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Credit Card Basics 101 The Balance’s Guide to What to Consider Before Opening a Credit Card 10 Types of , and How to Use Them Average Credit Card Interest Rate Is 22.70% The History of Frequently Asked Questions How do I apply for a credit card? You can complete a credit card application in several ways: online, on a paper application, or on the phone. Applying for a credit card online is convenient, and you can get a decision almost immediately. Be prepared with personal details like your date of birth and Social Security number, details on income and housing costs, and information on any authorized users you want to add to the account. Learn More How To Apply for a Credit Card How many credit cards should you have? The right” number of credit cards to carry depends on your spending habits, your income, and how you manage your credit. But according to the credit bureau Experian, the average American credit cardholder has 3.84 of them, which may be a useful baseline. Whatever the number, the most important thing is not to let them blow up your budget. Learn More How Many Should You Have? Can you withdraw money from a credit card? Most credit cards allow you to access cash using your card account. It’s called a cash advance,” and generally, it’s very expensive. You’ll pay fees for the advance, a high interest rate on the amount you withdraw, interest begins to accrue immediately, and you will reduce the amount of credit you have available to you. Learn More Why You Should Avoid a Credit Card Cash Advance Can you get cash back on a credit card? Yes, if your credit card is a cash-back rewards card. These cards offer a small percentage of cash back on most types of purchase transactions. The best cash-back cards return 2% on every purchase. Some may offer a lower base rate (like 1%) but a higher one in specific categories, like gas or dining out (as high as 5%). Learn More Pros and Cons of Cash-Back Does closing a credit card hurt your credit? Closing a credit card can hurt your credit score. This is because a key part of your score is the credit utilization ratio.” That’s the amount of total available credit you have spent or used. By closing a credit card, you reduce the amount of credit available to you, which worsens this ratio. Learn More Does Closing a Credit Card Hurt Your Credit Score? Key Terms Credit Card Revolving Credit Credit Utilization Ratio Annual Percentage Rate (APR) Credit Card Debt Grace Period Cash Back Variable Interest Rate EMV Chip Co-Branded Credit Card Credit Card Network Credit Card A credit card is a small plastic or metal card issued by a financial company. It allows you to make purchases by borrowing money up to an established limit. Learn More Revolving Credit Revolving credit is a type of credit that can be used repeatedly up to a certain limit as long as the account is open and payments are made on time. With revolving credit, the amount of available credit, the balance, and the minimum payment can go up and down depending on the purchases and payments made to the account. Learn More Credit Utilization Ratio Your credit utilization ratio compares your credit card balances to your credit limits. In other words, it’s how much you’re currently borrowing compared to how much you could borrow. Learn More Annual Percentage Rate (APR) The annual percentage rate (APR) of a loan is the total amount of interest you pay each year. This is calculated before compounding interest is taken into account. APR is represented as a percentage of the loan balance. Learn More Credit Card Debt Credit card debt is a type of revolving debt. You can keep borrowing month after month as long as you repay enough that you never owe more than your credit limit. Learn More Grace Period Most credit cards allow for a grace period, which is the amount of time you have to pay your balance in full without incurring a finance charge. The grace period usually starts on the first day of the billing cycle and ends a certain number of days later. Learn More Cash Back Cash back is a bonus paid to credit cardholders who make qualifying credit card purchases. Learn More Variable Interest Rate A variable interest rate is one that can fluctuate over time, causing your loan payments to change. Variable rates are common on credit cards and home equity lines of credit (HELOCs). Learn More EMV Chip An EMV chip card is a payment card that’s equipped with a secure computer chip that is all-but-impossible for thieves to copy. Learn More Co-Branded Credit Card Co-branded credit cards are credit cards backed by a credit card network, card issuer, and a consumer brand such as Delta, Target, or Marriott. Learn More Credit Card Network A credit card network authorizes, processes, and sets the terms of credit card transactions, as well as transfers payments between shoppers, merchants, and their respective banks. Learn More Explore Revolving Consumer Credit Jumps by Most on Record How To Book a Hotel Without a Credit Card Can You Use PayPal on Amazon? What Is a Secured Card? Chase Concierge vs. Amex Concierge Why Did My Credit Card APR Go Up? Visa vs. Mastercard: Which Is Best for You? What Is PayPal Credit? Rule of Thumb for Redeeming Credit Card Points How To Gift Credit Card Points Line of Credit vs. Credit Card: What’s the Difference? What Is a Visa Credit Card? How Does PayPal Pay With Rewards Work? Can You Get a Credit Card at 16? What Is American Express? How to Use a Credit Card to Build Credit What Is Recurring Billing? Calculate Credit Card Payments and Costs Are Credit Union Different? How To...