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Beginner’s Guide to Credit Cards

Best Student Credit Card

Beginner’s Guide to Credit Cards: How credit cards work?

TThe idea behind a credit card is simple: When you use a credit card, you borrow money to pay for anything. Next, you have to repay your debt. If you take the time to repay it (when your credit card statement arrives, instead of paying it in full), you will be charged interest. The entire credit card industry is in this basic premise.

The basic credit card transaction works like this:

  • You swipe your card. When it comes time to pay, you can use your card at the cash register via the card reader.
  • There is power to buy. The card reader will contact your credit card company to make the card valid for the purchase amount. Everything is fine, the transaction is authorized.
  • The merchant gets the money. The bank that issues your credit card sends the money to the trader who has done the transaction.
  • Give the money the transaction will appear on your credit card statement and you will pay the bank for the purchase.

How credit card rewards work?Best Student Credit Card

Types of awards

Most great credit cards give rewards for your expenses. The awards come in two basic flavors:

  • Refund of money: You can use cash back to cut your balance directly. In some cases, you may deposit your cash back into a bank account or send it to you in check form.
  • Points or miles: Points and miles can be redeemed for travel, gift cards, items or other things. You can redeem the credit option in your statement, such as cashback.

The card issuer determines the reward rate applicable to your card. There are two basic types of award structures:

  • Flat Rate: No matter who you spend the money with, you get the same reward rate for all the expenses with the card. You can get 2 points per dollar on all purchases or 1.5% cash back on everything.
  • Bonus Rewards: You earn a base rate on all expenses (usually 1 point or 1% cashback per dollar), and then higher rates in certain categories – 5% cashback on gas stations, for example, 3 points for 1 Dollar bonus for travel numbers, not where you buy , Not what you bought. Each merchant is assigned a category code; If your card pays bonus rewards at grocery stores, for example, any time you pay for a merchant with a category code, those gifts are referred to as a supermarket or grocery store.

Most credit card users have multiple cards with bonus rewards in different categories, as well as a flat rate card for purchases outside those categories.

Read: Check Regularly to Improve your Credit Scores

Bring back your Report

Rewards you earn on your card are stored in a rewards account, you can log in to your card account online or access it from the frequent issuer’s mobile app. Some issuers will immediately credit your rewards account for purchases. In other cases, your reward account is updated when your billing cycle stops and the issuer prepares your credit card statement, so it may take several weeks for the reward to appear from a specific purchase in your account.

Reporting or Rewards process

The award process works like this:

  • Shop with your credit card.
  • The issuer counts your rewards. If you have a bonus gift card, the issuer looks at the merchant category code you purchased and applies the bonus gift as needed. Otherwise, the issuer will only calculate your rewards based on a flat rate.
  • The issuer credits your gift to your account. As mentioned, the awards show can take anywhere from a few days to a few weeks.
  • You redeem the rewards by logging into your account online. Cash-back redemptions are simple. A booking trip can be added to a redeeming point or mile through an online tool, similar to Orbitz or Expedia. Each card is different.

How credit card interest works?

When you borrow money from a bank, you usually pay interest, which is the cost you used to bank money. Credit cards are exceptional, and there is a way to avoid interest altogether. Most cards offer a “grace period“: if you pay your balance in every detail – that is, you pay no debt from one month to another – you will not be charged interest. If you take out a loan, you will be charged interest. Interest works like this:Best Reward Credit Card

  • Your card issuer determines your interest rate. Generally, if your credit is better, you are less likely to qualify for lower rates, but credit card interest rates are much higher than other consumer loans.
  • Your interest rate is listed on your credit card statement. It is expressed as an annual rate, but in most cases it is taken daily. So if your interest rate is 17.5% per year, it’s actually 0.048% per day.
  • When your billing cycle ends: your issuer calculates how much interest you have. Your interest charge depends on your daily balance and your daily rate.
  • The interest charge is included in your next month’s minimum payment: Credit card interest is usually not compounded – meaning, it doesn’t add to your balance. You have to pay your full interest expense every month.

Different types of credit cards

Credit card companies offer a variety of cards to meet the needs of different customers. Some people put a lot of money on their card every month and then pay immediately; Those cards benefit from a gift card for a fraction of their cost. Others have balance from month to month; They work well with a card that offers a low running interest rate. Others are working to improve their credit; There are also cards designed for issuers.

There are major types of credit cards.

Credit card rewards

These cards “pay” a portion of your cost by giving you cash, points or miles. See a roundup of our Best Reward Credit Card for a wide variety of options for a wide variety of customers. Or view specific types of reward cards:

  • Cash-back credit cards give you cash: which can be used to reduce your balance or, in some cases, be deposited in a bank account or sent to you in check form.
  • Simple travel credit cards give you points that you can use to pay for travel: Unlike cards tied to specific airlines or hotel loyalty programs, these cards offer a lot of flexibility. You can use their rewards on airlines, hotel and other expenses.
  • Airline credit cards are the name of a particular airline: When you use them, you earn miles that can be redeemed for free flights or upgrades at that airline. These cards don’t offer much flexibility as to how you can use your rewards, but they are actually packed with special perks – free checked bags, priority boarding, airport lounge access and more.
  • Hotel credit cards name a specific hotel group: They earn points that you can redeem for hotel stays. Like airline cards, But is awesome – free night every year, automatic upgrades, elite status and so on.

Balance transfer credit card

These allow you to transfer the loan from a high interest card to a new card and give you 0% interest a year or more to repay this loan. You often have to pay a fee for a transfer, but interest savings can be considerable.

Low interest and 0% credit card

This card is best for those looking to bring a loan from day one. Zero-Cent Cards offer new cardholders more than 0% interest per year or purchases, making them suitable for larger expenses. Low-interest cards may not give a 0% word, but they do have a low running rate, which makes them a good long-term option.High Total Value Credit Cards

College student credit card

These cards are specifically designed for college students starting with credits. Application Process Young people are not likely to have long credit histories or high-paying jobs. However, keep in mind that simply qualifying for a college student is not enough.

For credit card creation

Credit cards with rich rewards, low interest rates, the lowest interest rate and the longest 0% periods are only available to those with the best credit. If you are still building up your credit. You will stop applying for these cards until your score improves. However, banks make cards specifically for people who work to improve their credit. Getting one of these cards and using it responsibly can go a long way toward your goals:

  • Credit cards for unbiased: credit For those with a credit score in the range of approximately 630–689, it is sometimes called “average” credit.
  • Credit cards for bad credit are intended for people with a score below 630: The best credit cards for bad credit are secured cards, which require you to deposit cash (which returns to you when you upgrade or close the card). There are “unsecured” cards for bad credit, which do not require a deposit, but they charge higher fees.
  • Secured credit cards, as mentioned above: require a refundable security deposit, which is usually equal to your credit limit. (The more you deposit, the higher your credit limit.)
  • The cardholder protects the depositor when his bill is not paid: so these cards are usually used to qualify those with lower credit scores. Easy. Keep in mind that some secured cards are available for people who have no credit or thin credit history, but not for those with damaged credit.

Comparison of credit card facilities

Each credit card delivers value in its own way through its own specific combination. And this includes trade-offs. If you want a gift, for example, you have to accept a higher interest rate. If you want high-value allowances, you pay an annual fee. If you want a low interest rate and fees, you should not expect too much from the card. In other words, you are unlikely to get a single card that offers a high rewards rate, a long 0% word, a rock-bottom running interest rate, generous incentives and annual fees.

The main points of comparison when looking at credit cards are as follows.

Annual fee

Some have died without paying a fee for the right to carry a credit card. But the annual fee payment is worth it under certain circumstances. For example:

  • To earn a significantly better reward rate.
  • To unlock valuable perks like airport lounge access or free check bags.
  • You may not receive a card, such as a credit check.

As with any annual fee, the math comes down to whether the value you receive from the card exceeds the dollar amount you paid. Still determined not to pay?

Other charges

Depending on what you want to do with the card, you can focus on these other charges:

  • Balance transfer fee: This is the fee you pay for transferring credit from one card to another. The fee is usually 3% to 5% of the amount transferred, but some cards do not charge a transfer fee, or they waive it for a while.
  • Foreign transaction fees: Most cards are in the U.S. Charges up to 3% on purchases made outside. If you travel internationally, you must get a card that does not charge this fee.
  • Cash Advance Fee: You usually pay upfront fees, the interest rate for a cash advance is often higher than the purchase, and in most cases, the grace period does not apply to cash advances, so you will immediately start paying interest on them. . Some cards do not charge for cash advance. Some cards do not allow advance.
  • Late fee and refund fee:These fees may be steep, but they are avoidable. Most cards charge them, but some do not charge.

Apple Credit Card

Interest Rate

Credit card companies grow the business by offering lower introductory interest rates to those with good credit. Offers 0% on group purchases of cards and balance transfers for a year or more. Some cards are not less than 0%, but still offer a low introductory rate.

The interest rate continues

The running rate is what you pay after any contact rate ends. Some cards charge the same rate for all cardholders; Others allow a range of rates based on your credit. Generally, the better your credit, the lower the rate you qualify for. He said, if you pay your balance every month, your interest rate doesn’t really matter because you will never be charged interest.

Current credit card interest rates are generally recognized as “variable”. This means that they can change under certain circumstances. Most rates are linked to the prime rate, which is the rate that big banks charge from their best customers. Generally, the credit card rate is set to prime rate and specific percentage points, so if your rate is “prime + 6” and prime rate is 6%, your rate will be 12%. When the main rate rises, your card rate increases.

What is the lowest interest rate on any credit card?

Although introductory interest rates are 0% simple, you are not getting a lower running rate than the prime rate. However, some cards offer rates at some point higher than Prime. For super-low running rates, your best bet is a credit union.


Cash-back cards pay back a certain percentage of the purchase price. Other cards cost you a certain number of points or miles per dollar. Each card determines its own gift structure, so apple-to-apple comparisons can be difficult. When comparing award shows, think about it:

  • Earn at a rate. What do you get for every dollar spent?
  • The redemption value. How much do you get when it comes time to use your rewards?
  • The choice of redemption.

Sign-up bonus

The sign-up bonus or welcome offer is the amount of cash you can earn (e.g., $ 150 or $ 200) or points per mile (miles, 40,000 points or 50,000 miles) by spending a certain amount on your first card. For a few months. The goal is to get into the habit of using the card. The bonus on many travel cards is often enough to cover the card’s annual fee for the first few years.


Unlike the rewards you get for using a credit card, these are the benefits you get from carrying a card. With some cards, especially travel credit cards, they provide greater value. Premium credit cards, with an annual fee of $ 450 and above, offer the most luxurious perks. Airline credit cards and hotel credit cards can easily pay an annual fee with their allowances. The full list of possible allowances is too long to include here, but simple examples are:

  • Aviation / airport benefits. Lounge Access. Free Check Bag. Basic boarding. Elite status.
  • Hotel benefit of free nights. Automatic room update. Early check-in / late check-out. Free facilities. Elite status.
  • Advertising costs include automatic credit for travel expenses, purchases from selected merchants, or application fees for loyal-traveler programs.
  • Purchase Protection. Extended warranty. Protection against theft or damage. Price protection (returns the difference if you find the same item cheaper elsewhere). Return Guarantee.
  • Rental car coverage. Supplemental coverage on your own auto insurance policy or primary coverage in place of your own policy.
  • Cell phone insurance coverage in case of damage or damage. To qualify you usually pay for your service with your card.
  • Credit tracking and security. Free credit score. Credit monitoring services. Ability to “lock” your card.

Credit creation assistanceQuick Silver Credit Card

When you want to build or restore credit, many features are more important to you than those who already have good credit.

  • Repoting to credit bureaus. If you use your card responsibly, you want your credit score to reflerct that. Ensure that companies collecting credit reports report payment activity to three credit bureaus.
  • Submit Requirements. If you are getting a secured credit card, you will need money for a security deposit. Minimum deposits are usually in the $ 200 to $ 300 range.
  • Upgrade possibilities. When your credit improves, it’s best to upgrade your account to a better card.
  • Encouragement for responsible behavior. If you pay on time or have access to a higher credit line, some cards will increase your reward rate.

How the application process works?

When you apply for a credit card, it determines how risky the card is to you. You are not sure of the issuer, so it goes from the information you provide (about your job, income and assets) and the information on your credit report.

  • The basic application process works like this: You fill out an application for the card. Nowadays, this is usually done online, but there are still paper applications.
  • The issuer will check your credit: Most people think of their credit only in terms of their credit score. But that three-digit number is really nothing but a summary of the information on your credit report. Information that the issuer is interested in. You may have a great score, but will still be rejected for credit cards because the issuer thinks you have applied for a lot of new cards in the recent past or because your income liabilities are too large.
  • If you meet the requirements of the issuer: your application will be approved. With online applications, approvals are usually made within minutes.
  • Your new card comes into the mail: This is usually done within 10 working days.
  • You activate your card: Do this by calling the phone number or going online. Once activated, you can use it.

Easy way to get  card Card?

Credit card acceptance is never guaranteed. Even if you have an excellent credit score, the issuer may reject your application because you do not have enough income or you have opened several other cards for recent or other reasons. Also, “easy” is a relative term. Anyone with excellent credit and good income usually qualifies for most cards. Anyone with the same credit score will have to work hard to get approved with enough income.

  • Generally, credit card issuers are low risk, easy to accept. Therefore, there is a recommended starting point for people who work to create or credit a credit card: the need for a security deposit reduces risk.
  • If you are starting a credit structure and have scored in the mid-600s, look for a credit card for unbiased credit. These provide greater benefits but do not require a higher credit score.
  • Store credit cards are generally easier to qualify for than bank cards. They have low credit limits and high interest rates, but they are a viable credit-building tool, where you keep your balance low and pay off every month.

Best Student Credit Card

How many credit cards do you have?

Just as not everyone has the best credit card, this is not the right credit card. It depends on your needs and how much effort you want to put into maintaining your credit card. Some people take a card and put everything on it. Others have literally dozens of cards, and for each purchase they use the card appropriate to that transaction. When deciding what is right for you, remember:

  • Every lender evaluates your credit within its own tenure, but you don’t have the strict limits of “having too many cards.”
  • You don’t need a lot of cards to maintain a good credit score. Credit scoring principles will reward you with credit cards, mortgages, loans, etc. – but there is no need to have multiple accounts for each type. Credit card, managed responsibly, is sufficient.

Advantages of multiple Credit Cards

  • Increasing Rewards: The card can pay you a higher reward rate on the grocery. Another person may reward you for spending on a restaurant or gas purchase or trip. Having multiple cards can increase your total rewards.
  • More Flexibility: Most of the cards are more widely accepted than others. It is advisable to back up in cases where the card is not accepted. Additionally, if a card is lost, stolen or compromised, you have another option when waiting for a replacement.
  • More Available Credit: A major factor in your credit score is your credit usage or how much credit you are using. Ideally, you want to keep the usage down to less than 30%. If you have a $ 500 balance on a card with a limit of $ 1,000 card, then your usage is 50%. If you have a balance of $ 500 on three cards with a limit of 1,000 cards, your usage is approximately 17%.

Multiplayer Credit Card Risk

  • Losing track of cost: The more cards you have, the harder it is to remember how much you have spent for a card.
  • Repayment of payments: Multiple expiration dates can increase the risk of missing payments, which can result in late fees or (if delayed enough) damage to your credit.

What is the difference between Visa and MasterCard?

This is one of the most common questions about credit card companies. With credit card cards everywhere, with a few exceptions (e.g. Visa-only Costco), both Visa and MasterCard carry, so customers wonder if it makes any difference.

The important thing to remember is that Visa or MasterCard do not offer credit cards. These companies are the only payment networks that process transactions. Most of the benefits that come with the card are offered by the card issuer rather than by the network. And since their acceptance rates are almost the same, you’d better understand focusing on different card features than what network they work on.

Best Credir Crad Companies Best Credit Card Companies

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