Credit Cards Applications 101 for Everyone

Credit cards applications are being processed in large volumes every day worldwide since there are numerous types of credit cards that consumers can avail of.

But, before you apply for a credit card, it is best that you learn first the basics about credit cards and applying for it.

Categories for Credit Cards Applications

Credit Cards Applications - Understanding the types of Credit CardsCredit cards are categorized in two major category; the secured and unsecured credit cards. What is the difference between the two types of cards? This is critical for your credit cards applications.

Unsecured credit cards are traditional cards that require credit ratings from good to excellent for approval. Your credit limit is determined by your credit rating. There is no application fee for these cards and usually the annual fee for the first year is waived.

On the other hand, secured credit cards require a deposit in your savings account to serve as collateral. Your credit limit is also determined by the amount of your deposit in your savings account. Usually, these cards are for those with bad or poor credit that need credit rebuilding.

Credit card types under these two major categories are discussed at the other pages of this site. Please feel free to use our search box by clicking Search at the homepage for more information.

Understanding Interests and Fees for Credit Cards Applications

Credit Cards Applications - Learning about the different interestsKnowing the type of credit card you need for your credit cards applications is not the only crucial factor that you should learn. It is also important that you understand about the different interest terms and fees related with the use of your credit card.

One of the most important terms that you should understand in relation with credit cards is APR, which stands for annual percentage rate. It is the interest that you must pay the credit card issuer.

When and how APR is charged? It will depend on the type of APR that is used for your credit account.

Generally, APR is charged to your account if you fail to pay your credit balance on or before the grace period expires. A grace period is provided to enable you to settle your balance in full.

The annual percentage rate is further subdivided into three main classifications that include:

  • Purchases APR is the interest you pay based on the amount of the balance you left on one billing period that is carried to the next period.
  • Balance Transfer APR is the interest charged when you transfer the balance from one of your credit cards to another card.
  • Cash Advance APR is the interest you pay when you take out cash advance from your credit card account.

All these APRs are charged to your next month’s account balance in addition to whatever balance that you will accrue next month.

How about penalties? Yes, there is Penalty APR. These are the increase in your APR caused by various reasons that include going beyond your credit limit, paying your balance late, and returned payments.

You will be notified at least forty five days in advance before an increase in your APR that serves as penalty takes effect.

How can you avoid paying APR? Pay off your balances in full before each billing cycle ends and you will not pay any APR.

How can you afford to do this? Purchase on what you can afford to pay when your bill comes due will enable you to pay your balance in full each month.

So, before you decide to submit your credit cards applications, make sure you understood the above information in order for you to enjoy your credit cards.


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