Getting a Credit Card

A credit card is a plastic card that allows the holder access to a line of credit
from a financial institution. Using the line of credit is like getting a short-term,
pre-approved loan from the bank, but the interest on the loan is much higher than
a regular loan. Some cards offer perks like frequent-flier miles, cash back,
warranties or rental car insurance with use, so in many cases paying with a credit
card can be more beneficial than paying with cash.

Why is a credit card important?

Credit cards allow consumers to have access to more money than they can safely carry
around, and they can provide an extra source of money to use for unexpected expenses.
Additionally, goods such as airline tickets, rental cars and hotel rooms, can only be
secured with credit cards since they offer protection for companies in case you don't
pay the bill.

Steps:

1. Build a credit history in the United States. This is probably the toughest and
most time-consuming part of the process. One way to do this is to request a secured
credit card from your bank. You must secure the card with your own money, so you do
not spend more than you can pay back. Be sure to make payments faithfully on your
secured card. If you can't get a secured card, start small: ask if your landlord can
vouch for your timeliness in paying your rent, or attempt to buy something you needed
anyway on store credit. After a few months of staying current on your bills, your
credit should look good to credit card companies.

2. Shop around for a card that best fits your purchasing habits. Do you plan to fly
home often? If so, you might want a card that gives you frequent-flier miles. Do you
plan to carry a balance from month to month? If so, find a card with the lowest
interest rates. Be sure to read and understand the fine print.

3. Apply, once you have found the card(s) you like. You may apply over the phone, by
mail or online. On the application, you must supply the following pieces of
information

Name: This is the name that you have on your credit report. If you put a different
name, processing of your application may be delayed.
Social Security Number/Tax ID: You must provide this information, as it is a unique
identifier. Companies use this information to access your credit report and other
financial information.
Address: This is the address to which they will send your bills and card. The company
will also ask how long you have lived at your current address and how much you pay for
mortgage or rent. They may use this information to get a general figure of your debt
load and disposable income.
Household income: This is your salary plus any other income you wish to be considered
when the company figures your credit limit. Generally, the higher your reported income,
the higher your credit limit will be.
Place of employment: Credit card companies want to know that you have a job and steady
income.
Signature: Your signature on the application means you approve of the contract terms,
which are printed somewhere on the application. It also signifies that the information
you have provided is true. If you applied online or over the phone, the company will
get your electronic or verbal confirmation, and they may send a contract in the mail
for you to sign.

If the card company approves your application, they will notify you by mail. The
approval notice will list your credit limit and any fees the company charges. If
the actual card isn't included with the approval notice, it will usually arrive within
a few weeks. If the card company rejects your application, you are entitled by law to
find out why. Call the toll-free (800) or (888) number on the card company's mailing
and request an explanation.

To be continued next week

Till then have a wonderful week

- Balaji