credit cards

What are They:

A credit card is a card issued by a financial institution, such as a bank or credit card company, that allows the cardholder to borrow funds up to a predetermined credit limit. It enables the cardholder to make purchases or pay for goods and services on credit, with the obligation to pay it back with interest.

interest rates

Interest Rates

Variable Interest Rates:

Most credit cards have variable interest rates, which means they can fluctuate based on changes in the market or the prime rate set by the Federal Reserve. This means that your credit card's interest rate can change over time.

Introductory or promotional rates: 

Some credit cards offer introductory or promotional interest rates, which are usually lower than the regular rates. These rates are often applicable for a limited time, such as six months or a year, and may apply to balance transfers, purchases, or both. After the promotional period ends, the regular interest rate will apply.

Standard rates:

Once the introductory period ends, or if your credit card doesn't have a promotional rate, the standard interest rate will come into effect. These rates are typically higher than the promotional rates and can vary significantly among different credit cards and issuers, though typically sit in the range of 12% to 30%.

Penalty rates:

If you fail to make your minimum payment on time or exceed your credit limit, your credit card issuer may apply penalty interest rates, also known as default rates. Penalty rates are often significantly higher than regular rates and can further increase the cost of carrying a balance.

Cash advance rates:

When you use your credit card to get cash advances, such as withdrawing money from an ATM or writing a cash advance check, the interest rates for cash advances are usually higher than the rates for purchases. Cash advances also often incur additional fees and may have no grace period, meaning interest starts accruing immediately.

Variable factors:

Credit card issuers determine the interest rate based on various factors, including your creditworthiness, credit score, credit history, and the prime rate. If you have a good credit score, you may qualify for lower interest rates. However, if your credit score is lower, you may be offered higher rates or may struggle to qualify for certain credit cards.

credit card limits

Credit Card Limits

Credit card limits refer to the maximum amount of money you can borrow using your credit card. When you are approved for a credit card, the issuer sets a specific credit limit for your account based on various factors, such as your credit history, income, and creditworthiness.

It's important to note that the credit limit is not the same as the available credit. The available credit is the remaining amount you can still spend on your credit card after accounting for your current outstanding balance.

Exceeding your credit limit can result in penalties, over-limit fees, and potential negative effects on your credit score. It's recommended to stay well below your credit limit to maintain a healthy credit utilization ratio, which is the percentage of your available credit that you are currently using. Keeping your credit utilization ratio below 30% is advised to demonstrate responsible credit card usage.

Credit card issuers may periodically review your account and may consider increasing your credit limit if you have a good payment history and demonstrate responsible card usage. However, it's extremely important to manage your credit card spending to stay within your means and not rely solely on the available credit to make purchases you cannot afford to pay off.

monthly payment

Monthly Payments

Credit card monthly payments are the amount of money you are required to pay each month towards your credit card balance. When you make purchases or use your credit card for cash advances, you accumulate a balance that needs to be repaid to the credit card issuer.

Minimum Payment:

Every credit card statement specifies a minimum payment amount that you must make by the due date to keep your account in good standing. The minimum payment is typically a small percentage of your outstanding balance, often around 1-3% of the total balance.

Paying Off the Balance:

While making the minimum payment satisfies the basic requirement, it's important to note that paying only the minimum will result in carrying a balance from one billing cycle to the next. If you don't pay off the full balance, interest charges will apply to the remaining amount.

Interest Charges:

If you carry a balance on your credit card, the issuer will charge you interest on the unpaid amount. The interest rate can be quite high, so it's important to understand the annual percentage rate (APR) associated with your credit card. Interest charges can significantly increase the total amount you owe if you don't pay off the balance in full.

Payment Due Date:

Your credit card statement specifies the due date by which the payment must be made to avoid late payment fees and potential negative impacts on your credit score. It's important to make your payment on or before the due date to maintain a good payment history, and automatic payments are extremely beneficial to ensure no payments are missed or late.

Paying More than Minimum:

While the minimum payment is the minimum amount required, it's generally advisable to pay more than the minimum to pay down your balance faster and minimize interest charges. Paying off the full balance each month is the best practice to avoid interest altogether.

Payment Allocation:

When you make a payment, the credit card issuer typically applies it first to any fees or interest charges, and then to the outstanding balance. If you have multiple balances, such as purchases, cash advances, or balance transfers, the issuer may allocate the payment to the balance with the highest interest rate first.

creditcard rewards


Credit card rewards are benefits and incentives offered by credit card issuers to encourage cardholders to use their credit cards for purchases. These rewards can come in various forms, allowing cardholders to earn points, cashback, miles, or other perks based on their spending.


Many credit cards have rewards programs where cardholders earn points for every dollar spent on eligible purchases. These points can be accumulated and later redeemed for various rewards, such as merchandise, gift cards, travel bookings, or statement credits.


Some credit cards offer cashback rewards, where a percentage of the amount spent is credited back to the cardholder's account. For example, a card might offer 1% cashback on all purchases or higher percentages for specific spending categories like groceries or gas.

Travel Rewards:

Certain credit cards offer rewards in the form of airline miles, hotel points, or other travel-related benefits. Cardholders can accumulate these rewards and use them for discounted or free flights, hotel stays, car rentals, or other travel expenses.

Tiered Rewards:

Some credit cards provide tiered rewards, where the earning rate varies depending on the spending category. For instance, a card might offer higher rewards for dining and entertainment purchases or provide bonus points for specific retailers or services.

Sign-up Bonuses:

Many credit cards entice new applicants with sign-up bonuses, which often involve earning a significant number of points or cashback after reaching a specified spending threshold within a specific timeframe. These bonuses can provide a substantial initial boost to rewards earnings.

Redemption Options:

Credit card rewards can usually be redeemed through the issuer's rewards platform. The available redemption options may include travel bookings, merchandise, gift cards, statement credits, or even charitable donations. The redemption value and options can vary depending on the specific credit card and rewards program.

Terms and Limitations:

Credit card rewards programs often have terms and limitations to consider. These can include expiration dates for earned rewards, spending category restrictions, redemption minimums, or annual caps on rewards earning. It's essential to review the terms and conditions of your credit card's rewards program to understand how it works and any limitations that may apply.

Credit card rewards can provide value and benefits to cardholders who use their cards responsibly. However, it's important to consider your spending habits, annual fees, interest rates, and other factors when selecting a credit card with rewards to ensure that the rewards align with your financial goals and needs.

credit card fees


There are several common credit card fees that cardholders may encounter. Here are some of the most common credit card fees:

Annual Fees:

Some credit cards charge an annual fee for the privilege of having the card. The fee can vary widely depending on the type of card and the benefits it offers. Not all credit cards have an annual fee, and it's important to consider whether the benefits and rewards justify the cost.

Late Payment Fees: 

If you fail to make at least the minimum payment by the due date specified on your credit card statement, a late payment fee will typically be charged. Late payment fees can vary, but they are often a set amount, such as $25 or $35, and can increase if late payments occur repeatedly.

Over Limit Fees:

If you exceed your credit limit, some credit cards may charge an over-limit fee. However, it's important to note that cardholders may have the option to opt-in or opt-out of over-limit transactions, meaning the card may be declined if the limit is exceeded.

Cash Advance Fee:

When you use your credit card to withdraw cash from an ATM or obtain cash equivalent transactions, such as cash advances or money transfers, a cash advance fee is typically charged. This fee is usually a percentage of the cash advance amount or a flat fee, and it can also incur higher interest rates than regular purchases.

Foreign Transaction Fee:

If you make purchases in a foreign currency or use your credit card abroad, some issuers charge a foreign transaction fee. This fee is typically a percentage of the transaction amount and can add up, so it's worth considering a credit card that offers no foreign transaction fees if you frequently travel or make international purchases.

Balance Transfer Fee: 

When you transfer a balance from one credit card to another, typically to take advantage of a lower interest rate, a balance transfer fee may be charged. This fee is usually a percentage of the transferred balance and is subject to a minimum amount.

Returned Payment Fee:

If a payment you made on your credit card is returned or fails to clear, a returned payment fee may be charged. This fee can be significant and may also result in late payment penalties.

Card Replacement Fee:

If you lose your credit card or it gets stolen, some issuers may charge a fee for replacing the card. The fee is typically charged to cover the cost of issuing a new card and can vary among different credit card companies.

It's important to carefully review the terms and conditions of your credit card to understand the specific fees associated with your card. Being aware of these fees can help you manage your credit card usage effectively and avoid unnecessary costs.

balance transfers

Balance Transfers

A credit card balance transfer is the process of moving an existing credit card balance from one credit card to another. This is typically done to take advantage of a lower interest rate, promotional offer, or better terms offered by the new credit card.

Lower interest rate:

One of the primary motivations for a balance transfer is to move a high-interest credit card balance to a card with a lower interest rate. By doing so, you can potentially save money on interest charges and pay off your debt more efficiently.

Promotional offers:

Some credit cards offer promotional balance transfer rates, which can be significantly lower than the regular interest rates. These promotional rates are often applicable for a limited time, such as 0% APR for a specified period, providing an opportunity to pay off the balance without incurring interest charges.

Balance transfer fees:

When you initiate a balance transfer, the new credit card issuer may charge a balance transfer fee. This fee is typically a percentage of the transferred balance and is added to your new credit card balance. However, some credit cards offer promotional periods where they waive balance transfer fees.

Eligible balances:

Not all balances are eligible for a balance transfer. Typically, you can transfer balances from other credit cards, store cards, or personal loans. However, it's essential to check with the new credit card issuer to determine which balances are eligible for transfer.

Credit limit considerations:

When you initiate a balance transfer, the amount of the transfer is added to your new credit card's balance. It's important to ensure that the transfer amount doesn't exceed your new credit card's available credit limit. Some issuers may allow a partial balance transfer if the full amount exceeds the credit limit.

Impact on credit score:

Applying for a new credit card for a balance transfer may have an impact on your credit score. It can result in a temporary decrease due to the credit inquiry and the opening of a new credit account. However, over time, a balance transfer can help improve your credit score by reducing your credit utilization ratio and demonstrating responsible debt management.

Before initiating a balance transfer, it's important to carefully consider the terms and fees associated with the new credit card, including the duration of any promotional rates, balance transfer fees, and the interest rate that will apply once the promotional period ends. Evaluating these factors can help you determine whether a balance transfer is a suitable option for your financial situation.

cash advance

Cash Advances

Credit card cash withdrawals, also known as cash advances, refer to using your credit card to obtain cash from an ATM or through other means. Here are some key points to understand about credit card cash withdrawals:

Cash advance limit:

Credit cards typically have a separate cash advance limit, which is a portion of your total credit limit designated for cash advances. The cash advance limit is usually lower than the overall credit limit on the card.

Higher interest rates: 

Cash advances usually come with higher interest rates compared to regular credit card purchases. The interest on cash advances often starts accruing immediately, without a grace period, meaning you'll be charged interest from the day you withdraw the cash.

Cash advance fees:

 In addition to higher interest rates, credit card issuers often charge a cash advance fee for each cash withdrawal. This fee is typically a percentage of the amount withdrawn or a flat fee, whichever is higher. The fee is added to your credit card balance and subject to interest charges.

ATM transaction fees:

When you withdraw cash from an ATM using your credit card, the ATM operator may charge an additional fee. This fee is separate from the cash advance fee imposed by your credit card issuer.

Repayment and interest charges:

Cash advances are generally repaid in the same manner as regular credit card balances. However, it's important to note that if you carry a cash advance balance, it will typically be subject to higher interest rates compared to regular purchases. If possible, it's advisable to pay off the cash advance balance as soon as possible to minimize interest charges.

Limitations and availability:

Not all ATMs accept credit cards for cash withdrawals, and there may be limitations on the amount you can withdraw per day or per transaction. It's recommended to check with your credit card issuer or refer to your credit card agreement for specific details on cash advance availability and limits.

Credit card cash withdrawals should generally be used as a last resort due to the associated fees and higher interest rates. It's advisable to explore other options, such as using a debit card or withdrawing cash from your bank account, before considering a credit card cash advance. If you do need to make a cash advance, it's important to carefully review the terms, fees, and interest rates associated with your credit card to make an informed decision.

secured credit card

Secured Credit Card

A secured credit card is a type of credit card that requires a security deposit as collateral. It is designed for individuals with limited credit history, poor credit, or no credit history at all. Here are some key points to understand about secured credit cards:

Security deposit:

To obtain a secured credit card, you must provide a security deposit, typically equal to the credit limit of the card or a percentage of it. This deposit serves as collateral and protects the credit card issuer in case you default on payments. The deposit is refundable if you close the account in good standing.

Building or rebuilding credit: 

Secured credit cards are often used to build or rebuild credit. By using the card responsibly and making timely payments, you can demonstrate creditworthiness and improve your credit history. Positive payment behavior can help establish a solid credit foundation for future credit applications.

Credit limit:

 The credit limit on a secured credit card is typically determined by the amount of the security deposit you provide. For example, if you deposit $500, your credit limit will usually be $500. Some issuers may offer the opportunity to increase the credit limit over time as you demonstrate responsible card usage.

Usage and acceptance:

 Secured credit cards work similarly to regular credit cards. You can use them to make purchases, pay bills, and build credit history. Secured cards are generally accepted at most locations that accept credit cards, including online merchants.

Fees and interest rates:

Secured credit cards may have fees associated with them, such as an annual fee, application fee, or processing fee. These fees can vary among different issuers, so it's important to compare offers and understand the associated costs. The interest rates on secured credit cards may also be higher than those on regular credit cards, so it's advisable to pay off the balance in full each month to avoid interest charges.

Graduation to an unsecured card:

With responsible card usage and timely payments, some secured credit card issuers may offer the opportunity to "graduate" to an unsecured credit card. This means you can transition to a regular, unsecured credit card without the need for a security deposit. The eligibility for graduation varies among issuers and depends on your credit history and payment behavior.

Secured credit cards can be a useful tool for establishing or rebuilding credit. They provide an opportunity to demonstrate responsible credit behavior and improve creditworthiness over time. However, it's essential to choose a secured credit card with favorable terms, fees, and interest rates and to use the card responsibly to maximize its benefits.

Impact on Credit Score

Payment history:

Your payment history is one of the most critical factors in determining your credit score. Making timely payments on your credit card bills demonstrates responsible financial behavior and positively impacts your credit score. Conversely, late payments or delinquencies can have a negative impact on your score.

Credit utilization ratio:

Your credit utilization ratio is the amount of credit you're using compared to your credit limit. Using a high percentage of your available credit can negatively impact your score. It's recommended to keep your credit utilization ratio below 30% to maintain a good credit score. Responsible credit card usage and keeping balances low can help improve your credit utilization ratio.

Length of credit history:

The length of time you've had credit accounts, including credit cards, is another factor considered in credit scoring. Generally, a longer credit history is seen as more favorable. Keeping a credit card account open for a longer period and maintaining good payment history can contribute positively to your credit score.

Types of credit:

Credit cards can contribute to your credit mix, which refers to having a combination of different types of credit accounts, such as credit cards, loans, and mortgages. Lenders and credit scoring models generally prefer to see a diverse credit profile. However, it's important to note that this factor has a smaller impact compared to payment history and credit utilization.

Credit inquiries:

When you apply for a credit card, the credit card issuer may request a copy of your credit report, resulting in a hard inquiry on your credit file. Hard inquiries can have a temporary negative impact on your credit score. It's generally advisable to limit the number of credit card applications you make within a short period to minimize the impact of inquiries.

It's important to note that credit card usage and behavior are just one aspect of your overall credit history. Other factors, such as payment history on other loans, the presence of any derogatory marks, and public records, also play a role in determining your credit score. Therefore, responsible credit card usage, including making timely payments and keeping balances low, can have a positive impact on your credit score and overall creditworthiness.


Authorized Users

An authorized user, in the context of credit cards, refers to an individual who is given permission by the primary cardholder to use their credit card account. Here's what you need to know about authorized users:

Permission and access: 

The primary cardholder, who is the account owner, grants authorization to another person to be an authorized user on their credit card account. This allows the authorized user to have access to the credit card for making purchases and transactions.

Shared credit limit:  

When an individual becomes an authorized user, they can use the credit card up to the shared credit limit set by the primary cardholder. The authorized user's transactions and charges contribute to the overall credit card balance, which is ultimately the responsibility of the primary cardholder for repayment.

Building credit history:

Becoming an authorized user on a credit card account can potentially help the authorized user build or improve their credit history. Positive payment history and responsible credit card usage can be reported on the authorized user's credit report, potentially benefiting their credit score. However, this depends on the credit card issuer's reporting policies, as not all issuers report authorized user activity to credit bureaus.

Limited account control: 

Although authorized users can use the credit card, they do not have ownership or legal responsibility for the account. They cannot make changes to the account, such as closing it, requesting credit limit increases, or adding additional authorized users. Only the primary cardholder has full control and responsibility for managing the credit card account.

Liability and repayment: 

While authorized users can make purchases with the credit card, they are generally not legally responsible for the repayment of the charges. The primary cardholder is ultimately responsible for paying the credit card bill and any outstanding balances.

Relationship dynamics: 

Authorizing someone as an authorized user involves trust and clear communication between the primary cardholder and the authorized user. Both parties should have a shared understanding of how the credit card will be used, any spending limits or restrictions, and how the primary cardholder will handle repayment.

It's important to note that the policies and guidelines for authorized users may vary among credit card issuers. Some issuers have specific requirements or restrictions regarding who can be an authorized user and how their activity is reported. If you are considering adding someone as an authorized user or becoming an authorized user on someone else's credit card, it's advisable to communicate openly and discuss the expectations and responsibilities involved.

Joint Cardholders

A joint cardholder refers to an individual who shares ownership and responsibility for a credit card account with another person. When two people are joint cardholders on a credit card, they both have the ability to make charges to the account, and they are both equally responsible for repaying the debt incurred on the card.

Shared Responsibility:

Both individuals are equally responsible for repaying any balances or charges made on the credit card.

Credit History Impact:

The credit history associated with the joint card will typically appear on the credit reports of both cardholders. This means that the financial behavior of one cardholder can affect the credit of the other.


Each joint cardholder has the authority to make purchases, request credit limit increases, and perform other actions related to the credit card account.

Communication is Important:

It's crucial for joint cardholders to communicate openly about card usage, payments, and other financial matters to avoid potential issues.

Before becoming a joint cardholder or adding someone as a joint cardholder, it's essential to understand the terms and responsibilities outlined by the credit card issuer.

debit or credit card

Debit V Credit Cards

Credit cards and debit cards are both widely used for making payments, but they work differently and have distinct features. Here are the key differences between credit cards and debit cards:

Source of funds:

A credit card allows you to borrow money from the card issuer to make purchases. The credit card issuer essentially extends you a line of credit that you can use up to a certain limit. On the other hand, a debit card is linked to your checking or savings account, and the funds used for transactions are directly deducted from your account balance.

Spending limit:  

Credit cards have a predetermined credit limit set by the card issuer. You can make purchases up to the available credit limit, which can be adjusted by the issuer based on your creditworthiness and payment history. With a debit card, you can typically spend up to the balance available in your linked bank account.

Borrowing and interest: 

When you use a credit card for a purchase, you're essentially borrowing money from the card issuer. If you don't pay off the full amount by the due date, you'll be charged interest on the remaining balance. Debit cards, on the other hand, do not involve borrowing or accrue interest since you're using your own funds directly from your bank account.

Payment method:

Credit cards provide a revolving line of credit, allowing you to make purchases even if you don't have sufficient funds available in your bank account. With a debit card, you can only spend what you have in your account, ensuring that you don't accrue debt.

Impact on credit history:

It's important to note that credit cards can be a powerful financial tool, but they require responsible usage and timely repayment to avoid accumulating debt and paying high interest charges. Debit cards, on the other hand, provide a convenient way to access your own funds without incurring debt. Choosing between a credit card and a debit card depends on your financial needs, spending habits, and ability to manage credit responsibly.

Liability for fraudulent transactions: 

Credit cards generally offer more robust fraud protection. If your credit card is used for unauthorized transactions, you can typically report them and avoid liability beyond a certain limit. Debit cards, however, may have limited liability protection, and you may be held responsible for unauthorized transactions if you don't report them promptly.

Rewards and benefits:

Credit cards often come with rewards programs, cashback offers, travel benefits, and other perks. These rewards are typically not available with debit cards, although some debit cards may offer limited rewards programs.

It's important to note that credit cards can be a powerful financial tool, but they require responsible usage and timely repayment to avoid accumulating debt and paying high interest charges. Debit cards, on the other hand, provide a convenient way to access your own funds without incurring debt. Choosing between a credit card and a debit card depends on your financial needs, spending habits, and ability to manage credit responsibly.