If you've recently applied for a credit card or you're looking to get one, there's a good chance that you've seen a credit card application that asks you to submit a real credit card application form where you agree to give the credit card company a monthly payment. It seems like an easy thing to do, right? The card company sends you the paperwork, you sign it and you send it back, right? Well, there are a few things that you need to know about this popular form of credit.
In reality, it's not as simple as applying for a credit card front and back. You don't just sign on the dotted line – or, in this case, in the front of your credit card application. To qualify for a real credit card, you must make a deposit into an account provided by the credit card company. This deposit is your credit limit. Then you make your monthly payments according to the schedule set forth by the credit card company, usually after the card is issued. Now, that doesn't sound too difficult, does it?
So, why is it so difficult to qualify for a card application that requires a deposit? Well, one reason is that when people apply for a credit card, the credit card companies all compete for your business. They want to be the card holder who pays the most money over the course of a year. So, if they see that you have made a bunch of deposits, then it makes sense for them to make you pay that money back in full when you apply for your card.
Now, this doesn't always have to be that way. If you're a good customer who consistently makes a lot of deposits, then you may be offered a card that allows you to start off with a large credit line and then build your way up from there. The credit card company would want to make sure that you are a responsible person who has always paid your bills on time. That means they may offer you a low amount to start off with and then gradually increase the amount as time goes by. In many instances, this is a very good deal.
But what if you don't make the minimum payment each month? You will be reported to the credit bureau, and it will reflect negatively on your credit score. What's more, some credit card companies will allow you to pay off your balance at a much lower rate than you would if you had paid the entire balance on time. You can learn about the best credit card offers by visiting the website of a reputable credit card comparison site. These sites keep you informed about which credit card offers are the best value for money, and they give you detailed information on all of the different cards and their respective terms and conditions. Once you have determined what type of credit card you need, all you need to do is apply.
As long as you make your payments on time, the credit card company will continue to honor them. The other thing to keep in mind is that if you pay off your entire balance every month, your interest rates on the new card will be considerably lower than if you carry a balance. There are a few exceptions, but generally, you will get a zero percent introductory rate if you pay the full amount each month. When you consider how cheap these cards can be, it really is not so bad to apply for a real credit card front and back.