It cannot be stressed enough how important it is to be careful when choosing a credit card issuer. You cannot apply for a new credit card without knowing anything about the issuer, without knowing how reliable they are, or how good their customer service is.
Some of the most popular issuers today include Bank of America, Synovus Bank, Applied Bank, or Chase Bank, but these aren’t your only choices.
There are many other credit card issuers that can provide both the typical credit cards such as low-interest cards, no annual fee credit cards, or no foreign transaction fee credit cards and credit cards such as shopping or co-branded cards.
So, let’s see what these other credit card issuers are, how they work, and whether they’d be a good choice for you.
Credit Card Issuers vs Credit Card Networks
1. Primarily, it’s important to know what other credit card issuers are not. Visa and Mastercard, for example, are not credit card issuers, they are credit card networks. They process your credit card transactions and decide which stores and merchants can accept their credit cards. In most cases, it doesn’t matter much which card network you’re using.
2. Card issuers, on the other hand, are financial institutions such as banks or credit unions that lend you money through credit cards. Applied Bank, Bank of Missouri, Capital One Bank, CitiBank, Meta Bank – these are all credit card issuers.
3. There are credit card companies that can act both as credit card issuers and credit card networks. The best-known examples are American Express and Discover. These two credit card companies act as your lenders, and they’re in charge of processing your credit card transactions.
While in most cases it doesn’t matter much which card network you choose, if you wish to use your credit card in as many locations as possible, you should opt for a more popular card network. Visa and MasterCard are both accepted in most countries around the world, so these would be good choices for frequent travelers.
The Importance of Choosing the Right Issuer
Whether you go for Credit One Bank, the Bank of America, or some other credit card issuer, it’s important to be very careful. Your card issuer can either help you reach financial stability or put you in debt.
Issuers are responsible for accepting or denying your credit card applications, for setting your rates, fees, credit limits, coming up with the terms and conditions, providing bonuses and rewards, maintaining your credit account, and more.
When choosing a card issuer, you have to ensure that they’re offering the best card features with the lowest fees. You should also consider how good their customer support is since you’ll need to contact the issuer if you have problems with your credit card, if your card has been lost or stolen, or if there are some fraudulent charges.
Soft vs Hard Credit Inquiries from Card Issuers
When you’re researching other card issuers, you’ll often notice that they advertise their soft credit inquiries that don’t damage your credit card score. But what are soft credit inquiries? And for that matter, what are hard inquiries?
A soft credit check is typically a part of the background check. Credit card issuers can take a look at your basic credit information to determine whether you could potentially qualify for some of their credit card offers. Your employers might do a soft credit check before they decide to hire you, and when you check your own credit, this is also considered as a soft inquiry. This doesn’t leave a trace on your credit report and won’t affect your score.
Soft inquiries are also used for credit card pre-approvals. However, if you’re pre-approved for a credit card, this doesn’t mean you’re guaranteed to get it. Soft inquiries don’t present the full picture of your financial health, and you could still be denied once you actually apply for a card.
A hard inquiry is a full credit check. The issuers and lenders will pull your records from one of the major credit bureaus and determine whether you’re eligible for their credit line. This does leave a trace on your credit report and making multiple credit card applications will temporarily damage your credit score.
While multiple credit card applications will hurt your credit score, they don’t play as big of a role in your overall score as your credit utilization ratio or timely payments. If you want to improve your credit score, be sure to pay off all of your debts on time.