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- You can apply for a new credit card online, in person, via mail, or over the phone.
- Before applying, check your credit score to determine what credit cards and APR you can get.
- If your credit score isn't high enough for your desired card, consider improving it before applying.
- Read Insider's guide to the best starter credit cards.
What to know about applying for a credit card
Obtaining your first credit card can feel like navigating a maze, with many choices and decisions at every turn. This comprehensive guide is designed to illuminate the path, ensuring you're equipped with the knowledge to make informed decisions every step of the way.
Credit cards aren't just tools for spending; they're complex financial instruments tied intricately to your financial well-being. A credit card is a powerful tool, and when used responsibly, it can be a stepping stone to a robust financial future.
What is a credit card?
Credit cards provide a line of credit from a financial institution. They allow you to make purchases or withdraw cash up to a certain limit and pay it back over time, typically with interest.
You have many options if you have a good credit score. But even if you're rebuilding your credit, there's a card for you.
Step 1: Assess your credit situation
Take a close look at your income, expenses, and existing debts. This assessment isn't just for the lenders; it's for you to ensure you're ready to take on the responsibility of a credit card.
Understand your credit score and how it impacts your chances of approval
Your credit score reflects your financial health and is a key factor in determining your credit card eligibility. It influences not just the approval of your credit card application but also the terms of the credit card, including the interest rate and credit limit. There are many free options to help monitor your credit score.
Building or improving your credit score
What is a credit score? Your credit score dictates the credit cards you can qualify for, the interest rates you'll be charged, and any rewards you'll receive. If your credit score isn't where it needs to be, don't despair. Simple steps like paying bills on time, reducing existing debt, and checking your credit report for errors can help improve your score over time.
Step 2: Decide what type of credit card you need
The array of credit card types is vast, from rewards cards that offer cash back on purchases to balance transfer cards designed to help you manage debt. Understanding each type and its intended use is crucial in selecting one that aligns with your financial goals.
The various options available to you include starter credit cards, rewards credit cards, student credit cards, balance transfer credit cards, and many more. You may find that the best travel rewards credit cards can help you take vacations you've only dreamed of, or the best 2% cash back credit cards earn you several hundred dollars each year in rewards for money you spend on bills and utilities.
If you're unsure what cards you qualify for, you can look into secured credit cards, which can be great for beginners since many accept applicants with bad or no credit. Here's our guide to the best credit cards for bad credit.
Pre-approval and eligibility
Many issuers offer credit card pre-approval tools online to help you understand how likely you are to qualify for the card you want before the issuer makes a hard inquiry that will appear on your credit report.
Understanding the pre-approval process can help you understand how likely you are to be approved for the credit card you want without impacting your credit score.
Rewards and benefits
Understanding the various rewards programs offered by credit cards, such as cash back and travel miles, and how they can be leveraged to maximize benefits. It's easy to get lost comparing apples to apples — 50,000 points may sound like a lot more than 30,000 miles, but each reward system has its own "currency" with different values.
Business Insider's guide to what points and miles are worth in value can help you understand how rewards work, while our reviews of different credit cards can help you decide which benefits work best for you.
Step 3: Compare credit card offers
Don't settle for the first offer you see. Compare multiple credit cards, considering factors like interest rates, reward programs, and fees to determine which card is best for you.
How to compare APR, fees, and perks
If you're new to credit cards, we recommend reviewing our guide to the best credit cards available right now. Pay attention to ongoing rewards and any sign-up bonuses offered to new cardholders, and compare them against your personal spending habits and needs.
The terms and conditions of a credit card can be dense and complex, but understanding them is crucial. Pay particular attention to fees, penalty rates, and the payment grace period.
Credit cards have various costs, from annual fees to interest rates (APR) and late payment fees. Understanding these costs upfront can prevent unexpected debts and financial strain.
Choosing between introductory offers and long-term value
It's important not to base your credit card choice entirely on the introductory offer but also on each card's long-term value. Of course, the welcome offer is a valuable consideration, but it's more important to assess whether the card makes sense to keep year after year.
Does the value of the card's benefits outweigh its annual fee? One cardholder may find value in a card benefit that another does not, so this decision should be based on your personal financial and travel habits and goals.
Step 4: Gather the necessary information to apply
What you'll need to complete an application
Be prepared to provide personal and financial information to complete a credit card application. This includes:
- Full name
- Home address
- Social Security number (SSN)
- Annual income
- Monthly expenses, such as housing
- And more
Common mistakes to avoid
Understanding your credit profile and score clearly is important to determining which cards you're more likely to be approved for.
It's also wise to double-check all of your personal details before submitting your application. Discrepancies can lead to issues such as requiring more documentation, and waiting longer for a credit decision.
Being informed and prepared can help you choose the right card and increase your chances of approval.
Step 5: Submit your application
With your chosen card in mind, you're ready to apply. This process is more than just filling out a form; it's about proving your creditworthiness.
How to apply online, in person, or over the phone
Applying for a credit card can be done in different ways: online, in person, or over the phone. Each method has its advantages.
Online application
Most issuers offer easy online credit card application forms where you enter your personal and financial details. Look for an "Apply Now" button on the site, and it should take you directly to an application. This is the quickest and most convenient method.
In-person application
If you need assistance, visiting a bank branch allows you to speak with a representative who can help you choose the best card and complete the application. Items like identification and proof of income may be required.
Over-the-phone application
When you apply by phone, you can speak directly to a representative who will guide you through the process. This method allows for a mix of convenience and personal interaction.
What happens after you apply: approval or denial
If you receive an approval, congratulations! You should receive your new credit card within 10 to 14 business days, although expediting delivery for extenuating circumstances is often possible. From there, you'll need to activate your card, and then you can start making purchases. Activation is typically a simple process, Bbut the journey doesn't end here. How you manage your credit card can significantly impact your financial future, so do so responsibly.
If you've been denied, the issuer should send a letter explaining the reasons for denial. These tend to be things like a low credit score or too much debt, so you can work to improve those factors for a better chance of approval next time.
You may wonder: Does getting rejected for a credit card affect your credit score? Fortunately, it does not go beyond the impact of the hard inquiry.
Step 6: How to use your new credit card responsibly
Responsible credit card use is crucial, from paying your bill on time to keeping your balance low. It can help build your credit score, potentially leading to better loan terms and interest rates in the future.
Setting a budget and paying on time
Setting a budget can help you manage your credit card usage, and paying your bills on time will ensure you avoid any late fees.
Moving from a debit card to a credit card is a crucial transition, as sudden access to all those borrowed funds can produce a temptation to overspend. Experts recommend treating your credit card more like a debit card — utilize it for big purchases, yes, but do your absolute best to pay your balance in full every month, or you could end up paying exorbitant interest fees.
Monitor your credit regularly
It's important to keep track of your credit, even after you've successfully gotten a credit card. Monitoring your credit on a regular basis can help you notice if someone has stolen your money or your identity so you can take quick action. The best credit monitoring services offer real-time alerts that notify you whenever they spot suspicious activity.
Applying for a new credit card: frequently asked questions
The credit score required to get a credit card varies depending on which card you're trying to get approval for. Different cards have different score requirements, and issuers will consider other aspects of your credit profile, too, such as the length of your credit history and employment status.
Yes, many of the best starter credit cards are designed for individuals with no credit history, although they may come with specific terms and limitations.
Many cards offer instant decisions regarding approval or denial. However, sometimes, the issuer needs more information, so you may have to wait up to 30 days for a decision. Calling the issuer and getting them the information they need can often help expedite the process.
If you're denied for a credit card, review the issuer's adverse action notice to understand the reasons for your denial. Based on the feedback, improve your credit score if needed, and consider applying for a card that suits your current credit profile.
Each credit card issuer has its own application rules that dictate how often you can apply for one of their cards. If you apply for too many cards at once, your credit score could be negatively impacted.
When choosing a credit card, consider your financial situation and spending habits, as well as the card's fees, interest rates, and rewards programs.
A higher credit score can increase your chances of credit card approval and secure you better terms, such as lower interest rates and higher credit limits.
You can use a credit card to improve your credit score by paying your bills on time, keeping your credit utilization low, and avoiding multiple new credit accounts within a short period of time.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
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