Credit Cards: Frequently Asked Questions

A secured card is a credit card that a cardholder "secures" with a deposit to ensure payment of the outstanding balance if the cardholder defaults on payment. Secured credit cards are targeted to customers with imperfect or limited credit histories who do not qualify for a traditional unsecured credit card. An unsecured credit card is not guaranteed by the pledge of any collateral. Most credit cards are unsecured debt and, therefore, have higher interest rates than other forms of lending such as mortgages that hold property as collateral.

Is Obtaining An Unsecured Credit Card Easy?

Criteria used to determine eligibility varies from card issuer to card issuer. Most banks and financial institutions will grant you credit if you meet the following requirements:

You must be a resident of the United States.

You must be at least 18 years of age.

You must make at least $95 a week.

You must have a valid Social Security number.

You must be employed for at least 6 months.

Are All Credit Cards The Same?

Credit terms vary among issuers. When shopping for a card, think about how you plan to use it. Do you expect to pay your bills in full each month or do you plan to pay off your purchases over time? Consider the annual fee, finance charges, interest computation method, whether or not there is a grace period for purchases and cash advances or balance transfers. It is also a good idea to look at the credit limit, how widely the card is accepted, additional services and features, and the Annual Percentage Rate (APR) and finance charges.

NOTE: Most credit card plans allow the issuer to "reprice" your current APR if the account falls into poor standing or becomes delinquent. Repricing is the act of increasing the APR.

What Is An Annual Fee?

Some issuers charge an annual membership fee or participation fees. These range from $25 to as much as $100.

"Gold" or "Platinum" cards sometimes reach as much as several hundred dollars. These fees may be charged whether or not you use the card.

Are There Transaction Fees And Other Charges?

A card may include other costs. Some issuers charge fees if you use the card to get a Cash Advances, make a late payment, or you exceed your Credit Limit. Often an issuer will charge a fee to transfer a balance from another creditor's account to their account. Fees are disclosed to you in your Terms and Conditions as well as in your Account Agreement. It is important that you read these documents in order to understand your responsibilities as an account holder.

What Is Credit Card Fraud?

One way to keep fraud under control is to closely monitor your credit report. A great way to do this is with a credit monitoring service. The cost of this service can range from $20-$50 per year. They give you unlimited free copies of your credit report so you can check it whenever you need to, online Monthly Monitoring Alerts to inform you of changes, black marks, inquiries and possible credit fraud signs on your report, information to help you deal with inaccuracies in your credit report, a newsletter with tips for managing your good credit, and articles to help you stay on top of your credit.

Is It Safe To Use Credit Cards Online?

It is much safer to use your credit cards on the Internet with a secure server than calling someone and giving your credit card numbers over the phone. However, people are still somewhat leery about using their credit cards on the Internet. When you use a secure server over the Internet, the data gets scrambled or encrypted and then put back together again once it reaches its intended destination. If you give your credit card numbers over the phone it is not in cryptic form. Furthermore, most credit card companies guarantee safe shopping on the Internet so you really have nothing to lose.

Types of credit cards

There are various types of credit cards available to consumers, each designed to cater to different needs and preferences. Here are some common types of credit cards:

Standard Credit Cards: These are basic credit cards that allow users to make purchases and pay off the balance over time, often with an interest charge if not paid in full by the due date.

Rewards Credit Cards: These cards offer rewards for spending in specific categories such as cash back, travel points, airline miles, or other loyalty programs. Rewards can be redeemed for various benefits, such as gift cards, merchandise, or travel discounts.

Travel Credit Cards: These cards are designed for frequent travelers. They often offer travel-related perks such as airline or hotel rewards, airport lounge access, travel insurance, and waived foreign transaction fees.

Cash Back Credit Cards: Cash back credit cards give users a percentage of their spending back as cash rewards. The cash back can be redeemed as a statement credit, deposited into a bank account, or received as a physical check.

Balance Transfer Credit Cards: These cards allow users to transfer balances from higher-interest credit cards onto a new card with a lower or 0% introductory APR (Annual Percentage Rate) for a specified period. This can help save on interest charges and consolidate debt.

Secured Credit Cards: Secured cards are typically used by individuals with limited or poor credit history. They require a security deposit, which serves as collateral, and the credit limit is usually equal to the deposit amount. Secured cards can help establish or rebuild credit.

Student Credit Cards: These cards are designed for college students with limited credit history. They often have lower credit limits and may offer rewards or perks tailored to student needs, such as cash back on textbooks or discounts on certain purchases.

Business Credit Cards: Business credit cards are meant for small business owners and offer features like expense tracking, employee cards, higher credit limits, and rewards for business-related spending.

Charge Cards: Charge cards are similar to credit cards, but they require the user to pay the balance in full each month. They typically have no preset spending limit, but the user's spending pattern and creditworthiness may influence the card issuer's approval of transactions.

These are just a few examples, and credit card offerings may vary among different banks and financial institutions. It's important to carefully review the terms, fees, rewards, and benefits associated with any credit card before applying.

Credit Cards: Frequently Asked Questions