Credit Card Frequently Asked Questions

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A credit card is a payment method, usually made of plastic or metal, that primarily allows you to make purchases using a line of credit extended by a financial institution. Credit cards are also powerful spending tools and can help you achieve important financial goals, like building credit, earning rewards and paying down or managing debt.

Credit cards give you access to a revolving line of credit, which you can use to make purchases. So, for instance, if you have a credit card with a $5,000 credit limit, you can charge up to $5,000 on the card without incurring fees or penalties. You regain access to a card’s credit limit as you pay down balances. You are expected to make a minimum payment by a set deadline each month. If you don’t, you will incur fees and penalties, plus incur damage to your credit.

If you carry any portion of a credit card balance from month to month, you will pay interest on those charges. High credit card balances can also negatively affect your credit. For these reasons, it’s generally best practice to pay off charges in full each month. Learn more about how credit cards work.

The right credit card for you will vary based on your spending habits and financial goals. For instance, if you’re looking for a return on your spending, consider a rewards credit card. If you’re trying to pay down an existing high-interest balance, consider a balance transfer credit card. There are also certain credit scoring requirements associated with most credit cards, so you’ll need to know what products you’re likely to qualify for.

Timelines can vary by issuer. However, generally speaking, the longest you’ll have to wait to get a new credit card is 10 business days. This timeline accounts for approval, which can happen within seconds of submitting an application, particularly if your credit is good, and how long it takes to send the card through the mail.

Generally speaking, you can apply for a credit card at 18 years old. However, the law requires applicants under 21 to provide proof of income or have a willing co-signer. Most major card issuers allow primary account holders to add a minor as an authorized user; some require authorized users to be at least 13 years old.

Many credit cards require applicants to have good-to-excellent credit. However, there are cards designed specifically for people with bad, fair or thin credit. There are also credit cards marketed specifically to students or credit newbies.

APR stands for annual percentage rate. It is essentially the interest rate charged on a credit card balance expressed as a yearly rate. (To determine what you’ll be charged in a given month, divide your APR by 12.) This rate is applied when an outstanding balance is present.

Most credit cards offer a grace period between your statement date and due date, during which you can pay off the balance from the prior month interest-free. Any purchase that you don’t pay off during this grace period will start to accrue interest. Learn how interest is calculated.

Zero-percent introductory credit cards allow you to skip accruing and paying interest on purchases, balance transfers or both for a set period of time, usually 12 to 21 months. Once the introductory period is over, you’ll pay the card’s standard APR on outstanding balances, just as you would with a credit card that doesn’t offer a promotional APR. Learn more about how 0% APR cards work.

A balance transfer fee is a charge that most issuers impose if you transfer an outstanding balance from one credit card to another. Most balance transfer fees are between 3% and 5% of the transferred balance, though there are a few cards that skip a balance transfer fee. These cards generally do not offer a 0% introductory APR.

Annual fees are common among travel credit cards and premium rewards credit cards. They’re also common among credit cards geared toward people with bad, thin or fair credit as these cardholders are considered risky borrowers. Having said that, there are plenty of competitive credit cards, including rewards credit cards, that do not charge an annual fee.

Used responsibly, credit cards can help you establish a solid payment history and improve your credit profile. To build a good credit score, be sure to pay all your monthly bills on-time and, whenever possible, in full. If you can’t pay bills in full each month, aim to at least keep your outstanding debt below 20% to 30% of your total credit limit. The lower your balance, the better your credit utilization ratio, a key component of credit scores.

While the best credit card offers require good-to-excellent credit, there are credit cards designed specifically for people with bad credit. These cards generally feature higher fees and little-to-no rewards, but allow you to rebuild your score by providing access to credit. The best credit cards for bad credit also provide educational tools and the opportunity to upgrade to a better product or higher credit limit after a period of demonstrated responsible use, usually three-to-six months.