We have tried to answer some of the most frequently asked credit card questions below. This is not an exhaustive list but should answer your burning questions and help steer you clear of credit woes.
1. How are credit and debit cards different?
A credit card uses borrowed money that the card holder has agreed to pay back with interest on a monthly basis, the interest rate is preset when the card is granted but can go up with misuse or down once you have a proven record of on-time payment.
Debit cards, on the other hand, are tied to a bank account spending your own money. Credit cards have the added benefit of being able to help build your credit history which debit cards typically do not.
2. How do I apply for a credit card?
Applying for a credit card is a simple straight forward process requiring some personal information as well as some personal questions as security safe guards. For students you may need the name of your school and some additional information.
3. How do I get a credit card without credit history?
There are a number of cards available for those with little or no credit history. If you are running into issues getting approved for a card look at getting a secured card with a small up-front deposit which will get you card and allow you work on what was preventing you from being approved.
4. Is there a magic number of credit cards needed to build credit?
There really isn’t a right number, credit scores are complex, and every credit bureau has its own algorithm. Things like frequent inquires, late payments and available credit ratio are really your key indicators to building credit over time.
5. What are instant approval credit cards?
Instant approval is rarely instant unless you happen to have superb credit, for most of us it simply means a quick response usually within a few minutes, but this can vary from card to card.
6. What is credit card pre-approval?
Preapproval means that the card company has pre-verified you with a credit bureau. You still have to apply to actually receive the card and it doesn’t mean final approval or that you will get the terms you want.
7. Is there are age restriction to get a credit card?
To be the card holder you generally have to be 18, however, individuals under 18 can typically be added to a parent or guardians account.
8. Why does my APR go up when making payments on time?
Your annual percentage rate can go up for a few reasons even with on time payments. Remember that the credit company is looking at your entire credit score so infractions on another account can ding all of your lines of credit. It also can simply be the end of a introductory rate or promotion.
9. Are there tools to help me manage my credit?
There are a number of credit services that offer free reviews and updates of your credit score and history.
10. How do I avoid incurring credit card fees?
Top things to remember are making full monthly payments on time every month, in addition from that make sure to read all of your cards terms and conditions as they will point out any potential pitfalls specific to that card.
11. When shopping online, is it better to pay by credit card or debit card?
The biggest difference them is when it comes to fraud. When fraudulent charges happen on your debit card the money leaves your account affecting what you can spend even if you are able to get a refund. With a credit card you are able to dispute the charges with the lost money ever impacting you.
12. Can I get my interest rate lowered after I get a card?
It doesn’t hurt to simply call and ask for your interest rate to be lowered, if you have built up a track record of timely full payments chances are good they will knock off a couple points or more. As always credit score and your overall history are king.
13. What is cash back?
Cash back is mostly what it sounds like. Some credit cards have a perk where they will give you back a small percentage of the money you spend on the card during the year. Be aware that there are generally rules about what charges apply, cap limits and how they send the money to you.
14. What is a statement credit?
A positive amount added to your balance from over payment or a miscalculation. If the credit is an unusual amount call your credit card company as it may be a mistake which could negatively affect you if its later corrected.
15. My card gives me reward points, when should I use them?
Read the fine print in terms and conditions! Some rewards do not expire while others reset each billing cycle or quarter, it can vary greatly from card to card even from the same lender.
Dana George-Berberich is a freelance reporter and novelist. She has written finance articles for newspapers across the country and for companies like Dun & Bradstreet and Bankrate.
