Many people have a question, China's mobile payment is very developed, why does the United States still like to use credit cards so much? What is the reason for this difference? If I go to the United States, how do I use credit cards?
1. Credit environment is mature
Credit card is an important source to accumulate personal credit, and in the United States, personal credit record is very common in daily life.
Renting an apartment, buying a car, taking out a bank loan, or even applying for internet access to watch TV all require a credit check, affecting every aspect of life.
Without creditworthiness or insufficient creditworthiness, the convenience will be greatly reduced, and you will also bear higher interest and fees.
2. Various incentives
Rich rewards for opening a card - cash, miles, credit card company's own points, useful card discounts, 1% to 5% cashback on purchases or bonus points, etc.
Some will also provide price protection, buy expensive money back, rental car insurance and delay insurance payout, etc., so that people feel that you are earning money when you spend.
As well as installment zero interest rate policy to encourage early consumption, spend first and then pay the bill, while mobile payment associated debit card or account balance will not be able to enjoy.
3. Theft protection
The United States has a strong credit card skimming protection system.
No password is required, and the important thing is the signature. If the merchant does not recognize the cardholder's signature, he or she may be liable for theft, and the card-issuing banks and institutions have a very good process for handling stolen and stolen cards.
Therefore, the need to accumulate personal credit + the preferential nature of credit cards + security form a mature payment environment for credit cards.
To accumulate personal credit quickly, it is important and necessary to have a credit card.
For Chinese in the United States, what do you need to know initially about credit cards?
1. U.S. credit card classification
There are Visa, MasterCard(MC), American, Express(Amex) and Discover as payment channels.
Visa and MC are payment channels that do not issue credit cards, while Amex and Discover are both payment channels that also issue credit cards. In terms of spending, Visa and MC have a broader audience.
By issuing bank, there are Chase, Citi, Bank of American (BOA), CapitalOne, US Bank, etc., as well as the above-mentioned Amex and Discover.
In terms of spending types, there are cashback credit cards, airline credit cards and hotel credit cards, and you can choose different spending types of cards to enjoy specific discounts according to the main purpose.
2. Credit system and influencing factors
Almost everyone in the U.S. has a complete system of personal credit history that affects every aspect of life. There are three main credit bureaus in the U.S. that provide credit scores, Equifax, Experian and TransUnion, if a credit report is needed.
Some of the factors that affect credit scores are
Repayment history: Whether or not payments are made on time. If you are afraid of forgetting, you can set up automatic payments.
If a newcomer wants to build up a credit score, it is recommended to pay it all off. If it is the minimum payment, it will incur interest based on your credit score.
Debt ratio: On the repayment date, it would be better to keep the ratio of the credit you use to the total credit below 10%.
So no matter how much money you spend, it is recommended to always pay it back before the repayment date, preferably in full, the lower the ratio the higher your credit score.
Total credit history length: one is the age of the earliest card opened, the second is the average length of time used, so it is recommended that you do not close your first card, it occupies a very important position in the credit history.
HardPull (HP): When you apply for a new card or a loan to buy a house or a car, the bank will ask the credit bureau for your report, and this act will be kept for 2 years, and the request to check your credit report is called hard pull.
If there is a large number of HP in a short period of time, the bank will think you are short of money and the possibility of approving a new card will be greatly reduced. So don't be greedy for offers to apply for various credit cards frequently in a short period of time.
What do I need to pay attention to when applying for a card?
The credit card application mechanism in the United States is relatively sound, so the right application strategy can make a big difference.
Card application can be done by phone, online application, etc. For Chinese Americans, it is recommended to apply online or go directly to the bank and someone will guide you.
For newcomers, it is recommended to start with simple cards, such as Discover, which is a great card for newcomers that do not require SSN.
The first card does not need to be too entangled in the opening card rewards and benefits, the important thing is to apply first to accumulate credit. (ps. SSN is a nine-digit number issued to citizens, permanent residents, and temporary (working) residents by the U.S. federal government's Social Security Administration, similar to the role of Chinese ID numbers)
Try to avoid card rejection, understand the difficulty of different card applications and then depending on the situation, sometimes the card application will be affected by special rules.
For example, Chase 5/24, two years five card principle, that is, if there are 5 or more new accounts in the past 24 months, Chase will directly reject.
So, there are certain skills to be aware of when to apply for a card and which card is better to apply for.