By David Pilley on December 19, 2011
.jpg.aspx?width=75&height=75) It is incredibly easy to apply for a credit card. The facility to get new plastic is one of the reasons people are so entrenched in debt. You can get a credit card from your bank, a retailer, or a department store, and, boy, do they want you to get one! Like me, you might even be getting junk mail every week saying you have been pre-approved for a new card. Getting a credit card is so easy, you can get more than one at the same time.
You can find information about different credit cards online or in print, predominantly newspapers and finance magazines. The three ways to apply for a card are on a paper application, on an electronic application via website, or by phone. If doing it online, always make sure it is on a secure (https, not http) website. There will be a few preconditions, so rest assured that they don’t just hand out a credit card to anybody. In most cases a Social Security number, driver’s license, date of birth, and proof of address are the only necessary pieces of information. If you’re getting a credit card from somewhere besides a bank, it’s not always necessary to show proof of a bank account. Finally, when you get your card, you need to be aware of the credit limit, changing interest rates, grace periods, and any extra fees your card will carry.
There are few rules in the actual distribution of credit cards. The first one involves income. It is a federal crime for a credit card company to issue someone a card without having proof of the customer’s income. You do not have to show proof of a bank account, but there must be some evidence of your income. It is also illegal for a credit card issuer, after having seen proof of income, to give a credit card to someone whose income is not high enough to pay the monthly bills.
The second rule involves application fees. The Federal Reserve says, unless one of your last six payments was late, the yearly fees on a credit card cannot exceed 25 percent of your available credit. Therefore, if your new credit card has $400 worth of available credit, it is illegal for the company to charge more than $100 in fees in a year. Furthermore, any late payment fees cannot be greater than the minimum monthly payment.
The third rule involves an age limit. If you are under 21, you must have both a co-signer and an adequate source of income in order to get a credit card. Any further action taken on the credit card, such as a change in the credit limit, cannot be authorized without the co-signer’s consent. A red flag should go up if you encounter a credit card company that still offers you a card if you are under 21 and neither you nor your co-signer have adequate income to pay the monthly bill.
Finally, the credit card issuer must also give you a list of terms and conditions. The document should explain your balance and your monthly payments, and it should also reveal to you the penalties for making late payments. The credit card company must also send you a notice 45 days before they plan to change interest rate or other fees. The company must also mail your credit card bill three weeks before it is due, and the payment’s due date should be the same each month. These are the important guidelines you need to know before signing up for a new credit card.
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