If you’re ready to apply for a credit card for the first time, you’re in luck. The Nerds have put together a step-by-step guide with everything you need to know to make the most of the experience.
Ready to get started? Let’s dive in.
Step 1: Know how credit cards work
First, it’s important to understand how a credit card works. Unlike a debit card, which immediately deducts funds from your checking account when you swipe, using a credit card requires you to borrow a small sum of money. Every time you run it, you’re essentially taking out a miniature loan from the bank that issued you the card. At the end of the month, you have to pay that loan back.
But unlike other loans, which require you to make a hefty payment of pre-determined amount of money every month, your issuer will give you the option to just pay a very small fraction of what you owe. You should not take this option. By only making the minimum payment on your card, you’ll be racking up big interest charges when the rest of your balance rolls over to the next month.
The takeaway? Pay your credit card bill on time and in full every month – no exceptions!
Step 2: Do your research
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on Chase's
secure website
Now it’s time to figure out which card is right for you. There are a lot of options on the market these days, so shopping around is essential.
To get started, check out our handy credit card comparison tool. Be sure to scroll down and work through some the questions on the page – they will help guide you to a card that suits your needs.
If you’re looking for a quick recommendation, the Nerds like the Chase Freedom® - $200 Bonus for credit card newbies. With it, you’ll earn 5% cash back in rotating quarterly bonus categories, up to $1,500 spent per quarter. You’ll also earn unlimited 1% cash back on all other purchases.
Historically, the Chase Freedom® - $200 Bonus has featured retailers like Starbucks, gas stations, Amazon, restaurants and department stores as 5% bonus categories, so there’s something for everyone to love. Plus, unlike most other cash-back cards, this one comes with a signup bonus: Get a $200 Bonus after spending $500 on purchases in your first 3 months from account opening.
Given its lucrative and easy-to-use rewards structure and its annual fee of $0, you can’t go wrong with the Chase Freedom® - $200 Bonus as a starter card.
Step 3: Apply for a credit card using an online form
When you’ve selected a card you’re comfortable with, it’s time to move forward with the application. The easiest way to do this online; you’ll simply visit the issuer’s website, find the card you’re interested in and click on its “apply here” link. Or, you can use one of the “apply here” links in a NerdWallet article – we’ll take you directly to the credit card application you need.
Either way, you’ll land on an application form, where you’ll input your personal financial information. Typically, you’ll be asked to provide:
- Your name, address, and phone number
- Your Social Security number
- Bank account information (i.e., whether you have a checking account, savings account, or both)
- Your employment and income details
At the end of the form, you’ll see a copy of the card’s terms and conditions. Be sure to read it over carefully so that you’re sure you’re comfortable with the interest rate, fees, etc. before clicking on “apply.” If you are, feel free to do so. In many cases, you’ll be directed to a new screen almost instantly that will tell you if you’ve been approved or denied.
Step 4: If you get denied, find out why
If you get approved for the credit card you were after, that’s great news. Activate it as soon as it arrives in the mail (after reading over the Card Member Agreement, of course), then you can begin using it responsibly right away.
But if you got denied, it’s important to pick up the phone and find out why. Under the Equal Credit Opportunity Act, lenders are required to explain why your application for credit wasn’t approved. If you couldn’t qualify for the card because of your credit, take steps to start improving it today. Otherwise, you should ask the customer service representative you speak to recommend a product you’re more likely to get approved for.
Step 5: After 6 months, consider applying for a credit card “companion”
Apply Now
on Chase's
secure website
If you’re happy with the credit card you selected, you might want to consider getting a card “companion” for it a few months down the line. Pairing up credit cards to maximize rewards is a smart strategy and will also help you keep your credit utilization low throughout the month by spreading your spending over multiple cards.
Nerd tip : For most folks, waiting about six months between credit card applications is a smart move. Applying for too many cards in too short a timeframe will cause your credit score to dip, because this is interpreted as a signal that you’re in financial trouble.
For example, if you took our advice and got the Chase Freedom® - $200 Bonus, getting the Chase Sapphire Preferred® Card as its companion is a good choice. With it, you’ll earn 2 points for every dollar you spend on travel and dining out, and 1 point per dollar spent on other purchases. Generally, points earned with the Chase Sapphire Preferred® Card are worth $.01 apiece, but if you redeem them for travel through Chase Ultimate Rewards, the value of each goes up by 25%.
You’ll also have the option to transfer your points to participating frequent traveler programs at a 1:1 ratio. If you’re skilled at hacking frequent flyer award charts, this card feature is a big selling point.
And this is also where pairing the Chase Freedom® - $200 Bonus and the Chase Sapphire Preferred® Card comes in. Since you’re earning Ultimate Reward points with the Chase Freedom® - $200 Bonus, you have the option to transfer them to your Chase Sapphire Preferred® Card account and redeem them for travel. You can then do another transfer to the frequent traveler program of your choice and make out like a bandit when you book your next trip.
If that trip happens to take you overseas, the Chase Sapphire Preferred® Card will definitely come in handy. It comes chip-enabled and charges no foreign transaction fees, so swiping abroad will be a breeze.
Finally, the Chase Sapphire Preferred® Card will get you started with a stellar signup bonus: Earn 40,000 bonus points after you spend $4,000 in the first 3 months. It carries an Introductory Annual Fee of $0 the first year, then $95.
With the Nerds’ tips above, you should be in good shape to apply for a credit card today!
Woman applying for credit card image via Shutterstock.
The post Apply for a Credit Card in 5 Simple Steps appeared first on NerdWallet Credit Card Blog.
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