How Are Credit Cards Issued.

Credit cards are not automatically given out. You may have gotten credit card offers in the mail but you as the consumer has to apply for the credit card before one is issued to you. After you fill out the credit card application either through snail mail or online, the issuing credit card company will review your file and check your credit rating. The higher the credit rating you have, the higher the limit will be on your card. If you have a low credit rating or no credit at all, the credit card issuer may deny your application or offer you a secured or pre-paid credit card until you credit score rises.

If you do have a good enough credit score the card will come in the mail. Don’t run out and start using it right away because you have to contact the credit card issuer and be issued or register a pin number for your credit card. A pin number is a four to five digit number in which you use the card as a debit card or to withdraw cash from an ATM. The pin number is a safety feature that keeps someone else from using the card if it is stolen or lost. Create your pin number with numbers that you will remember, but avoid using birthdates or other common numbers in which another person can guess and use.

You are now set to use your credit card, but here is where you have to be careful. Look at the interest rate on the credit card. This is sometimes very high, especially if this is your first credit card. The interest can really hurt you if you spend money unwisely. For example, if you get a credit card with a 500.00 limit and a 18% interest and you spend the limit the first month, not only will you have to pay back the limit but you will also have to pay back an extra 90.00 in interest. Your monthly payment will pay back all or some of that interest and only a little amount on your balance. That 500.00 could take you months to pay back at that rate.

You really need to look at your finances and what you have and do not have available. Think of the reason that you applied for that credit card. Is it in case of emergencies or to take the family on a trip or vacation? No matter how you use the card, remember that it is wise to pay off the card as soon as possible. The faster you pay it off, the less interest you pay and you will have the credit card ready for another purchase, vacation, or emergency.

Keep your new credit card in a safe place. It is best not to carry it with you if you have low will power or you are an impulse buyer. It is too easy to slide the card and not have the pain of handling over cash. Think ahead of how and when you will use the card. It will save you time and give you more financial freedom in the future.