Credit cards are among the most crucial payment cards to buy goods and services online and in physical stores. They allow you to borrow finances from your issuer and refund it at the end of the month or as per the agreements with the card-issuing institution. But can I use a credit card at an ATM apart from using it to buy goods? We shall find out about that later.
I suppose you know that we have payment cards called debit cards that you can get from financial companies such as banks, credit unions, or mobile wallets. The cards allow you to withdraw money at ATMs using your PIN. You only need to insert your card into the machine and enter your PIN, then select the amount of money you want to withdraw, and you are good to go. Once you pick your money, the card pops out for you to pick it.
You can apply for credit cards online or at a physical place. When you apply for the cards online, you usually get them at your physical address. You can also apply for the card at a branch depending on your personal preferences. You should be at least 18 years old to apply for the card. Most card issuers will always require you to upload your identification document and your Social security Number. You may also need to create a checking account for the card.
How to get a credit card?
It is easy to get a credit card as long as you are at least 18 years old. As mentioned above, one can apply online by visiting the concerned website and submitting their application by providing the necessary details. These include your names, Zip code, state, city, email address, and phone number.
The first thing one should do before getting a debit card is to survey the available credit cards and their features to get the best card for their use. When you apply for a credit card online, the card’s issuer sends it to your address for a pick-up. You should activate it as soon as you receive it to start using it.
If you must apply at a branch, you should travel to the said branch with the necessary documents and start your application. You may have to wait for a few days to receive the card at your place or get it the same day. It all depends on your card issuer.
What should you consider when applying for a credit card?
When applying for a credit card, you should consider various factors to get the best card ever. They include the following.
i) Credit limit
Credit cards come with a borrowing limit whereby you can only borrow a certain amount of money. After that, you cannot borrow again until you repay your debt. Usually, unsecured credit cards dictate your limit. However, you can determine your borrowing limit depending on the deposit amount.
ii) Interest rates
Credit card issuers generate income by charging interest rates to credit card borrowers. Every issuer charges their fees for the same scores or deposit amount. It is, therefore, crucial to check the issuer who charges lower interest rates. That way, you can save a lot of money.
iii) Fees
There are various fees that credit card issuers charge to make money from the card borrowers. These include transaction costs, foreign transaction fees, annual fees, late payment fees, etc. Some issuers charge low fees, and you should be keen to get an issuer who charges lower fees.
What are the various kinds of credit cards?
There are two categories of credit cards that you can get today. They include secured and unsecured ones. The two cards differ in that the secured ones require a security deposit while the unsecured ones require credit scores. Usually, people get secured credit cards for rebuilding credit from scratch in most cases.
After depositing money for your secured credit card, the card issuer locks the deposit amount until you qualify for an unsecured credit card. The deposit is for repaying your debt if you default. Sometimes you may not be able to pay your borrowed amount due to some challenges, where your deposit comes in to settle your dues.
You must have a borrowing history for unsecured credit cards to get them. That means you should have taken a loan at one time or the other. You can get an unsecured credit card for bad, fair, good, and excellent credit scores. Bad credit cards have low borrowing limits and attract high-interest rates due to the cards’ high-security risks.
How do you use a credit card?
There are various ways you can use a credit card. They include the following.
1) Build your credit
All credit card types help you build your scores since they report your card usage to the credit bureaus. Therefore, if you use your credit card well, you will likely see a change in your overall scores. However, the best credit cards for building scores are the unsecured ones. That is because they can even help you build your scores from scratch. However, suppose you have no deposit and need a credit card. In that case, you may get instant credit card approval for bad credit with no deposit from various financial companies.
2) Buy goods and services
A credit card allows one to buy goods and services at various places online and at physical stores. When purchasing online, you have to enter your card details when checking out various websites. You should provide your card number, the expiry dates, and the CVV, and the service provider will deduct the right amounts. You do not have to do much when purchasing goods and services at the physical stores. Once you tap or swipe on the card reader machine, you can pay instantly.
2) Pay bills
You can pay bills such as water, electricity, internet, and using your credit card. You can even create an automatic repayment of the bill from your account if you pay a fixed amount. You will not need to remember the days to repay your debt.
Can I use a credit card at an ATM?
Yes, you can use a credit card at an ATM to withdraw money. Just like debit cards, credit cards come with a PIN that you should enter on the screen once you insert the card into the machine. After inserting the PIN, you get permission to withdraw money from the ATM.
Getting money out of your credit card at an ATM is costly due to the fees that accompany the activity. Remember that it is a cash advance and attracts a lot of fees from your card issuer. Interestingly, a cash advance does not affect your credit scores. However, if possible, you should avoid issues of cash advances like a plague to save money.
How else can you get money out of your credit card?
Withdrawing money at an ATM is not the only way to get finances from your credit card. There are other ways which include the following.
1) Withdrawing money over the counter
Credit cards allow you to withdraw money over the counter of any bank that supports the card issuer. You need to walk with your credit card and an identification document to get started. The cashiers will then withdraw the amount you want from the card. You also need to note that withdrawing money over the counter is also a cash advance, and there must be fees.
2) Use a convenience check
A convenience check is also another avenue that you can use to withdraw money from your card account. You only need to request the check from your card issuer. Once you get it, you can cash it out at any financial institution that accepts check deposits. A convenience check works like any other check.
3) Pay bills
When you pay bills with your card, you spare the amount of money you could have used to pay your service provider. Therefore, the process is termed as one of the ways you can get money out of your card.
How do I build credit scores with a credit card?
I have mentioned that any credit card can allow you to grow your scores. However, that is possible if you do certain activities with the card. You can grow your scores in the following ways.
a) Pay your debts on time
The best way to grow your credit card scores is to pay your debts on time. Late payments affect your overall scoring in a bad way. Suppose you look at the various pieces of information used to calculate your scores. In that case, the payment history occupies 35% of your overall scoring.
b) Mix credit
You can mix various credits, such as personal loans, credit cards, auto loans, etc., to have as many financial companies reporting to the bureaus as possible.
c) Keep your card active.
Dormant credit cards lower scores to a greater extent. If you keep your card active, you will be able to enjoy a fantastic boost in your scores.
Bottom line
Credit cards are essential payment cards that allow you to borrow finances from your card issuer. You can get a credit card online or at a physical branch. That can be a secured or unsecured credit card. Banks, credit unions, and mobile wallets are the institutions that issue credit cards. You must be 18 years old to apply for a credit card.
