CREDIT CARDS
A credit card is a bank card which is linked to a credit line or credit account. Every time you use the credit card you spend the banks money. It is a loan!
Every card is valid and can be used for a limited time only. This can range from a few months for temporary cards up to a few years for the rest. Usually the validity of a card is 3-5 years, and the expiration date is printed on the card. Prior to the expiration date the card must be renewed, which means replaced by a new one with a new number.
Obtaining a credit card
Credit cards can be used as an excellent tool to build up a good credit if you don't have one, or to improve the existing one, if backed up by enough financial knowledge and self discipline. However obtaining a credit card without any existing credit history might be quite a challenging task. I know because I suffered through every step of it, and it took me long weeks until I researched and found out the easiest way to do it.
You can do it in two ways:
If you have a good friend in America with a good credit history who trusts you enough, it can help you to get an unsecured credit card. That friend or relative of yours probably already has credit cards. He can ask for a new credit card in your name linked to his account. You can start using your new credit card to build up credit.
Buy small value items on this credit card and pay it off fully at the end of the month. Why? In order not to limit too much your friend's credit limit. Let's say if your friend has a credit limit of $5000. Now with two credit cards both of you are spending against your friend's $5000 credit limit. The more you spend the less he can spend from his credit card and vice versa. But don't forget he made you the favor, so don't make him feel inconvenienced about this joint-credit-venture.
You can obtain a secured credit card from the bank where your checking account is open. Many banks offer secured credit cards, and the reason why I am recommending your existing bank is because with them already you have a history, a relationship established.
What is a secured credit card? It is a special credit card "secured" by a savings account. Don't forget you are trying to build up a credit history. The bank doesn't know you yet, and this is why it requests a special guarantee that no matter what, you are able to pay back your credit card charges. For this you deposit a certain amount of money in a newly created savings account. You won't be able to access this money for a year, or until you decide to cancel your secured credit card.
So let's say you want a credit card with a $1000 credit limit. You will need to deposit $1000 in a savings account. Your credit card limit will be equal to your savings account limit. If you want to raise your credit limit later, all you have to do is to deposit more money into your savings account, and your limit automatically will be raised.
Secured credit card transactions are reported to the major credit bureaus like other non-secured credit cards, so it helps you to build up a credit history. Just be sure you don't overspend yourself and I recommend you pay back, as much as possible, your credit card debt; if possible, clear the whole amount monthly. It will help you to create good habits.
After a year the bank will switch your secured credit card to an unsecured one, and give you back your money.
A credit card is a bank card which is linked to a credit line or credit account. Every time you use the credit card you spend the banks money. It is a loan!
Every card is valid and can be used for a limited time only. This can range from a few months for temporary cards up to a few years for the rest. Usually the validity of a card is 3-5 years, and the expiration date is printed on the card. Prior to the expiration date the card must be renewed, which means replaced by a new one with a new number.
Obtaining a credit card
Credit cards can be used as an excellent tool to build up a good credit if you don't have one, or to improve the existing one, if backed up by enough financial knowledge and self discipline. However obtaining a credit card without any existing credit history might be quite a challenging task. I know because I suffered through every step of it, and it took me long weeks until I researched and found out the easiest way to do it.
You can do it in two ways:
If you have a good friend in America with a good credit history who trusts you enough, it can help you to get an unsecured credit card. That friend or relative of yours probably already has credit cards. He can ask for a new credit card in your name linked to his account. You can start using your new credit card to build up credit.
Buy small value items on this credit card and pay it off fully at the end of the month. Why? In order not to limit too much your friend's credit limit. Let's say if your friend has a credit limit of $5000. Now with two credit cards both of you are spending against your friend's $5000 credit limit. The more you spend the less he can spend from his credit card and vice versa. But don't forget he made you the favor, so don't make him feel inconvenienced about this joint-credit-venture.
You can obtain a secured credit card from the bank where your checking account is open. Many banks offer secured credit cards, and the reason why I am recommending your existing bank is because with them already you have a history, a relationship established.
What is a secured credit card? It is a special credit card "secured" by a savings account. Don't forget you are trying to build up a credit history. The bank doesn't know you yet, and this is why it requests a special guarantee that no matter what, you are able to pay back your credit card charges. For this you deposit a certain amount of money in a newly created savings account. You won't be able to access this money for a year, or until you decide to cancel your secured credit card.
So let's say you want a credit card with a $1000 credit limit. You will need to deposit $1000 in a savings account. Your credit card limit will be equal to your savings account limit. If you want to raise your credit limit later, all you have to do is to deposit more money into your savings account, and your limit automatically will be raised.
Secured credit card transactions are reported to the major credit bureaus like other non-secured credit cards, so it helps you to build up a credit history. Just be sure you don't overspend yourself and I recommend you pay back, as much as possible, your credit card debt; if possible, clear the whole amount monthly. It will help you to create good habits.
After a year the bank will switch your secured credit card to an unsecured one, and give you back your money.
