Credit cards can be a wonderful way to get that early introduction to a financial relationship with a credit lender that can ultimately bring you many forms of financial freedom. When applying for a credit card for the first time, you will receive several documents such as:
- Application for a credit card
- Credit card application form
- Information on payment methods for credit cards
- Amount limit on credit cards
- Charges if the credit card is canceled
- Your credit score and how the credit provider will check it
If you’ve just started to become financially independent, you should make sure you are on good terms with your credit provider. The day you receive your credit card application form, follow these simple steps to successfully apply for your first credit card:
- Download the credit card application form. You may download the application form and other relevant information here. We recommend you only access the forms through the link shown here to keep yourself safe. Create an account at your financial provider (including but not limited to your broker, bank, and other financial services). At this stage, you should have verified that you have an existing bank account linked to your credit provider.
- Enter your details in the credit card application form (name, date of birth, address, email address, mobile number, and so forth). Upload your passport and other identification documents (this helps you establish a credit history while they are on your credit report).
- After you’ve filled out the form, it’s time for the credit provider to verify the details and approve the application. Once you have verified your details, you will be issued a credit card. Once you receive the credit card, ensure you open it as soon as possible. This ensures that you don’t run into difficulty if the card gets canceled.
- In many cases, you will receive your credit card with no questions asked after you provide proof that you have an existing bank account linked to your credit provider. The term “unsecured credit” is usually used for credit cards. An unsecured credit card is a credit card without any collateral security like a guarantor to ensure that you can pay off your credit card bill in full each month. However, they are still safe to use.
- It is imperative to keep a low credit card balance on your credit card, as it is unlikely that you’ll pay off the full balance each month. Although it’s possible to have a higher credit card balance, you can’t carry it for the entire year without incurring interest, which brings us to the next point.
- Carrying a high credit card balance on your credit card means you are likely to incur interest. Usually, interest charges start from the date of opening your credit card, and will only get larger as you carry on charging your balance. Therefore, we strongly advise that you avoid a high balance on your credit card, as it has the potential to create huge problems for you in the long run. For this reason, we recommend that you use the 15 percent rule to keep a low credit card balance.
The following information is required to open the credit card and ensure the card works for you:
- A recent full form of identification, such as your driving license, ID card, passport, national identity card, bank card, and so forth.
- Your full name, date of birth, address, email address, and mobile phone number.
- Your ID card number.
- Your social security numbers.
The credit provider will also ask you for a utility bill or bank statement from your previous month. This will be used to assess whether you can pay back the credit in full, or whether you have good credit. If you don’t have your utility bills or bank statements, you should provide them at the time of applying.
Credit Card Terms & Conditions
Credit cards are typically flexible. You can pay back the credit card, at least up to a set amount in full, and/or with no interest. These terms can vary significantly from one credit card provider to another, so you should read the terms carefully before you apply for a credit card. The best policy is to read up on the terms and conditions of credit card companies before applying.
- As a general rule, you should apply for a credit card with a low APR (interest rate) so that you can pay it off in full, which makes it affordable. There are also different credit card interest rates so it’s important to keep in mind the APR before applying for a credit card.
- The credit card industry generally charges a fixed interest rate. As a general rule, however, credit card companies generally waive the highest rate, if you pay back your credit card in full in the first 30 days. If you pay only one monthly payment and miss two payments in that period, you may see a higher rate.
- Credit card companies also charge a monthly fee. If you make the minimum payment on time, you will typically avoid paying a monthly fee. This fee can be significant if you fail to pay your credit card bills on time, as some companies charge a fee to the customer each month that they don’t make their payments.
- The credit card terms and conditions also state what happens if you miss one or more payments. If you default on your payment or don’t make your payment in full, the credit card company can charge a late payment fee of anywhere from 5 to 15 percent of the outstanding amount, depending on the credit card provider. You may also be charged a penalty APR, which is charged when your card issuer believes you are in financial difficulty.
- You can also incur costs in case your credit card gets lost or stolen. You are required to notify the credit card provider immediately of any loss, which could result in a balance transfer fee if the new company doesn’t waive it. If you don’t notify the credit card company immediately, then the interest charged for late payment could be more expensive.
- Another cost you might incur is a monthly fee, which could be as much as $10 per month, to cover the company’s processing costs. This charge will apply if you have a card in a prepaid credit account, which is often a result of someone who has poor credit applying for a credit card to build up their credit score.
Review Your Credit Report
As the credit provider prepares your credit card application for you, you may start to receive an unexpected card from them. The card that they send is from their collection unit. If you receive more than one card in your credit report, you will need to request them to pull the credit report for you and then review the credit report. If you discover any items on the credit report, it’s time for you to take action and rectify it.
The credit provider is legally obligated to provide you with a copy of your credit report for free once a year. They will provide this report via mail or over the phone (but it’s best to request it over the phone). The credit provider will also provide you with a copy of your credit report if you request it in writing. You need to take the time to review your credit report once every year. You can review it once every 3 months if you prefer.
Enroll in a Debt Management Plan
A debt management plan (DMP) is a legal requirement in South Africa to qualify for a credit card. This should be noted as not everyone will qualify for a credit card. To qualify for a credit card, you will need to meet pre-established criteria that your credit provider will ask you to meet. Your credit limit and repayment terms will be based on your debt management plan requirements. However, you should not be wasting your money without having a debt management plan in place. The current DMP in South Africa requires you to have a debt of at least R250,000 or a debt that you can settle within 3 months.
So, if you’re in debt and know you cannot pay your creditors back in the time given, you should discuss your situation with your credit provider and consider a DMP. Doing this will help you reduce your debt to qualify for a credit card. A DMP will help you manage your debt and prevent you from wasting your money and credit. The DMP will be much cheaper than other debt management plans. But remember to contact your credit provider to discuss your debt management plan if you’re not in one already.
Pay All Your Bills on Time
If you can’t afford to pay your credit card bills in full every month, you should take immediate steps to rectify the situation. To avoid delays in getting your payment, you should contact your credit provider and have them make an exception to the minimum payment date.
If you have payment protection insurance with your credit provider, it will help to reduce the interest rate that they are charging you. However, if you cannot afford to make your full payment each month, then it’s important for you to at least pay what you can afford to make each month. You should contact your credit provider to discuss the details and to see if they can assist you.
Why People are Addicted to Use Credit Cards?
Here are some of the reasons why credit card owners are so addicted to these small pieces of plastic.
Personal Financial Security
Credit card owners are considered to be the smart ones as it gives them great personal financial security. They are in control of their money. They have the option to pay the bills whenever they want to without any payment penalties.
Ease of Access
What is the use of having millions of credit cards if you can’t access them whenever you want? Not all cards are available in every country so if you want to get a certain one, you will have to have to travel to another country. This is the issue with most credit cards so that is why credit card owners are stuck with just a few. They have the option to pay the bill whenever they want without any payment penalties.
Getting a credit card is a great way to finance your luxury lifestyle. You can shop without paying much for luxury items. You can afford to treat yourself to a good expensive watch or new sunglasses.
A credit card is an instant cash source for emergencies. You can use it to pay your bills when you run into financial trouble. You can easily replace the funds whenever you need them.
You get paid back if you pay back your credit card bills on time and in full. You get a customer loyalty bonus when you repay your bills on time. It shows that you are a responsible borrower.
Credit card owners can get buy one get one coupon when they make purchases. This is the most loved thing about credit cards because you can use them to buy two expensive items for the price of one.
Credit card owners get an interest-free period whenever they use their credit cards. This makes it easier to budget for your financial needs and you don’t pay any interest on your money.
You can do whatever you want with your credit card without it affecting your financial situation. It gives you the power to make big purchases without the fear of debt.
Wrapping – Up!
New credit cardholders can choose from several flexible payment types for their credit cards. For instance, prepaid cards are an excellent way to control your spending, while cashback cards offer you ways to earn money on your spending. Remember, you should always keep in mind that the credit card will be yours, so you must be responsible when using it. Applying for a credit card for the first time is a chance to form a credit history, and is something you should take very seriously.