Sequined versus Simple
Consider your needs, lifestyle and credit history when comparing card types.
• Standard. These no-frills cards come with just the basics, but they may have lower card fees than their tricked-out counterparts.• Retail. Usually accompanied by a chipper sales associate asking, “Would you like to save 10 percent on your purchase today?” retail cards typically offer in-store discounts. In some cases, the cards are issued by the store itself and can only be used in that store.
• Secured. Helpful for people building or re-building credit, secured cards require a cash security deposit usually equal to the card limit.
• Premium or Rewards. Often bearing the name of precious gems and metals, premium cards come with perks like cash-back rewards or points. They may also have higher credit limits and require better credit to qualify.
To kick off your card shopping, check with your financial institution first; it may offer special deals like low terms and waived fees. You can also research different cards at bankrate.com.
Sizing it up
Once you’ve found a potential card, check the tags to see what’s in the fine print. Aside from its mighty power to cause eyes to glaze over, fine print holds the secrets to whether a card is a good bet or an overpriced nuisance that’ll snag up your finances.
Fortunately, Uncle Sam has made the fine print easier to understand. As required by law, individual card terms are spelled out in a Schumer Box, a standardized format that makes disclosures more transparent. (It’s named after Senator Charles E. Schumer, the man responsible for the legislation.)
To give a card’s terms the three-way mirror test, compare offers at consumerfinance.gov/credit-cards/agreements.
Credit card issuers can’t sign up just anyone, due to laws intended to protect inexperienced consumers from taking on cards they can’t afford. To get a card:
• You must be at least 18 years old.
• If under age 21, you must provide proof of adequate income (enough to make minimum payments on the card) or apply with a cosigner.
• If applying with a cosigner, they must be a parent, guardian or spouse and are liable for your debt if you can’t pay it.
Signing the Dotted Line
Before you apply for a card, collect the required application information, including data about your employment and income. If applying with a cosigner, you will need this information from him or her as well. Only apply for one card at a time. Each time you apply for a credit card, the issuer checks your credit; having multiple credit card inquiries in a short period of time can have a negative effect on your credit score.
If a card issuer rejects your application, resist the urge to send off a rebound application — this could give your credit score a hit and aggravate the damage. By law, issuers must notify consumers and explain why their applications were denied, so use this information to improve your score, and wait at least a few months before applying again.