How To Apply for a Credit Card

And What to Consider When Applying

Credit card account

Credit card applications are abundant nowadays. You can find them in banks, credit unions, department stores, supermarkets, and on websites. With so many cards competing for your business, applying for a credit card means doing more than just filling out the application and handing it in. There are a few things to know before applying for that oh-so-fabulous credit card. Just as with a job interview, you'll want to put your best foot forward. Credit card companies will give the better deals to applicants who prove to be responsible in life.

  1. Your FICO score. This is a biggie. Your FICO score is a credit score developed by the Fair Issac Credit Organization that determines how likely it is that a user will pay his bills. The lower your FICO score, the higher your interest rate will be. Why do that to yourself? Get your score as high as possible before sending in that credit card application. Do this by being a responsible consumer. Pay at least the minimum on your bills when they're due, don't send in too many credit applications at once, and keep your debt owed on any current credit cards as low as possible.
  2. Choosing a credit card. Forget the phrase, 'Beggars can't be choosers.' When it comes to choosing a credit card, you need to find one that will work for you-not the other way around. It doesn't matter whether you're applying for a regular card, secured card, or premium card, you need a credit card that serves your best interests.

    An important factor in choosing your credit card is how it will be used. Plan on paying off the balance in full each month? Look for a card with no annual fee and a longer grace period (FYI: a grace period is the number of days you have to pay a balance in full before the interest rate is tacked on.) If a monthly balance is likely in your future, then look for a card with a lower interest rate (this rate is commonly referred to as APR, or annual percentage rate).

  3. READ THE FINE PRINT! Become familiarized with a credit card company's terms before using their card. Is the interest rate fixed, or does it vary? How long of a grace period do you have before a finance charge occurs? What are the card's fees and penalties? Understanding these details takes a little time, but is worth every minute. Failing to understand the fine print could possibly damage your FICO score.

There are numerous calculators online that will help you determine what you can really afford to pay. has an easy-to-use calculator for determining how long it will take you to pay off your credit card debt. Imagine this scenario: you're out shopping for sneakers when you spy the home gym of your dreams. It costs $3,000. With no cash in your wallet, you pull the plastic. You justify its usage by telling yourself that attaining a fit body is worth the 17% interest rate. You might even be thinking that it's no big deal to only make the minimum payment each month. You think so, huh?

Let's plug in those numbers using Cardweb's debt payoff calculator. Keep in mind that most credit card companies demand a predetermined minimum amount every month-usually 2-4% of your current balance. Here's the lowdown: if you have a credit card balance of $3,000 with a 17% interest rate and plan on paying 2% of the bill each month (the minimum payment allowed), then it will take you-are you sitting down for this one?-nearly 33 years to pay it off. You'd be paying more than $6,000 in interest! Don't let that become your future. Use your credit cards responsibly and sparingly.


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