If there’s one thing that most of us are familiar with, in some shape or form, it’s credit cards. They’re an integral part of our adult lives, despite some of the risks that come with them. For anyone looking to learn more about what credit cards are and how they work, then you’ve certainly come to the right place. That’s what we’ll be covering today.
There are all sorts of different types of credit cards, which is really where things start to get tricky if you’re getting your first one (or if you haven’t read much about them to begin with). That’s why we’re here – to offer you a comprehensive understanding of how they work.
While we can’t exactly cover every single type of card that’s out there, we’ll do our best to give a good list of them. Make sure to stay tuned to get a guide on all types of credit cards, including ones that have a high credit limit.
What are Credit Cards?
Of course, the first question for us to address is this one: what are credit cards in the first place? Why are they such a critical part of our adulthood these days, and why does pretty much everyone have one? Well, there are a few reasons, so let’s start from the beginning.
First, we can take a look at what credit cards are. Simply put, these cards are financial tools that allow individual holders to make purchases on “credit.” Physically speaking, they are small plastic cards that each have a unique identification number and security code.
When a credit card holder uses their card to make a purchase, they are essentially borrowing money from the credit card issuer. This is typically a bank or some other type of financial institution. You can’t just stroll up to an institution to get a card willy-nilly, either – there is a complex approval process.
Something else to keep in mind is that the cardholder is expected to repay the borrowed amount, either in full by the due date or in monthly installments. They also often come with a credit limit, which is the maximum amount a cardholder can borrow – though some have higher limits than others, as you’ve probably guessed from the title. Finally, they can provide various benefits such as rewards programs, cashback, travel insurance, and fraud protection, which we’ll be delving into further later.
Applying and Qualifying
Now we get to the part that is daunting for a lot of people – how do we apply for credit cards, and by proxy, how do we qualify for them? It’s a bit complicated, but don’t worry – we’ve got your back. You can get an idea of the process here: https://www.duo.uio.no/handle/10852/17172, but we’ll explain it as well.
Do Your Research
One of the most important things to do in terms of applying for a credit card is to do some research first. Look at the various options that are available, such as rewards programs and even types of cards (which we’ll cover further later on). Additionally, get a sense for what you might qualify for based on credit scores and the like.
Check Eligibility Requirements
On a similar note to the above point, makes sure that you’re looking at the requirements for each card you’re interested in. You see, most of the time, you’ll need to fit those eligibility factors in order to qualify for the card you want. That might include things like your credit score, your total amount of debt, and what your current work status looks like.
Gather Your Paperwork
As with most things in life, there are a lot of necessary things that you’ll have to do if you are applying for a credit card. Unfortunately, this includes a whole lot of paperwork. Namely, you’ll want to have your identification information, some recent pay stubs, and some previous tax documents. Having them on hand can ease things when you’re asked for them during an application.
Just remember that the specific documents to prove citizenship and your identity as a whole may differ based on your home country. Try your best to prepare either way.
Decide How You Want to Apply
In the past, there was really only one option here: submit a paper application. These days, we have a lot more choices. You can decide to fill out an application online, in-person at the institution of your choice, or even on your phone. It will be up to you to pick what you feel most comfortable with but check with your lender to see what methods are available.
Fill Out and Submit the Application
Obviously, the next step will be filling out your application, but that shouldn’t be too challenging so long as you make sure to gather your personal information prior. The other thing to keep in mind is that applications aren’t exactly legally binding – even if you’re approved, you don’t have to accept the offer.
When you look at kredittkortinfo, you may notice that there is a small negative impact on your credit score with each application you submit. This is temporary and will fade after a few years. Still, it’s best not to submit too many at one time.
Types of Cards
Now that we’ve explored some of the ways that you can apply for them, let’s delve into the different types that you might end up interested in. There are a lot, of course, but thankfully they’re easy enough to differentiate and keep straight. Remember, this list isn’t comprehensive.
Cards with a High Credit Limit
We’ll start with the type that we highlighted in the title, since this is probably what you’re most curious about at this point. The main thing here is that these cards allow their holders to spend a lot of money, which can make them somewhat risky. Of course, the intent with them is to allow us to make bigger purchases for a lower interest rate.
This doesn’t always happen as intended, but that’s their primary purpose at least. They can also be useful for company credit cards or business cards, both of which might require you to take on a high upper credit limit to even acquire. These are an option for a lot of different consumers but may not be the right fit depending on your needs.
Rewards Cards
The appeal of these is, of course, that they provide some sort of reward or incentive for spending with the card in the first place. This may include cashback options, gift card redemptions, discounts, or travel points. Some of the most popular rewards cards are for frequent fliers and airline travelers.
Before you decide to get a rewards card, do your best to pick one that will actually give you some benefits. For instance, don’t get one that will reward you with travel points if you don’t actually travel much. Chances are, you’ll be able to find one that does cater to your spending habits.
Balance Transfer Cards
If you already have a few other credit cards that you have a high balance on, and they charge a lot of interest, then this may be one that you’re interested in. Their primary purpose is to allow you to transfer balances from other high-interest credit cards to a new card with a lower or zero introductory interest rate. As you can guess, this can help consolidate debt and save on interest charges.
Business Credit Cards
These cards are designed for small businesses and entrepreneurs, although some larger corporations utilize them as well. They often come with features like expense tracking, employee spending limits, and rewards tailored to business needs, all of which can be a big help – especially if you’re just getting started.
Are Credit Cards Worth it?
The final question we should ask ourselves is this: is it going to be worthwhile to apply for and have a credit card? Are the inherent risks worth the potential rewards? It’s a deeply personal question, and one we can’t necessarily answer for you.
Rather, we can help you to weigh the potential pros and cons of having one. For most of us out there, it’s pretty important to get a credit card at some point or another, at least to help build our credit scores. You see, the more that you pay off the balance on time, the better it can look for your credit score.
In that sense, you can see why they’re worth it for a lot of people. Unfortunately, there are some risks here too. If you are someone who spends and shops compulsively, then having a credit card may not be a great idea. At least, you probably won’t want to get one with a high credit limit if you know you won’t be able to pay it back.
Overall, it’s for each of us to decide which type of card is best for us, and if we even want to get one at all. While it can be a hard decision, you’ll be glad you made it either way!
