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10 months ago
All you need to know about credit cards

All you need to know about credit cards

You need to have a general knowledge on credit cards and credit line so that you can fully understand how to get and use a credit card in the US. Without a credit history, you will not be able to open a credit line at one of the international companies such as Visa and MasterCard. Also, if you just came to the US, you have a lot of opportunities to build a credit line. Hence, you’ll have to start small.

First, you will need to open bank accounts, preferably a savings account and check accounts. Wherever you apply for a credit line, the borrower will want to know where you live, work and also manage your bank accounts. The more you live or work in the same place for a longer time, the better your chances.

Many companies that issue credit cards would require you meet certain minimum income requirements and some companies would not issue you credit cards if you do not have a credit line based in the United States. If you already have a credit card from your parent country (Eurocard, Access, Barclaycard, American Express, Visa or MasterCard etc), it would increase your chances of being offered a credit card in the US after your credit line has been checked. Also, banks with which you are an accountant are more likely to receive your credit card request.

Sometimes there is no choice but to purchase on credit while waiting for a credit card - for example, when buying a car – but make sure that you understand the terms of the loan agreement. You may be required to pay high interest rates, sometimes up to 21%. Thus, in order to avoid creating too large a debt, delay the credit card receipt or the execution of large purchases that require a long term debt during your first months in US and also make your first cash purchases or checks. It is recommended that you keep accurate records of your expenses during your first two to three months in US so that you will be able to decide better when to use a credit card and when not to as well as avoid unnecessary mistakes. Also make sure that you read all the details of the credit card offer before committing;

In US, there are several types of credit cards you can apply for: Credit cards, Charge Cards, ATM Cards and Debit Cards.

Credit Cards –helps you to obtain expensive loans from the bank, fuel companies or other stores so you can pay for services and products up to a certain amount called credit limit. Credit limit is the maximum amount that can be owed to a credit company at any given moment. You can either pay the full balance or the minimum amount due. If you choose to pay the minimum amount dues, you will be charged interest on the balance. After getting a credit card, be sure to manage your account wisely by making your payment on time and remaining within the credit limit as these are positive indicators to the financial world. This type of consistency will help give you the opportunity to increase your limit and with it, your purchasing power. The longer you keep it up, the more your credit card will work to improve your credit score, opening a whole new world of financial possibilities.

Charge Cards – You cannot receive a charge card without credit history. This card is of two categories: American Express and Diners Club. You use this card without limit as it does not have maximum credit limit. However, you must make payments at the end of the month or at the end of the month though there is an exception which is payment for a flight, hotel or cruise purchased by a travel agent who is using American Express. This type of payment is made in 36 installments and you will be charged between 19% and 21% and a minimum monthly payment. If you do not pay the full amount (except for the exception given), you will receive a grace period of one month in which you will not be charged interest. Thereafter, you will then be charged an interest rate of 18%. If you do not pay within 3 months, your account will be closed.

Debit cards – This type of card is a combination of checks and credit cards and as such, you can use your debit card as a credit card. This is the only credit card that does not need to prove any credit history, since it “refers” to the cash available to you in your account at any time and you can receive it immediately upon opening the bank account and can be used only in stores and not in the banks themselves. With this card, you can pay bills immediately and not on credit. Some banks can issue an integrated ATM card with the bills being sent to the credit card holders every month. If the payment amount is not paid within a specified number of days, additional “financing fees” are added to the account.

ATM Cards – Most ATM cards also work as debit cards and as such. With this card, you can withdraw money from your account at any time of the day as well as deposit checks into your account, print a mini bank statement, and check your account balance. There may also be a limit to the number of ATM transactions you can perform per month and you can be charged when you withdraw from another bank’s ATM both by the other and your bank.

You would be issued credit cards depending on your type of bank account and credit union you belong to.


Secure Credit Card - Best way to create/build credit history if you do not have or limited credit history: investopedia.com/terms/s/securedcard.asp