Credit Cards

By Investor / Published on Saturday, 04 Feb 2017 08:13 AM

Introduction

The Oxford Dictionary describes a credit card as a small plastic card issued by a building society, bank etc., allowing the holder to purchase services or goods on credit. The card contains vital information about the card holder, such as signature and the name of the card owner. The use of credit cards started in the United States way back in 1920s, when oil companies and hotels started issuing such cards to their customers to purchase goods and services for their business.

The work of credit cards

A credit card offers the card owner a line of credit that can be used to make purchases, balance transfers and cash advances and require that he/she pays back the loan amount in the near future. Many people, who use credit cards to purchase either good or services have a month to pay the loan amount back before the extra charges are levied. When the card holder goes for a long period without repaying the money owed, they stand a chance of their cards being revoked or being withheld at the purchasing points. Thus, it’s advisable that one pays the necessary monthly minimum fees so that the credit line continues to remain open without having to attract interest or credit line the getting cut.

Getting a credit card

There are several requirements that credit card companies need many applicants to meet before issuing a credit card. The minimum age that an individual must attain before getting a credit card issued is 18 years. And  thus, many young people are very eager to attain that age so as to qualify; otherwise they need someone to co-sign the credit card for them. The companies not only need one to attain that age, but they also demand that one must have a source of regular income, which serves as an assurance that he or she will be able to service the loan accrued by the credit card. Persons, who have already held a credit card previously, are required to show a credit score before they are issued a new credit card. Once you meet all these requirements, you can apply for a credit card and await its approval by the company.

Time taken to possess a credit card

The time taken to officially possess a credit card is not fixed, but is dependent on several issues. As much as you wish to get a credit card so badly, the companies are not so enthusiastic to give one. They carry some thorough background checks on you to ensure that it’s safe to give you a credit card. They will need to know if you receive a regular income in your account, how old you are, your credit history and how many times you have applied for a credit card. Many get their application declined and the companies send them a reason, which has led to the card application getting declined. All in all, one should not give up. And as long they have what the credit card company needs in order, they get their credit cards in just a few days.

The number of credits cards one can possess

There is no a given number of credit cards one is restricted to own; thus one can have as many cards as he/she likes to. The reason is simple; because the credit card issuers don’t do a background check of the number of accounts on your credit report. The companies rather look at your debt-to-income ratio, income and credit score, when deciding to give you a new credit card. The restriction might only arise when you application for a new credit card exceeds your given credit limit that the company has set for your previous credit cards.  Many people, therefore, set a limit on the number of credit cards that they are willing to apply for so as to ensure their debt is manageable.

Applying for a credit card

When applying for a credit card, there are some key issues that one needs to consider before starting the application process. The income is a major factor that credit card issuers consider, when issuing credit cards because they use your income to calculate your debt-to-income ratio, thus giving a clear picture of the ability to pay back the debt. The credit score that one has is of great importance, when applying for a credit card because many companies are happy with persons having a good or excellent credit score. Another thing to be kept in mind is that one should not jump for the very first offer that comes your way. And thus, it’s important to inquire more about the card that you are about to subscribe.

Conclusion

Credit card is the mode that most Americans use in the market, and it provides a smooth transaction system to the business world without any problem. The average American finds it easy to use the credit card rather than cash. But people need to be cautioned to ensure that they pay their minimum required fee to keep the credit line open and thus avoid being subjected to the costly interest and charges.

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