Credit cards are a lifeline for many. They help pay for emergency needs when cash isn’t available. However, not everyone can purchase a credit card.
What Is A Credit Card?
The experts at SoFi say a credit card is a payment method in which a customer receives a line of credit instead of cash deposits. When you use a credit card, you generate a balance on your card.
You must pay off the amount due each month. The card accrues interest if you have a remaining balance, your payment is late, or you don’t make any payment. Delinquency causes the addition of more fees to the balance.
How Do You Get A Credit Card?
The way to obtain a credit card depends on the company and the line of credit you request. Firms look at several pieces of information:
- Legal Name
- Birthdate
- Address
- Annual Income
- Social Security Number
The credit card company requires the last item to perform a credit check, which is an examination of your other accounts and the amount owed.
What Age Can You Get A Credit Card?
A question that continually comes up is, “At what age can I get a credit card?” You must be over the age of 18 to apply. However, you might face additional requirements if you are between 18 and 20 years old.
The most important is the proof of ability to pay what you owe. The stricter requirement is from the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. The law intended to protect young adults from taking on more debt than they could afford.
Those younger than 18 can also get a credit card. However, these individuals can’t apply themselves. They require a co-signer, usually someone 21 or over, who shows proof of income to pay the negligent debt.
What To Look For In Your First Credit Card
If you are eligible to apply for a credit card, there are a few things to review before you sign anything. The first is the Annual Percentage Rate (APR) — the fee you pay to borrow money. Determined by the Federal Reserve, the amount is a combination of interest plus costs like lender fees. APRs change when the U.S. government makes changes to the base interest rate.
New credit card holders tend to pay higher APRs than established customers. While the latter has a longer credit record, those between 18 and 20 don’t have as much to show to the card company. The APR can be reduced if cardholders pay their balance on time.
Another thing to review is your credit limit. Again, a new cardholder won’t receive an excessive amount to use because they’re an unknown entity. However, if customers regularly pay their balance, the card company could raise their limit.
In the end, new customers should be careful when they sign up, no matter how old they are. The more you know about credit card fees, the better prepared you are to make regular payments.
