Credit Card Frequently Asked Questions
How do I get a credit card?
A credit card can be obtained many different ways. The most common way is by responding to a direct mail solicitation sent to you by a financial institution. Often the financial institution with which you have a checking or savings account will offer credit cards as well. Due to the explosion of internet, getting a credit card is becoming a lot earsier since more and more companies make their credit card offerings available on the web. Applying for a credit card is just one click away.
I've just started working and I don't have a credit history; can I still qualify for a credit card?
In many cases, yes. Many banks and other issuers of credit cards are willing to provide young people, including students, with a basic credit card with a low credit limit such as $500. Incidentally, responsible use of your first credit card can be a good way to start building a positive credit record.
How secure are credit cards?
Credit cards are a secure way of purchasing goods and services. With the use of holograms and other technical devices, forgery is becoming increasingly difficult. And if your card is lost or stolen, a phone call is all it takes to stop unauthorized use of your card and to get it replaced.
Do all bank credit cards offer the same features and benefits?
No. Banks compete for your business, and some of the ways they do that is by charging different fees and offering different features and benefits with their credit cards. Some have lower interest rates while others have a wider range of features.
Are there hidden costs associated with credit cards?
There are often annual fees or application fees that apply, the details of which have to be revealed to the applicant. Often these are outlined in the Terms & Conditions section. Again, it is important you read the fine print so that you fully understand all costs associated with a particular credit card.
Does applying for a credit card affect my credit status?
Yes. Every time you apply for a credit card, department store card, or any other type of credit-related card, an inquiry is made as to your credit status. This inquiry is noted with the respective credit bureau. Although these inquiries will remain on the report for approximately one year, issuers will be primarily concerned with the number of inquiries over the last 6 months. Showing a handful of inquiries for that period is not critical. But issuers do become concerned if there are more than 10 inquiries during that time. They interpret this as an indication that you are in [too] much need of credit, and thereby consider you high risk. As a result, they will be less likely to grant you the credit card you are applying for. It is therefore important that you do not apply for an excessive amount of credit cards unless aboslutely necessary.
My credit is damaged. Can I still get a credit card?
Yes. Depending upon how damaged your credit is, you will most likely be interested in secured credit card offers. You can expect to have to provide a security deposit against which you can borrow by charging the credit card.
I am not a U.S. resident. Can I still get a credit card?
Yes, some U.S. banks do issue credit cards to international applicants. Due to the risk involved in opening an account for someone abroad, international credit cards usually require a security deposit. There are known cases wherein organizations posing as banks have offered such credit cards, collected large sums of security deposits, and then disappeared without a trace. It is therefore important that you research a bank making such an offer. If you are interested in obtaining an international credit card, please refer to our Credit Card Offers page.
What is a secured credit card?
A secured credit card is a credit card that requires a security deposit. These types of credit cards are generally for individuals whose credit is less-than-perfect. Your credit line will represent anywhere from 70% - 90% of your security deposit. Depending on the credit card issuer, some secured credit cards require a deposit for a limited time such as one year. If your history with the card is good, the credit card issuer may extend your credit line or offer you an unsecured card.
What is an unsecured credit card?
An unsecured credit card does not require a security deposit. Such credit cards are intended for inviduals with good or outstanding credit.
Why do some credit cards require a deposit?
A security deposit is usually required for high-risk credit cards, such as secured cards for people with damaged credit. Your security deposit is the bank's insurance against possible credit card abuse. The deposit assures the credit card issuer that you will not avoid full payment of your credit card bill.
My credit card has been lost or stolen. What should I do?
As soon as you discover that your card is missing, call the customer service number provided with your card. This will stop an unauthorized user from making fraudulent charges. It's always a good idea to keep a list of your credit card account numbers and their toll-free customer service telephone numbers in a safe place in case your cards are lost or stolen.
How do the bank cards that are associated with sponsoring organizations work?
A bank card that is associated with a sponsoring organization, such as a professional association, a club, or an alumni association, is usually referred to as an "Affinity Card". When you use an affinity card, a percentage of the sale goes towards the support of the organization. With most affinity cards, you pay the same fees and charges as you would normally pay with a regular bank card.
How are Finance Charges Calculated?
Most issuers use the Average Daily Balance method for calculating interest. This means that if you don't pay your bill in full, interest will be charged from the day a charge is posted to your account. Some issuers charge two months of interest when you switch from paying in full each month to carrying a balance. This is called Two Cycle Billing. The other two methods for computing charges are Adjusted Balance and Previous Balance. If you feel ambitious the exact formula for interest calculations can be found on your bill.
I think there's an error on my credit card statement. What should I do?
Should you find an error in your credit card statement, call the financial institution that issued the card immediately to dispute the charge. The credit card issuer will investigate the transaction. While the charge is being disputed, you are not liable for the repayment of the transaction in question or the interest it accrues.
I'm not satisfied with the quality of an item purchased with my credit card and the merchant will not give me satisfaction. I haven't paid the bill yet. What do I do next?
Contact your credit card issuer in writing to let the issuer know of your attempt to resolve your dispute with the merchant. Each financial institution has a slightly different policy, but in most cases, your card issuer will get involved in the dispute process and help you resolve the issue. One of the many protections afforded to you as a credit card holder is protection against purchases that "aren't as described" or are damaged in some way.
Are merchants permitted to establish minimum or maximum transaction amounts for payment cards? Are they permitted to charge me extra for using my credit or debit card?
No. Merchants are not allowed to establish minimum or maximum transaction amounts for payment cards. This is against many credit card company's, such as Visa's, policies. If you encounter a merchant that does have a minimum, you can report this to your credit card issuer who may choose to report the merchant to their acquiring bank. Merchants are also not allowed to surcharge you for use of your payment card.
I am having trouble managing my debts. What should I do?
If you find yourself having trouble managing your debts, the first thing you should do is review your income versus your expenditures to see where your spending pitfalls are. Living within your means is not always easy. If you need help preparing a budget or managing your debt, there are credit counseling services that offer free or low-cost assistance. Talk to your creditors. Most offer advice and assistance as well as money management materials.
The National Foundation for Consumer Credit has member offices in every state. Check your local phone book for a listing, or call 800-388-2227 for the office nearest you. Credit counselors can help you with advice, set up a debt repayment program, and can even contact your creditors on your behalf to negotiate lower interest rates or fees.
I carry a balance on my credit cards. Does the date I make my payments make a difference on how much I pay in finance charges?
Obviously, the best way to avoid finance charges is to try to pay off your balance in full every month. Finance charge computation methods vary from bank to bank, but in general, most financial institutions establish interest rates and billing policies that they have to communicate to you by law when the card is issued. If you have questions, you should contact your issuing bank's customer service representatives for help.
If my credit history is not good, how can I improve my credit standing?
Since the best reference on a credit line is a credit card paid on time, over a period of time, your best bet for rebuilding credit may be to get a secured credit card. To obtain one of these major credit cards, you place a deposit with the issuing bank and get a card with a small starting credit limit, usually equal to your deposit.
How do I request an increase in my credit line?
Most credit card issuers are now able to authorize an increase in credit lines over the phone. It's always a good idea to make the request in writing as well. Many times, if you have demonstrated the ability to use your card responsibly, your credit card issuer may offer you an automatic increase.
How do I get a debit card?
Since debit cards are linked to your checking and/or savings accounts, you should check with your bank to see if it offers a debit card option. Debit cards are a convenient, safe, and widely accepted alternative to cash and checks.
What are the benefits of having a gold card?
Gold cards offer you more features than regular or classic bank cards. Gold Visa cards have a minimum $5,000 credit limit. They also include various standard features, such as auto rental collision/loss damage insurance, travel accident insurance, and purchase security and extended warranty protection insurance. In addition to the standard features, different cards offer a variety of optional features.
What is a grace period?
Many credit cards give you a grace period, which is the length of time between the date of purchase and the payment due date . Interest begins to accrue on your purchases on the date the transaction is posted to your account if the balance is not paid in full. When you buy goods and services, you will not be charged interest on the purchase price until the payment date on your next monthly statement. Depending on when you made the purchase, you may not have to pay for it (or even make a partial payment) for several weeks.
OR a grace period refers to the amount of time past the given due date of a credit card bill which will not incur interest fees on the due balance provided the total balance is paid within the grace period. Grace periods vary, but usually range from 10 - 25 days depending on the credit card issuer.
Do I pay interest as soon as I make a purchase, or do I get a grace period?
With most bank credit cards, when you buy goods and services, you will not be charged interest on the purchase price until the due date or payment date on your next monthly statement. If your due date is the 15th of the month, for example, and you purchase an item on, say, the 28th, then you'll have a grace period of about 17 days before interest is charged. Of course, if you pay in full by the due date, no interest on purchases is charged.
Why is interest charged immediately on cash advances but not on purchases?
Cash advances, unlike purchases, are treated as a loan, and similar to other types of loans, the interest begins to accrue as soon as the cash is advanced.
What is a balance transfer?
If you already have a credit card and you apply for a new one, you can transfer your existing balance on the previous card to the new one. Effectively, the new credit card issuer will assume the outstanding debt [that you owe on the previous card] by paying off the credit card issuer and then billing you for it.
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