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A Beginners Guide to Understanding Credit Cards

A Beginners Guide to Understanding Credit Cards

For those who are just beginning to understand credit cards, there can be a lot of information that you may not be familiar with. Understanding the ins and outs of credit cards and how they work early can save you a lot of heartache later. There are a lot of horror stories regarding people who signed up for a credit card, only to have it come back to bite them.

With this guide, you will be much more prepared to understanding how credit cards work and the terms that you need to know. You will understand what to search for when applying for credit cards and what to avoid. This way, you can obtain a credit card that is the best possible one for your individual circumstance.

Every year, many different people sign up for credit cards that contain many unwanted surprise. By understand the terms and conditions that are offered with each credit card, you will be well on your way to obtaining the most beneficial credit card.


This is more often than not, the very first consideration that many different customers look at when applying for their first credit card. If you are applying for your first card and have little to no credit history, you may not obtain the highest limit. Bear in mind that you should only spend up to thirty percent of your current limit, or it will show negatively on your credit report.

Interest Rate:

Obviously, trying to obtain the lowest possible rate might be a little hard to do when you are just starting out. Credit card companies are really only willing to extend the lowest rate to those that have been with them for a long time, or those who have an excellent credit history. That doesn’t mean that you should settle, though. You can still shop around for the best deal. Also, check to see whether or not there is an introductory payment rate and whether it can increase if you miss a payment.

Annual Fee:

Many credit cards charge an annual fee and while it can be a little high, some may offer different features that may make it worth it. These can include rewards programs, or better interest rates. Obviously, if you can obtain a comparable card with no annual fee, than you should go for it.


Many different credit card companies offer different rewards for using their cards. This can include rebates, gift cards and cash back, which can be applied to your monthly payment. By using your credit card frequently and paying off your balance responsibly, you can obtain some pretty good rewards. Bear in mind that you still want to keep your balance as low as possible, so don’t go crazy.

Hidden Fees:

Many different credit cards have hidden fees that can be quite substantial. These can range from going over your limits, or missing a payment. Check out to see whether or not they have fees and whether or not they can be avoided. This can include forgiveness for missing one payment or going over your limit.


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