Getting A Credit Card

Today the use of credit and debit cards for everyday purchases is becoming more and more common. Paying with credit or debit card is almost required for making purchases online, which is gaining popularity. People with poor credit may find it difficult to be approved for a card, but there are ways these individuals can enjoy the convenience of having a credit card.

Getting a card for those with average to good credit is usually very simple. Credit card companies are constantly sending offers and advertising their cards. They offer a number of incentives such as giving a certain percentage of all purchases (usually 1-2%) back to the card holder, or low interest rates. The customer simply has to select which card they like best based on its features and submit an application to receive the card. Depending on the company and card involved, customers can be approved instantly and receive their card week or two. The card holder then is free to make purchases with credit, and incurs no fees if their balance is paid within the month. However, expect to pay a huge amount of interest if the balance is not paid, this is where card companies make money.

Heavily advertised cards that most people see on TV with attractive offers are often challenging for people who do not earn very much or have some credit problems to get. However, it is still possible for these people to get credit from these companies through the use of Risk Based Pricing, where the company offers credit at a higher interest rate to offset the risk of loaning the money. Those with low credit scores may not be able to receive the advertised card, but they can get a similar one with different rates.

While those with only minor problems with their credit report may be able to get traditional cards with raised interest rates, people with severe credit problems must find alternatives. Some companies offer beginner cards for those with bad or no credit history. These cards have very low spending limits and high interest rates when compared to most cards, but they do offer a way for people to get their first credit card. These cards can then be used to build a credit score which allows the user to get a better card in the future.

People who have severe debt or have previously declared bankruptcy may not even be able to get a starter credit card. The only option for these individuals is a prepaid card. Prepaid cards, also known as secured cards, work much like debit cards. The cardholder funds the account with money they already have, and they cannot spend more money than they have, preventing them from going further in debt. Since there is no risk to the issuer of the card, nearly everyone can be accepted, but expect to pay large fees for one, such as a percentage of all purchases or a signup fee, so it is important to check all the details before obtaining a secured credit card.