Surely no one is a stranger to credit cards. Credit cards are everywhere in our life. Everyone has a credit card, and everyone knows what a credit card is …… wait, do you?

What Is a Credit Card?

Credit cards are issued by banks, credit unions or financial institutions. Credit cards allow cardholders borrow money to purchase first, then pay back the money monthly. Generally speaking, credit cards have higher annual percentage rates than other loans.

Usually, credit cards have an interest-free period, varying from 20 to 50 days, depending on the type of the cards and the issuing banks. During that period of time, you don’t have to pay the interests for the money. Once you overdue the payment, the interest will be higher than other kinds of loans.

Types of Credit Cards

There are several types of credit cards except the most common one we know.

Business Credit Card

This kind of credit cards are specially designed for business. Due to the large amount of small businesses in the US, it is also called the small business cards. With business credit card, it is easier to separate personal consumption from business activities, which is convenient for company management.

Secured credit cards

Secured credit cards help people with poor credit history or no credit history to have a credit card. It is much easier to apply. Cardholders have to deposit a certain amount of money in the card, for example, $1000, then they will be given credit from $500-$1000. Fees charged by secured credit cards often exceed the ordinary credit cards.

Prepaid Cards

Also known as “semi-secured cards”, which are often applied by people with poor credit history. Similarly, cardholders must put a certain amount of money in a linked bank account before using. It doesn’t provide credits. Cardholders can only use the money in the account. Unlike debit card, it doesn’t require a PIN.

How to apply for your first Credit Card?

You must be at least 18 to apply for a credit card. If you are under 21, you should provide proofs of your independent income to show that you are able to pay the amount you charge monthly. But here’s a catch-22. You can’t have credit cards without credits. The, how can you start your first credit card?

Apply for a student credit card

As a student, your part-time job can help you get approved for your first student credit card. It proves that you have independent income and have the ability to pay the amount. You can build your own credit history from then on.

Authorized credit card user

Authorized credit card user can enjoy the same benefits as the cardholder, and don’t have to pay for the balance. In some cases, it also can help you build credit history because the account history may be reported on your credit history.

Apply for secured credit cards

Like I mentioned before, secured credit cards are good start for you to build credit history. It is easy to apply and used just like other normal credit cards.

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