

The Fair Credit Billing Act allows credit card users to dispute unauthorized purchases or purchases of goods that are damaged or lost during shipping. If the item was bought with a debit card, the charge cannot be reversed unless the merchant is willing to do so. Whats more, debit card theft victims do not get their refund until an investigation has been completed.

The credit card holder, on the other hand, is not responsible for the disputed charges the amount is usually deducted immediately and restored only if the dispute is withdrawn or settled in the merchants favor. Though some credit and debit card providers offer zero liability protection to their customers, the law is much more forgiving for credit card holders.

If you need to rent a car, many credit cards provide some sort of waiver for collisions. Even if you want to use a debit card, many car rental agencies require customers to provide credit card information as a backup. The only way out for a customer may be allowing the rental agency to put a hold of perhaps a few hundred dollars on a bank account debit card as a form of surety deposit.

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Spending Can Lead To Debt

When you make purchases with a credit card, youre spending the banks money, not your own. This money has to be repaid, with interest. At the very least youre required to make the minimum payment due each month. Racking up high balances on multiple cards could make it difficult to keep up with monthly payments and strain your budget.

Is It Good To Have Multiple Credit Cards

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The effect on your credit score is probably one of your major concerns about having multiple credit cards. That is a common consideration, but having more than one credit card can actually help your credit score by making it easier to keep your low.

For example, if you have one credit card with a $2,000 and you charge an average of $1,800 a month to your card, then your credit utilization ratiothe amount of your available credit that you useis 90%. Where credit scores are concerned, a high credit utilization ratio will impair your credit score. It may not seem fairif you have just one card and pay it off in full and on time every month, then why should you be penalized for using most of your credit limit? But thats how the credit scoring system works.

Is it bad to have multiple credit cards? No, if you handle your credit wisely, keep your credit line utilization ratio below 30%, and keep track of payment due dates.

To improve your credit score, most credit experts recommend that you should avoid using more than 30% of your available credit per card at any given time. By spreading your $1,800 in purchases across several cards, it becomes much easier to keep your credit utilization ratio low. This ratio is just one of the factors that the FICO credit scoring model takes into account in the amounts owed component of your score, but this component makes up 30% of your credit score. Only your payment history is weighted more heavily in determining your credit score.

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How Can I Check And Monitor My Credit

You can check your own credit it doesn’t hurt your score and know what the lender is likely to see.

You can get a free credit score from a personal finance website such as NerdWallet, which offers a TransUnion VantageScore 3.0.

It’s important to use the same score every time you check. Doing otherwise is like trying to monitor your weight on different scales or possibly switching between pounds and kilograms. So, pick a score and get a game plan to monitor your credit. Changes measured by one score will likely be reflected in the others.

Remember that, like weight, scores fluctuate. As long as you keep it in a healthy range, those variations wont have an impact on your financial well-being.

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