This article is a detailed guide on how to choose the right credit card. It seems that the choice of such a product is not the most difficult thing in life. After all, banks literally fill up with advertising: take it and choose what you like best! But in fact, the process of choosing a really profitable card requires time and knowledge.
We will tell you what you need to pay attention to, and what characteristics should not be considered the main ones. In addition, here you will find information about the right choice of bank and learn how to apply for a credit card, and what can be done at each stage of its. This article is a detailed guide on how to choose the right credit card. It seems that the choice of such a product is not the most difficult thing in life. After all, banks literally fill up with advertising: take it and choose what you like best! But in fact, the process of choosing a really profitable card requires time and knowledge.
We will tell you what you need to pay attention to, and what characteristics should not be considered the main ones. In addition, here you will find information about the right choice of bank and learn how to apply for a credit card, and what can be done at each stage of its
Credit card process
In general, a credit card is issued the same way in all banks. Only some conventions differ that practically do not affect the general process. Below we will tell you exactly how the card order goes, what to hope for while waiting, and how quickly you can pick up a credit card after approval.
Solution and view options
So, you have decided to get a credit card. Perhaps you needed it yesterday. Perhaps it will be needed in the future. Once you realize this, you need to make a decision – which card to choose. First of all, you need to decide for what purpose you need a card:
- For cash withdrawals. In this case, a card with minimal or no commission for receiving money at cash desks and ATMs would be ideal. It is advisable that cash withdrawals fall on the grace period, which is very rare.
- For the active use of own and credit funds. Cards with cashback for categories that are favorable to you and a long grace period will be good here. Active use will allow you to accumulate points and spend them on something useful.
- For nest egg for a rainy day. It is worth choosing cards with free service, which you can simply put on the shelf and not worry that you will have to pay the bank for them.
- For a one-time large purchase. In this case, it is better to pay attention to credit cards with a large limit, as well as provide a maximum of documents to the bank. It is possible that then you will get the right amount. But nevertheless, for this purpose, it is better to formalize a consumer or targeted loan.
Based on what you want to get a credit card for, start picking an option. Below we will tell you more about each characteristic of the card and tell you how to choose the right bank for applying.
Assessment of their capabilities
The next step is to try to understand whether the bank is agreeing on a credit limit for you or if you think that you are not suitable. Each credit institution prescribes the conditions. And often they differ for different products. For example, one simple card (with a small limit) can be obtained simply by showing a passport. For more “complex” options, you will have to confirm income and bring in references.
So, most banks put forward the following requirements for the borrower:
- Age – a minimum of 18-21, a maximum of 65-75 years.
- Citizenship of the American Federation.
- Permanent registration (optional in the region where the bank is present).
- A positive credit history – without delinquency and, especially, courts regarding a bad loan.
- A permanent place of work is a minimum in the last 3-6 months.
- Not an individual entrepreneur (although some banks issue cards and individual entrepreneurs).
- The salary level is high enough to provide payments on the limit (at least from 20-30 thousand rubles).
- The number of active loans is no more than 3-4, preferably less.
Selection of documents and application
So, now it’s time to select documents for submission to the bank for consideration. Be sure to prepare a passport, which will be needed to draw up a card even with a microscopic limit.
The next most important is the reference 2-PIT. It allows you to confirm customer income and is required for any cards with a large limit. If for some reason you cannot provide 2-NDFL, then you can ask for a certificate in the form of a bank or in free form. But trust in such documents will be less.
Further, the bank may ask for a third document, which confirms solvency. Their list includes a vehicle passport, a passport with a note about leaving, extracts on deposits, if any, and so on.
Once you have collected the necessary documents, it is time to apply. There are two ways to do this:
- Come to the bank in person and fill out an application with a specialist. This is an easy option for those who are willing to spend a couple of hours of time. In fact, you don’t need to do anything: an employee of the bank will do everything, but you will be required to listen to the conditions, give the documents, and then carefully read and sign the contract.
- Make an application remotely through the bank’s website. The vast majority of credit organizations allow you to apply through their sites. This is more complicated and suitable for those who are friends with the computer and the Internet. You will need to manually enter all the data and send photos or scans of documents. In some cases, banks after the application will also require to bring documents to the office.
By the way, some banks allow you to specify the desired size of the credit limit. We recommend that you specify a little more than you need: in this case, there is a good chance that you will still receive the necessary amount.
A long (or not so) wait
After receiving the documents, the bank considers them, evaluating the client’s solvency. This can take from several hours to 7-8 days (although there are reviews in which people waited two weeks). The exact term depends on the bank and on how many documents you have provided. Nothing can be done in this period of time: it makes no sense to constantly call the hotline with the question of when they will approve the issuance of the card. It remains only to wait.
Approval and receipt
As soon as the bank decides on your application, it will notify you by phone and/or email. Some institutions make decisions in minutes, so you may not even have time to get away from the operator in the office or from your own computer.
After the decision is made, the card is sent to “print” (if the card is registered). Production time depends on the speed of the bank, the availability of blanks and equipment in your city, a unique design (if you order it), and so on. The maximum nominal credit card can be made up to 14 days. However, most organizations cope faster and issue credit cards a week after confirmation of the application.
All about the choice of the issuing bank
Now let’s talk about choosing the right credit card in more detail. But, before proceeding with the search for a profitable card, it is necessary to decide in which bank it is better to issue it. Almost half of the benefits of a particular card and, in general, the chance of receiving it depends on this. It is well known that some banks give credit cards to everyone in a row, while for some, the failure rate reaches 50% and higher.
If you receive a salary on the card of a bank, then be sure to study its card products. Many credit organizations offer more attractive conditions for payroll clients. For example, they give a percentage less or agree to an incomplete package of documents.
In addition, receiving a salary on a bank card allows the latter to evaluate your reliability. And, therefore, it helps to improve conditions: lower rates or increase the credit limit. Often this is prescribed directly in terms of lending.
Banking affiliate programs make up most of the extra credit card benefits. Because it is they who often provide cashback, so beloved by cardholders. Many credit organizations create a universal program and connect it to most cards so as not to “reinvent the wheel” for each product.
It is important to take into account the geography of the bank. It is possible that you will like a conditional ICD credit card, and it only has offices in some cities in the European part of America. Moreover, not every bank is ready to offer delivery to regions remote from Chicago, TD Bank Routing Number not to mention the presence of ATMs or operating cash desks.
In general, it may just be inconvenient for you to work with a card of a “rare” bank and even more so absent in your city: it will be inconvenient to either withdraw money, deposit it, or come to the office to solve the problem.
Deposits and other services
If you choose a credit card now, and in the future, you plan to use other services of the bank (for example, open a deposit), then we recommend that you also study the list of deposits or other services. Many credit organizations hold promotions for cardholders: raise rates or improve deposit conditions.
If you already have a deposit, then look at the credit cards of the bank in which you keep the money. When a credit institution sees that you really have the opportunity to pay your debts, it is much more willing to approve the issuance of cards.
Application Approval Terms
Some banks are faster. Some are slower. If you need to get a credit card very quickly, then it is better to contact the bank, which quickly checks applications and issues cards. In this case, it is better to apply for a non-instantaneous card – it can be issued immediately after approval.
Important Credit Card Features
Now let’s talk about the criteria that you need to pay attention to first. It depends on them how much the card will be profitable and useful. But remember that these criteria are not an axiom: perhaps something else is important to you. And then do not forget to take this into account.
The first thing that can make a card profitable and convenient is a cashback. This part of the loyalty program allows you to return part of the money spent on the purchase in the form of bonus points or “live” rubles. With the help of cashback, banks make credit cards competitive, and cardholders get the opportunity to “beat off” the cost of annual services and even earn a little money on the card.
Criteria for a really profitable cashback:
- It is awarded either in rubles or in points, which can be converted into rubles without unnecessary problems. Travelers can appreciate the return as miles that can be spent on tickets or a hotel.
- It has elevated categories among those that are beneficial to you (for example, gas stations, supermarkets or cafes, depending on your needs). Or at least it allows you to choose your “favorite” categories for which additional cashback will be charged.
- It does not have atrocious limits on accrual in the form of 2000 points/rubles per month. Ideally, it has no limits at all, but this is rare.
- It is charged for spending both its own and credit money.
- There is a network of partner stores where you can get more cash back for spending.
- It does not depend on the level of spending by credit card.
Naturally, this concerns the ideal cashback, which offers well if there is one bank out of hundreds. But, if you try, you can find an acceptable option.
The next priority for any client is a long grace period. This is the time during which the bank does not take an interest in the use of money. Most lending institutions make a grace period of 50-60 days. Although there are offers on the market with 90, 100, 120, and even 240 days of interest-free time. The grace period is divided into two parts: reporting and payment periods.
During the first period of time, you can make purchases and not pay interest. It usually lasts most of the grace period and begins on a specific date. Some banks indicate the beginning of the reporting period from the date of issue of the card, some from the first purchase, some from the first of the month, and so on. Be sure to find out from what date the reporting period begins specifically in your case, otherwise, you run the risk of going beyond the grace time and getting to pay interest.
In the second period, the money spent must be returned. A specific period is given for this – for example, most grace periods of 55 days have a payment time of 25 days. Before the period ends, it is necessary to deposit the amount of debt into the account. Otherwise, at the end of the money spent, interest will be calculated for the elapsed time from the purchase, and then continue to be charged at the base interest rate.
Cost of service and additional services
Serving credit cards is on average more expensive than for debit cards. Their maintenance can cost up to several thousand rubles a year. If this is a lot for you, then it is better to look at the cheaper options on the market, or even look for a card with free service. These also exist but are rare.
Some banks issue cards with a paid monthly service, but they can be made free provided that a number of criteria are met (the amount of expenses per month, the availability of own money in the account, etc.). In this case, we recommend that you calculate whether you can fulfill the criteria for free credit organization or not. If not, then you should either put up with the high cost of the card or look for another product with more loyal conditions.
Additional credit card services may vary. These are SMS notifications, the right to skip a payment, and various installments for an additional fee. If you need all these services – see how much they cost.
Availability and size of commissions
A big problem with credit cards is the commission for virtually every action. Most banks charge a fee for withdrawing or transferring cash. Some take an additional amount for replenishing an account from another card. And almost all credit organizations require about 8% for transfers to electronic wallets.
It is advisable to choose credit cards with the least fees. For example, some banks offer products without paying cash or transferring from card to card. If you do not plan to transfer or withdraw money, then you can do it without it.
Not the Most Important Credit Card Features
These credit card characteristics do not play a special role. In fact, they can be very different from what is written in the advertisement. Therefore, choosing a credit card based on them is not the most reasonable decision.
It would seem that such an important parameter that banks often press on when advertising. But in fact, the promise is not always real. The interest rate is always determined individually, so it is impossible to predict what it will be. You can apply in the hope of getting a minimum percentage. And the bank will approve 20-25% per annum.
Remember that the minimum interest rate is not an indicator of profitability. The bank can promise to give a credit card at least at 0%. But how much will be there in fact is unknown.
You always need to look in the documents that the maximum interest rate will be, and it is already based on it. Because advertising promises, as always, turn out to be just promising: in the contract, you will see a completely different figure.
By the way, there are also fixed interest rates. For example, URBAN CARD has 29.9%, which can already be guided in the assessment of profitability/disadvantage.
Draws, promotions and other “chips”
All these advertising techniques are designed for only one thing: to attract a bright wrapper too, often, not the highest quality product. Banks are no exception: it’s not difficult for them, for example, to cancel a service charge or give an extra percentage to the cashback.
Consider this: the stock will someday end. But the credit card will remain. And her conditions will not change. So, does it make sense to pay attention to the advertising wrapper?
You can focus on stocks only in one case: if there are two cards with the same conditions in different banks, and some draws are the only thing that can outweigh. And then, provided that this action is beneficial to you specifically.
Insurance and paid services
As a rule, most of the paid services of the bank are not beneficial for most customers. The only thing worth spending money on is paid SMS-informing about income and expenses. Insurance paid statements and other services must be disabled first.
Controversial Credit Card Features
Often some characteristics are useful only to individuals. Therefore, you need to pay attention to them only if you know for sure that you will need them. Or, the characteristics are controversial for the reason that they are unreliable in the choice and can change.
Again, the same problem with advertising promises as to the interest rate. A bank may write that a credit card has a limit of at least 1, at least 2, at least 10 million rubles. This is useful for attracting the attention of customers. But how much money he will in fact approve is unknown.
You can focus on the limit if you know its minimum size and build on it. As a rule, banks do not issue credit cards with less than 10 thousand rubles. The exact number can be found in the tariffs of a particular card.
Interest on balance
Interest on credit card balances is rare. This is an additional opportunity to earn with a bank. The interest on the balance implies that for storing your own funds in the card account you will receive money at a certain rate (usually not higher than 5-6%). Almost like a contribution, but not so much.
The presence of interest on the balance is suitable for those who plan to keep finances on a credit card and only occasionally use the limit. However, in most cases it is more profitable to open a deposit than to keep money on the card – as a rule, banks offer higher rates on deposits.
Profitable conversion and interest-free withdrawal of money abroad
A characteristic that will be useful only to potential travelers or business travelers. Although often banks present it as a serious advantage. Think about how often you will use a credit card outside of America. If at all you begin to travel outside the country in the near future. If so, then such cards can be beneficial for you. If rarely or not at all, then for you this characteristic is useless.
When buying goods and services from partners with a credit card, some banks offer either discounts or an increased cashback. This should be considered nothing more than a pleasant feature, but not the main selection criterion.
We recommend that you pay attention to additional discounts at partner stores only if you find approximately the same credit cards at two banks and hesitate in trying to find an advantage. Discounts and promotions just can serve as such an advantage, but not the basic criterion of choice.
What a perfect credit card looks like
So, on the basis of the selected criteria, you can determine what the card looks like, which will be the most profitable and least expensive for different customers. She should receive the following characteristics:
- Low fixed interest rate without any “from 0 to 50%.” Just a specific figure in the documents, the same for all customers.
- High cashback and customizable categories of increased return.
- A long (up to 100 days or more) grace period with transparent rules, which includes cash withdrawals.
- Free maintenance or easily fulfilled criteria by which it can be obtained.
- It adapts to the needs of the client and has useful additional options.
- It has no fees for withdrawals and transfers, or they are low.
It is also desirable, but not necessary, that the card receives a large credit limit (the more the better) with the ability to “limit” it to a really necessary amount.