How to get and use a free credit card
Understanding “Free” in Credit Cards
Before proceeding, it’s crucial to define what “free” means in the context of credit cards. A “free” credit card typically refers to one that:
● Charges No Annual Fees: The primary indicator of a free credit card is the absence of annual charges.
● Offers No Hidden Fees: This includes foreign transaction fees, account maintenance fees, and others.
● Provides a Grace Period: Allows you to pay off your balance without incurring interest, provided you pay in full by the due date.
Steps to Obtain a Free Credit Card
A real example: Sarah’s Smart Credit Card Strategy
Sarah, a recent college graduate, entered the workforce and decided it was time to get a credit card to start building her credit profile. She wanted a card that wouldn’t cost her anything initially but would also provide some benefits as she established her credit history.
● Step 1: Research and Selection
Sarah began by identifying her primary goals for a credit card:
No annual fees
Introductory 0% APR to manage her initial expenses without interest.
Some form of rewards or cashback to maximize her spending benefits.
● Step 2: Comparing Options
After researching on platforms like NerdWallet and Credit Karma, Sarah compiled a shortlist of cards that met her criteria. Among them was the Discover it® Cash Back card, known for its no annual fee and generous cashback offers.
● Step 3: Applying for the Discover it® Cash Back Card
Sarah applied for the card and was approved based on her steady income and responsible financial history. Here are the key features of her chosen card:
No Annual Fee: No cost to hold the card each year.
Introductory Offer: 0% APR for the first 14 months on new purchases, which was perfect for managing her immediate post-college expenses.
Rewards: 5% cashback on rotating categories each quarter (up to a quarterly maximum) and 1% on everything else. This aligned well with her expected spending on groceries and transport.
● Step 4: Using the Card Effectively
Sarah began using her Discover card for routine expenses, particularly those falling into the quarterly 5% cashback categories:
Quarter 1: Grocery stores
Quarter 2: Gas stations and ride-sharing
Quarter 3: Restaurants
Quarter 4: Online shopping
She meticulously paid her balance in full each month to avoid interest charges, thereby using the card to her advantage to build her credit score without incurring debt.
● Step 5: Analyzing the Benefits
At the end of her first year, Sarah had obtained significant benefits:
Cashback Earnings: By strategically using her card, she earned around $200 in cashback, which she applied as a statement credit.
Credit Profile Building: Regular and responsible use improved her credit score considerably, setting her up for future financial growth.
Interest Saved: The 0% APR period allowed Sarah to handle her post-graduation expenses without the burden of high interest.
Sarah’s approach to selecting and using a credit card demonstrates how by choosing a no annual fee card with beneficial introductory offers and rewards, one can effectively enjoy a “free” credit card experience. This approach not only minimized her costs but also aligned her spending with tangible financial benefits.
By following these steps and considering your specific needs, you can find credit cards that minimize initial and ongoing costs, effectively making them relatively “free” financially.
💳💳If you’re looking for credit cards with no annual fee, consider these popular options:
Chase Freedom Unlimited®: Earns 1.5% cashback on all purchases, 5% on travel via Chase, and 3% on dining and drugstore purchases. Offers a 0% APR introductory period for 15 months.
Discover it® Cash Back:5% cashback on rotating categories up to a quarterly cap, then 1%. Matches all first-year cashback for new users.
Citi® Double Cash Card:Provides 2% total cashback — 1% at purchase and 1% when paying. Includes balance transfer options.
Capital One Quicksilver: Delivers 1.5% cashback on all purchases with no minimums and offers a 0% APR intro period.
Wells Fargo Active Cash℠:Unlimited 2% cashback with a 0% introductory APR.
These cards offer valuable rewards without annual fees, making them financially attractive.