Credit cards are now almost a necessity in this digital age. With the advent of online shopping, it’s easier to use these pieces of plastic than other forms of payment. But if you don’t have a credit card, what exactly are the steps to acquiring one?
Here’s a quick list of tips to help you apply for your first credit card – for personal or business purposes:
1. Learn How Credit Cards Work and the Jargon behind Them
Many people get into trouble when using their credit cards because they’ve never really understood how these things work. Some make the mistake of using the credit card like a source of free money, while others don’t fully understand the terms and conditions for the card that they’ve gotten. So before you even apply for a card, make sure you know what annual fees and the annualized percentage rate (APR) are.
2. Check Your Credit Rating
A good credit score helps ensure that your application for a credit card goes smoothly. After all, this tells banks that you’re responsible enough to handle a credit card by showing you don’t have any overdue bills with other banks or lending establishments. A bad credit score can lead a bank to reject your credit card application or offer you a higher interest rate.
There are several websites that can compile a credit report for you to review. An example of this is TransUnion, the first and only consumer credit reporting company in Hong Kong. After paying a one-time fee and gaining access to your credit report, you’ll know if you need to improve your score first before applying for a card.
3. Do Your Research
With so many credit cards available today, it’s tempting to just apply for the first credit card offer you come across. However, if you don’t do your research, you may miss out on a better deal. There may be a card may have cheaper or no annual fees; another may offer better installment programs. For instance, this page lists the many benefits of getting a Standard Chartered credit card. In any case, it’s best to check the fine print before applying online.
4. Analyze Your Spending Patterns
Of course, when looking at multiple credit card offers from banks, you should also compare them to how you spend your money. You should also consider what you intend to use the credit card for. For example, if you travel extensively, a credit card with frequent flyer rewards is a good choice. Meanwhile, if you just intend to get a card for online shopping, go for one that offers rebates at your favorite merchants.
5. Prepare Your Requirements
Some credit card issuers—a bank or even a retail store—may require you to show or submit documents with your application. This is to protect against identity theft. Documents that they may ask for include a government-issued ID card (and/or a photocopy thereof), bank statements, proof of billing address, etc. Requirements may vary from bank to bank, so make sure to double-check them before submitting anything.
With these five tips, you’ll have an easier time narrowing down what credit card is good for you. You’ll also get to avoid the many pitfalls that befall first-time card owners.