About Applying for Credit Cards
Credit cards are issued by banks and allow consumers to securely pay for goods and services. Credit cards carry interest rates that vary from bank to bank and are affected by the financial situation of the applicant. Many credit cards also have annual fees that are added to the balance of the account and accrue interest the same way that purchases do. Most credit cards also allow cardholders to use their lines of credit to receive cash advances and transfer balances from existing credit cards.
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Factors
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Credit card companies consider a number of factors when deciding if they will offer a line of credit. These factors include credit score, length of credit history, employment history, and income. Credit card companies will also consider how the applicant has lived at his or her present address. Applicants must be older than 18 or have a parent or legal guardian co-sign for the credit card. If the application is approved, all of these factors may also influence the credit limit and interest rate on the card.
Disclosures
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Credit card applications must disclose the interest rate, whether that rate is variable, how finance charges are calculated, annual fees, transaction fees, minimum finance charges, and fees for cash advances, overdrafts and late payments. Credit card applications also list the grace period for the account, or when your charges begin to accrue interest.
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Unsecured Credit Cards
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Unsecured credit cards allow consumers to make purchases on the legal promise that they will pay back the bank later, either in full or in installments. There is usually not an application fee for unsecured credit cards. Credit card applications may ask applicants for their full name, date of birth, address, length of time at their residence, social security number, name of employer, job title, salary and length of time on the job.
Secured Credit Cards
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Secured credit cards generally require an up-front payment or an active bank account. The money that you spend using your credit card is deducted from this payment. Generally, secured credit cards have a less strict approval policy than unsecured credit cards and are most commonly used by persons with a low credit score or a limited credit history. The information required on the application is generally the same as that required for an unsecured credit card. Most companies require applicants for secured credit cards to pay an application or processing fee. Often, when applicants are denied a secured credit card, the application fee is not refunded.
Balance Transfers
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Some banks allow consumers to transfer debts from other accounts at the time the credit card application is approved. These banks will provide space on the application to list the name of the bank issuing the other credit card as well as the account number and balance of that credit card. If an applicant requests a balance transfer on a credit card application, the new bank will pay off the existing credit card company and add that balance to the new account without any additional action from the consumer.
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Resources
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