10 Common Queries About Credit Cards

Rohan Mathew

Are you thinking about getting a credit card? If so, then you must be having some questions in your mind. Credit cards are meant for making life easy and smooth. You don’t have to carry cash all the time to purchase anything from a store if you own a credit card. You just need to carry your credit card and you are sorted. You can search online to quench your curiosity about credit cards. Here in this article some of the common questions have been rounded up to help you get a clear picture. Spend some time reading it carefully before you go ahead to get a credit card.

  • Is there any difference between credit card and debit card?

Many of you might get confused between debit card and credit card and look for answers by searching online. So, you must know that credit card and debit cards are not the same thing. Both of them are different as they work differently although services provided by them are somewhat same.

In case of a credit card, you are actually borrowing the money from a credit card company and you need to agree to pay the percentage of interest on the outstanding debt. You must make the payment at the end of each billing cycle. While a debit card should be linked with your bank account from where you can take out many for any purpose. 

  • Is holding a credit card better than carrying cash?

Credit cards have a lot of benefits to offer apart from convenience. You can take advantage of credit cards to earn rewards, to avail cashback offers. Not just that! Credit card plays an important role in helping you build credit. By using a credit card you can get access to free credit score information. You can use credit cards to do foreign transactions without paying any extra fees. You will be able to make the most out of credit cards only when these cards have been managed well by you. Any discrepancy like late fees will definitely ruin your credit card rating.

  • How can you apply for credit cards?

You need to follow a simple and straightforward process in order to apply for credit cards. The application process just requires you to provide a little basic information. In case if you are a student then you will be asked to provide your name, location of your school, your social security number and primary address. In order to ensure your security, it is necessary for you to know your mother’s maiden name.

  • Is it a good idea to carry balance on the credit cards?

If you want to upgrade your credit scores then don’t carry balance on your credit cards. Late payment of a bill by you will force the credit card company to report it to credit reporting agencies. This means that all your payments are going to be recorded in your credit reports. Holding off payment of bills can negatively impact your credit scores and will eventually affect your chances of getting financial help in future.

  • What should be done with credit cards which are no longer in use?

If you are working towards improving your credit scores then drop the idea of cancelling credit cards even if you don’t use them any further. It is because those credit cards are capable of representing your credit history. Besides, you can take advantage of already existing cards to improve your credit card utilization ratio provided that you are able to show that the card has been paid off. All you have to do is to confirm that you don’t require the credit that you have. So, having an inactive credit card will not do any harm rather it will work in your favor.   

  • How APR is going to work in case of credit cards?

APR means Annual Percentage Rate. This basically means the interest rate that you would be paying off for borrowing money using your credit card. This is the ideal way for most of the creditors to earn a huge amount of money by utilizing the interest paid off by you. Don’t get confused as APR relates to annual rate while the creditor will be charging you on a daily basis and issue bill for every month. This is how it works.

Don’t think that you are being charged extra since you will have to pay on a daily basis. In order to make calculation easy, the annual rate has been converted to a daily percentage. This is done simply by dividing the interest rate with 365 days. Finally, the daily percentage gets multiplied with the current balance that you must be holding in your credit card account and the daily interest charge gets added to your balance the upcoming day. For convenience the annual rate of interest has been broken down into daily interest rates.

Sometime you may notice that your APR is going up despite the fact that you are making payments on time. There could be reasons why this must be happening. It could be because your credit rating is decreasing, card related promotion has come to an end or there is a change in the prime rate especially if you are using a variable rate card.

  • What are the ways that can help you avoid credit card fees even after having a credit card?

Late payments or missed payments are majorly the root cause of credit card fees. So, the best way out would be to pay off the bill on time and in full every month. Please note late fees can also affect your credit rating. So, you need to be very careful.  You can also look for Payday Loans as an Option

Always keep track of mails that you receive from the credit card company. At times it may happen that no annual fees have been included when you signed in. But you may receive a mail from the credit card company which informs you about changes in terms and conditions. After reading the mail if you think you cannot afford rates then you can simply cancel the card. All this is possible only if you regularly check your mails.

  • How to decide if credit card or debit card should be used while shopping online?

In case of credit cards you may rest assured to get more purchase protection. This is something which you cannot expect to get in case of a debit card. Additional benefits that you can receive with credit cards are warranties and rewards program. Not all types of credit cards offer these additional perks. But many of the top credit cards provide facilities like extended warranties, return guarantees etc.

The main difference lies in the way both credit card and debit cards handle fraud.  Although in both cases, money gets refunded after fraudulent charges but with a debit card it takes long to get back the money while with a credit card you will not lose the money in case of fraud.

  • How does a cash back card work?

Cash back cards are basically credit cards which give you an opportunity to earn cash back every time you spend. How much cashback you will get  varies from card to card. You must know one thing that high rates can be obtained from introductory offers only. Moreover, different programs come with different types of redemption options.

By using the rewards earned you can shop online, purchase gift cards, use as credit towards the current statement, or straightaway can deposit the money in the bank account linked to the credit card.

The amount of cash back that you can expect to get is quite small and hardly matches the starting interest charges that you have to pay every month. Thus, credit cards are a very good option for those who really need them and can pay off the bill on time. Besides, donate option is also available for customers like you who are interested in donating some amount from the credit card by exploring ‘discover’.

  • Do I need to have as many credit cards to build credit?

The exact number of credit cards that you should carry to build credit cannot be confirmed. It is because there are many factors which constitute the credit score building process. Moreover, all the credit reporting agencies rely on different types of formulas.

It is better to have one or two credit cards when you are getting started with credit. The reason is with one or two cards payments can be made consistently and on time. In order to optimize your credit utilization ratio you need to have more credit cards or fewer cards with higher limits.


Credit card seems like the most convenient thing to get in today’s time. None wants to carry much cash in the pocket. With credit cards payment of restaurant bills, online shopping expenses, grocery bills etc becomes hassle free and super easy. It is just a matter of swipe and you are done. But before getting started with a credit card you must make sure if getting this card will be worth it for you. It is because at the end of the day you will have to pay for the principal amount and the interest charges that will be charged.

My Name is Raphael  I am a fan of photography, travel, and fashion. Iam also interested in shopping and education. You can visit my website www.paydatree.ca  For more Information