Credit Cards

Frequently asked questions about loans.

credit card (5)

What’s the difference between a credit card and a debit card?

A debit card is connected to your checking account and when used to pay, deducts the funds instantly from your checking account. It is basically an instant check in plastic form.

A credit card is a form of credit that gives the user the ability to borrow money from the issuing lender. They come with a set amount of money that can be charged on the card. After a month, the amount of money charged on the card will be posted as a bill and the user must then pay the bill. If not paid in full, a credit card will charge interest on the charged money.

How are MasterCard, Visa, Discover, and American Express different?

Each of those companies is a credit card processor. This means they are responsible for monitoring and processing all the transactions made on their specific cards.

Business have the option to allow purchases from specific credit card processors, with Visa and MasterCard being the most widely accepted, and Discover and American Express having a bit less availability. Additionally, Discover and American Express are both the processors and the lenders of their credit cards, meaning the card is entirely going through them, rather than a bank.

What should I do if I lose a credit card?

If you lose your credit card, you should immediately call your issuing bank/lender and notify them of the lost card. If there have been fraudulent purchases made, be sure to inform the bank/lender of those as well so the charges can be investigated and potentially removed from the account.

What are points/cash back?

Most credit cards come with perks that in the form of either cash back or points back. This means that every time you make a purchase, you will receive a set amount of points/cash back. These can be used to pay off the credit card, purchase things through a credit card company’s rewards portal, or exchanged with another affiliate brand.

Each credit card has its own system of points/cash back, so it’s best to research credit cards you’re interested in to maximize your points/cash back according to your usual purchases.

Do credit cards have fees associated with them?

Yes, some credit cards have fees in order to use them. An annual fee is often applied to premium credit cards that have many benefits associated with them. These can vary widely, with some having fees into the hundreds of dollars. Some credit cards charge international fees, so anytime you make a purchase in another country or currency, an additional fee will be applied to the charge.

Another fee is a cash advance fee. Some credit cards allow users to withdraw money against their credit line. These often have fees along with higher interest. Be sure to investigate and research a credit card you are interested in to determine what kind of fees you may be charged.

How Credit Cards Play a Key Role in Financial Success

Credit cards play a central role in all commerce, as they are convenient substitutes for cash or check. A credit card is not only easier to carry than cash, but it is also safer because of fraud protections if your card gets lost or stolen. That’s something you can’t say about cash — once it’s gone, it’s gone for good.

A credit card can sometimes seem like free money, so it’s best to take some time to learn how to use it wisely so you don’t fall into deep debt.

How to Use Your Credit Card

Credit cards are so convenient because they are accepted virtually everywhere and don’t require hitting the ATM or carrying around cash. Just swipe your card or insert the chip in the card reader, and you’re on your way. But this swipe-and-go process can also lead you down a dark path of interest-bearing debt.

Using Your Credit Cards Responsibly

Credit cards can be amazing when you use them correctly. They can earn you free vacations and cash back, but they can also open a pit of debt that can throw your financial situation for a loop. Here’s how to use them responsibly:

Spend within your means. Banks will occasionally call and offer higher lending amounts based on your income and credit card payment history. Make sure you are still leaving within your means even if you have a higher limit.
Never buy anything with a credit card that you do not have the cash to pay for.
Compare credit card offers often and focus on those with o% interest and reward points. Once you have opened an account, you don’t have to keep it.
Always pay your credit card in full when you receive your statement

How a Credit Card Can Benefit You

Convenience: With a credit card in your wallet, you rarely ever need cash or an ATM.
Efficient record keeping: Easy expense monitoring and monthly budgeting through monthly statements.
Instant cash: You can get quick cash advances when you need them, instead of applying for personal loans.
Purchase protection: Credit cards often offer extended warranties on items you purchase.
Balance surfing: You can quickly transfer your high-interest balance to a lower-interest card.
Perks: Credit card holders often earn reward points for using their credit cards, which they can redeem on travel, cash back and more.

What to Consider Before Getting a Credit Card

credit card rates A credit card can be useful and destructive, so before you compare credit card offers, ask yourself these questions:

Can you limit use to just your daily expenses?
Are you committed to paying your credit card off each month to avoid interest charges?
If it’s a variable-rate card, can you afford the constant interest rate fluctuations?
What credit limit do you need? Use the calculator at Financer.com to compare 26 lenders limits.

What You Should Know About Credit Cards Rates, Fees and Penalties

Card issuers often find subtle ways to take money from you. Balance transfers and cash advances, while attractive up front, include fees. Some companies even charge a yearly fee just for having the card.

These fees are part of what allow credit card companies to offer these types of deals. Make sure you weigh out all your options before taking advantage of these and other offers.

You also need to take penalties into consideration when shopping for a credit card. Late on your payment? There’s a penalty. Go over your limit? There’s another penalty. Each credit card has different penalties, so make sure to review these on the off chance you run into one.

How to Find The Best Credit Card Rates

Credit card rates can vary greatly between issuers, and the only way to find the best one for you is to shop around. But don’t search at random. Instead, write down a list of what you need in a credit card and put them in order of importance.

This will help you whittle down the massive list of available credit cards to just a few that offer the best benefits for your situation and help you learn how to compare credit cards.

Here are some of the rates to consider when shopping for a credit card:

Promotional interest rate
Fixed interest rate
Foreign transaction rates
Balance transfer rates

How Can You Lower the Interest Rate on Your Card?

Credit Cards

Since you agreed to the credit card terms, you may have a hard time getting the issuing bank to reduce the interest, but it’s not impossible. Here are a few tips to help drop that interest rate:

Call your lender and ask for a lower rate.
Search for new-customer deals for your card and request that rate.
If all else fails, sign up for a new card with a lower rate and transfer the balance.

Always remember that credit cards are like any other financial service: Everything is negotiable. Don’t be afraid to call your credit card company and ask them to lower your interest or waive an annual fee.

The worst the company can say is “no.” But if you have a steady payment history and have been a customer for a few years, you may be surprised at what you can ask for and receive.

Credit Card Tips and Tricks

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