Gety your first credit card is a crucial financial step and can come in handy in an emergency. But it can be difficult to apply for a credit card if you\’ve never had one before. This manual is meant to assist.
Why You Need A Credit Card?
It\’s important to consider your motivations before learning how to obtain a credit card.
Remember that receiving your first credit card comes with a lot of responsibility in addition to flexibility.
Credit cards can be a helpful tool for managing your finances, and there might be advantages to using credit cards for short-term borrowing and spending. However, it’s crucial to know how to utilise a credit card to prevent being bitten by hefty costs.
What are the advantages of Credit Card
If you use your credit card responsibly and only charge what you can afford to pay back, there are several advantages. These consist of:
- Cost-sharing for purchases over time
- Increasing your credit score or creating a credit history
- Gaining benefits or rewards like rebates or air miles
- Purchase bankruptcy protection for products if the vendor defaults
What are the Disadvantages of Credit Card
However, there are a number of drawbacks to credit cards to be aware of:
- It may be simpler to overspend than you can afford.
- Your credit score will suffer if you make late payments.
- Managing several credit cards can be challenging.
- Utilizing available credit excessively can worry lenders
How Credit Cards Work
You can borrow money through a credit card, loan, or overdraft; this is what is referred to as \”credit.\”
When you apply for a credit card, the lender checks your credit to determine how hazardous of a borrower you are in their eyes.
They will assign you a credit limit if they provide you a credit card. Your credit limit is a predetermined sum of money that you can use to make purchases of products or services.
Every month, you return the borrowed funds, either in full or in part, with interest applied if there is an outstanding balance. There is a minimum payment required, but it\’s ideal to settle the entire sum because you won\’t be charged interest.
How to apply For a credit card for the first time
If you\’re considering getting your first credit card, the advice and details provided here will be useful. Learn how to apply for a credit card and what to consider when making your selection.
Who is eligible to apply for a credit card?
To apply for a credit card, you must be at least 18 years old. Check again, though, as some cards do have a higher minimum age requirement.
Most issuers won\’t allow you to apply for one of their credit cards unless:
- Staying in the UK
- Are in work
- Earn more than a predetermined threshold, such £7,500 annually.
However, there is a further crucial step that borrowers need to be aware of. Borrowers in the UK can start setting up the necessary foundation well in advance to ensure that they are approved for their first credit card.
The trick is to make sure your financial situation is as good as it can be before applying. This will increase the likelihood that the initial credit card you select will accept you.
Steps to choosing your first credit card
There are numerous kind of credit cards. Selecting the ideal credit card for your needs is crucial because each is better suited to a specific type of borrowing.To assist you pay off your present loans, you might be looking for one with a low interest rate. You might want one that offers benefits that fit your lifestyle.
A credit builder card can be an excellent choice for you if you\’re a first-time borrower seeking for assistance on how to get a credit card.
What are Credit Builder Cards?
You are most likely to be approved for a credit builder card if this will be your first credit card.These are excellent first credit cards in the UK. They are beneficial for those with bad credit who want to raise their credit score as well.
Low credit limits on credit builder cards are normal; they typically range from £100 to £250. Additionally, they impose higher-than-normal interest rates, which can range from 24% to 50% or even more.
As you routinely use and pay off your credit card, a history of responsible borrowing will be established. If your credit history is extensive enough, you can be eligible for a different kind of credit card.
How to apply for a credit card that isn\’t a credit-builder
A credit builder card is a necessary step before applying for one of these other card kinds. Even though you might not be able to receive any of these for your very first credit card, after having a credit builder card for a while, you might be able to.
Work on getting a credit card first, then carefully using it. Once you\’ve completed that, you ought to be able to advance to one of the following card types:
- 0% on purchases: This indicates that, for a specific time, you won\’t be charged interest on any purchases made with your card.
- 0% on balance transfers: To avoid paying interest, you might exchange a credit card debt that was being charged an APR to one that was being offered at 0%.
- You can transfer the majority of the card amount to your current account at 0% interest. For this, there is typically a transfer fee.
- Air miles: With this kind of card, you receive air miles after making a particular amount of purchases with your credit card.
- Rewards: You can get rewards like cashback, which gives you a percentage of your purchases back. For instance, it might be 0.5 percent.
What to consider before requesting your first credit card
There are a few crucial factors to take into account while comparing credit cards. This will enable you to determine which card best suits your needs and provides the most value.
Interest
The cost of borrowing money from the lender is reflected in the interest assessed on your credit card. Be on the lookout for the \”Representative APR\” when comparing credit cards.
At least 51% of consumers who are given that card are given this rate. It may not always be the rate you\’ll be given because it depends on your financial situation and credit history. As a result, you can receive a rate that is higher than what was advertised.
APR introduction
Many credit cards offer introductory interest rates that are lower, or even 0%, for a certain period of time.
They return to the usual variable rate after that. You should make careful to pay off your amount before the promotional rate expires, even if these can be helpful for spreading out the expense of goods.
Credit ceiling
You may only use your credit card to borrow up to this amount. Your credit limit is based on your credit history and financial situation, just like the APR.
You might not be granted a high limit as you\’re a first-time borrower. But keep in mind that the lender can offer to raise your limit if you consistently pay off your bill on schedule. You can ask for it to be raised if they don\’t offer to increase it.
How to apply for your first credit card in UK
The credit card of your choice can be applied for online, over the phone, by mail, or in person. Use an eligibility checker to determine your odds of approval before submitting an application for a credit card.
Applying online is the quickest and easiest method. All you need to do is fill out an application on the provider\’s website. That might get you accepted in a matter of minutes.
The majority of credit card companies want that you disclose the following details:
- Name and address
- Date of birth
- Employment status
- Income
- Nationality
Substitutes for credit cards
There are other choices to think about if your application is rejected or you decide against having a credit card, such as:
The use of a debit card
Purchase of a prepaid debit card
taking advantage of your overdraft facility (be aware of the charges that may apply)
Making a short-term loan application
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