Credit cards have become one of the most fundamental parts of American life. We use them every single day, performing millions and millions of transactions across the country (and all over the world when we go traveling). Credit cards come in many, many different forms, offering great interest rates and rates so high that they should only be used in cases of emergencies. When we use them, and stay on top of our payments, month after month, year after year, we are building our credit histories, and a solid credit history is something everyone should be striving for. If you want to get a credit card, but aren’t sure how to go about doing it, read on to learn how.

Applying for a credit card is pretty straightforward. The first thing you want to do is research the various credit card offers out there, and pick the one you like best. There are cards that are student-friendly, for example, or that offer significant rewards, rebates, and incentives for people who travel a lot. Once you’ve made your decision, verify what they need from you, such as a driver’s license, or social security number. Then, if you’re applying online, fill out the forms as instructed. If you’re doing it by hand, fill out the application. You can also apply by phone.

Credit card companies will then review your records and then determine your credit rating. If it’s excellent, you will probably get the credit card. If it’s not, you could be denied. Applying for a credit card with a bad credit history may mean that you have to apply for a secured credit card – one that requires you to pay the credit card company a deposit of, say, $1,000 in order to get a credit line of $1,000. (This way they will have money to cover your credit card bills should you default on your payments.) There are plenty of credit cards out there for people with less-than-perfect credit, so if that’s you, don’t be disheartened.

Before you apply for a credit card, try to sit down with a financial advisor to go over all your options. You want to make sure you know exactly what you’re doing before you commit to any major financial contract.

Do you know your FICO score? Most consumers don’t, yet your FICO score is one of the main sources of information that banks look at to determine your creditworthiness. In the United States, your FICO score – also known as a “credit score” - is a numerical value derived from a statistical analysis of your credit report. Credit scores are based on information provided by three major credit agencies: Equifax, Experian, and TransUnion. Each credit agency uses a different scoring system and credit card use impacts this score in several important ways.

First, you should be aware that a large percentage of your score – in fact, one third of your FICO score - is based on the ratio of debt you are carrying on your card versus the overall amount of credit available to you. The bank is more interested in that ratio than the actual amount of credit you have, or number of cards. So don’t assume that because you have $3,000 available on your credit card, that it’s okay to carry that amount of debt as long as you make your payments on time. It’s generally considered advisable to keep your balance below 50% of your credit limit – and ideally, below 30%. If you go over 50%, points will be deducted from your credit score.

Secondly, limit the number of cards you have and resist the temptation to open new cards or lines of unsecured credit. Every time you apply for a card, in a department store or online, your application is noted and if you apply for a lot of cards in a short period of time, it can adversely affect your score. Similarly, closing several credit cards at once can also hurt your credit score. It’s best to remain consistent in your use of credit with a limited number of cards. Experts suggest that carrying two to six cards is the optimum number. Applying for lots of cards can hurt your credit score. Conversely, closing several credit cards at once will trigger a decrease in your score.

Finally, be sure to make your payments on time and pay over the minimum payment whenever possible. A late payment counts against your score immediately, and it may take up to six months for that to come off your record. Establishing a history of on-time monthly payments is the best way to maintain a good credit rating.

You are trying to repair your poor credit history, because you’ve misused a credit card in your past. You do not need to be told how difficult it is to get a credit card. Even if your financial situation has changed, you may need to prove your creditworthiness before your credit score begins to reflect your changed habit.

The truth is, even if you are not getting offers in the mail, there are many places online where you can search for the best deal on credit cards for people with bad credit, including both secured cards and unsecured cards, and get the best interest rate for your needs. But often, if your credit score is considered bad, you are not going to qualify for a decent interest rate. Indeed, for borrowers with bad credit, your credit offers may have interest rates as high as 24% - not to mention steep annual fees, “program fees,” “participation fees,” and other monthly charges. If you are desperate to rebuild your credit, it might be worth it to you to take on this type of card, but be sure to read the fine print and know what you are getting into.

For a person who is unable get any kind of unsecured card, a secured credit card might be a useful tool to rebuild your credit rating. A secured credit card is not exactly the same as a debit card, but it does involve using your own cash as “security.” With this type of card, your “cash collateral deposit” becomes your credit line for that account. For example, if you put down a deposit of $500, you will have a $500 line of credit. You may be able to extend your credit line by adding more money to the deposit, or, sometimes, the bank will reward your timely payments by extending your credit line without an additional deposit.

As with any offer, be sure to read the “fine print” and make your payments on time. Even a one day late payment can ding your credit rating and undo all your hard work, not to mention result in late payment fees, and an interest rate hike as well!

We have all heard that “variety is the spice of life” and have tried to indulge in such experiences as food, wine, retirement portfolio’s and experiences. A little known fact is that by diversifying the types of credit lines a consumer has, the stronger their credit score can be.

The Fair Isaac Corporation is a Minneapolis-based company that developed the FICO scoring formula. It is an equation that combines five consumer behaviors in relationship to how they handle their debt. The result is a score ranging between 300-850. The higher the score, the better rates an individual will be offered when applying for loans of any type or size. It is important that consumers focus their efforts and maintaining a healthy FICO score to get the best financial opportunities available to them.

The assortment of credit lines a consumer has accounts for 10% of their FICO store. This variety will prove to the credit bureau that a candidate has the ability, skills and resources to handle all types of debt. By maintaining a timely and solid repayment history for loans such mortgages, store cards and personal loans one can increase one can establish a solid credit history.

In general, there are several things a person can do to start increasing their credit score. One such act is making sure that there are a variety of credit lines to choose and use at any give time. Not only should consumers have debt in the form of credit cards they should also have a history of handling installment loans, like car payments, responsibly.

When you acquire a credit card, what happens is that the credit card issuer extends you a line of credit, and charges you an interest rate for the privilege of that credit. In former times, this practice was known as “usury” and was condemned by many religions as immoral. The principal argument against usury was that it created profit from avarice and greed rather than labor or work. The charging of interest is still illegal in some Muslim countries, stemming from the belief that lending money at interest leads to extensive worry about money instead of God.

Here in America, credit card interest charges are the principal way that credit cards create revenue for the credit card issuer. The practice of charging interest commodifies the concept of time. The card issuer – most often, a bank – gives you, the consumer, an account number and an associated card that can be used to make payments at various locations with money that you have borrowed from the bank. The bank pays the bills presented to them, and charges you interest on the card for any remaining balance that you have not yet paid off. The longer you maintain a balance on the card, the more interest they charge, which is compounded to the principal and added to your balance. Over time, this can create a snowball effect and if you do not pay off the balance, you will continue to accumulate credit card debt without even making a purchase.

How does the bank determine what interest rate it charges you? Banks set your interest rate based on your creditworthiness, as determined by credit history reports from the major credit bureaus, such as Experian, Equifax and Transunion. Typical credit card interest charges in the United States can be between 7% and 36%, based on the borrower’s credit rating.

If you have a favorite retailer, or you constantly find yourself out at the mall making purchases, you may want to explore the benefits of retail rewards credit cards. Retail credit cards give you various rewards for making purchases of retail goods. Sometimes those rewards are tied to specific stores, companies or online merchants such as Amazon.com, Victoria’s Secret or Disney. Others apply to certain general categories, such as sporting goods and outdoor camping gear, but are redeemable at a variety of merchants. These sorts of offers bring business to the stores and if you are in the habit of making a lot of purchases at a particular retail location, they might offer you benefits, rebates, or coupons you would not have otherwise received.

While these sorts of offers may look good on the surface, it pays to look closely at your credit card rewards program to see just how rewarding it really is. It’s a question more consumers might want to ask themselves, since in the last analysis, the reward value of a point may be far less than the dollar value, or real value, which you could be able to purchase with the equivalent amount of money. Additionally, if you carry a balance on your card, the amount of interest you end up paying can often exceed the value of whatever reward you are getting.

If you are looking for ways to benefit from your retail purchases, retail credit cards may be a good option for your financial situation and shopping patterns. With all the different interest rates, reward programs and fees available to you, it pays to understand the difference between different rewards programs and shop around before committing to a card, to determine which type of reward program is best for you and your lifestyle.

In a competitive environment, many banks will offer you a special terms to compete for your business. They may offer you special retail incentives, or airline miles, or special deals on interest rates. One of the ways they can try to win you business is by offering what are known as introductory interest rates.

In order to lure your business, many credit card companies will offer what are called introductory credit card interest rates. An introductory rate is a low rate of interest – sometimes even 0% - which lasts for a short amount of time. This “teaser rate” can last for several months or a year, depending on the terms of your agreement.

There are many advantages to choosing a card with a low introductory interest rate. For instance, with a low introductory rate, or even 0% interest for the first six or twelve months, you can transfer your existing balance to a new card and begin a grace period of low or non-existent interest rates. For the savvy consumer, this strategy is an excellent way to reduce credit card debt, because it gives you a chance to start paying down a high credit card balance without incurring a fortune in finance charges.

However, you should be sure to read the fine print to understand what you are accepting along with an introductory credit card interest rate. After the introductory interest rate expires, your terms will change and your interest rate will go up. If your introductory rate is contingent on a credit card balance transfer, there may be associated charges such as a transfer fee. Also, you’ll want to make sure that the interest charged at the end of that introductory period is only on the remaining balance, and not retroactively applied to the total amount transferred to the card. Always be sure that you have read the terms and conditions so you know what to expect.

Also, it’s important to plan ahead and know how long your introductory interest rate will last. If you find out your interest rate is in effect for only three months, it is wise to pay off as much of your balance as possible, or look for another card. If you have a good credit score (700 or above) you may be entitled to get a good rate on another card from the same company, as credit card companies always want to retain good customers.

For many years many media sources advised consumers who were unable to control their spending to literally put their credit cards “on ice” and to freeze them in a block of water for emergency use only. But by freezing their spending habits (and their cards), consumers may actually be harming their credit scores.

The credit bureaus want to make sure that consumers are using all their available credit in a responsible manner. If someone stops using their lines of credit altogether, then there will be no chance to build a new history with positive data to outshine the negative past.

With the current credit crunch affecting everyone, credit card companies are also in the process of closing down credit accounts that haven’t been used. This move can reduce the total line of available credit for a consumer. With a reduction in available credit, there will be an increase in the credit utilization ration (the amount of credit being used versus a person’s entire credit line) on a consumers account. This can negatively impact ones credit score as well.

The best way to contribute positively to your credit score is to not turn a blind eye to your credit. Read all incoming material from your credit card company to make sure they aren’t about to close your line of credit, pay off the balances on time and use those emergency credit cards wisely.

That doesn’t mean going on a major shopping spree to show activity on the card. It means making small purchases like buying a tank of gas or purchasing some movie tickets at least every six months. Then pay off those small balances in full and on time.

With so many economic worries abounding, consumers should make tending to their financial health their number one New Year’s resolution. By committing to maintaining low balances on your credit cards as well as paying down high credit card debt in general, you can significantly decrease your credit utilization ratio and raise your credit score in the process.

FICO credit scores are weighted heavily on the amount of available credit you have based versus what you are actually using. This is the ultimate definition of credit utilization rate and experts advise not taping into more than 10% to a maximum of 30% of your available credit. Keeping a tight rein and fierce eye on your balances will help you improve your credit score.

The best way to achieve a better credit utilization ratio isn’t through a confusing series of payments or as some websites advice a “round robin” payment schedule. Simply charge less and pay off your existing credit card debt in a timely, structured manner.  By following this strategy, paying their bills on time and living within their means, those monitoring their credit score should see a marked improvement.

Difference in credit scores are the number one reason why your neighbor may get a great 5.25% rate on a conventional 30-year mortgage while you get stuck paying over 7% and tens of thousands of more over the lifetime of a loan. By making and sticking to this “financial diet” resolution, you too can earn the right to the best credit rates out there.

CDs are among the most secure investments on the market. Since they are insured by the federal government, and have a slightly higher interest rate than a traditional savings account, they are generally considered a good step toward investing in your own financial security.

One of the drawbacks to investing your money in a CD is that your money can be tied up for a long period of time while you wait for the CD to mature – for one year, three years, five years or even ten years. If the roof on your house collapses, or your child needs expensive dental work, you won’t be able to liquidate this asset without paying substantial penalties for early withdrawal.

However, even though you may not want to touch your CD principal, there are other ways to have your money work for you if you do find yourself in financial straits. For instance, it is possible to use your CD as collateral for a loan. Some banks will give you a loan against your CD so long as you have the money on deposit at that financial institution. Typically, a financial institution can lend up to 95 percent of the value of your CD principal, and the length of the loan can be as long as the term on the CD.

It may seem counterintuitive to take out an interest-bearing loan against an interest-bearing CD. However, there can be sound financial reasons for doing so. One reason might be to improve your credit score by making a series of on-time payments on a secured loan. If you establish a good payment history, taking out a loan against your CD can be a good alternative to obtaining a secured credit card, and will help improve your score with the three credit bureaus.

Also, although it is unlikely that your loan interest will be less than your CD interest (it is typical for a loan rate to be 2 to 3 percentage points higher than the yield on a CD), it may be worth it if you have a high-interest CD that bears substantial penalties for early withdrawal. Talk to your financial institution about what they are able to do for you.