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Credit Card Basics

Which credit card is right for you?

Get the most out of your purchases with these popular card categories.

  • Best cards of 2024

    The experts at Bankrate have rated and compared over 250 cards to bring you their list of top picks.

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    From our partner Bankrate

  • Balance transfer cards

    Balance transfer cards offer a low or 0% APR introductory period, giving you some breathing room to pay down credit card debt.

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    From our partner Bankrate

  • Cash back cards

    Cash back credit cards keep rewards simple, typically putting 1%-2% back in your pocket every time you use your card to make a purchase.

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    From our partner Bankrate

  • 0% APR cards

    If a big purchase is in your future, a card with a 0% introductory APR gives you time to pay off the debt before you start racking up interest.

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    From our partner Bankrate

  • Travel cards

    For frequent or aspiring travelers, travel credit cards can offer flexible rewards to redeem on flights and hotels, as well as other travel perks.

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    From our partner Bankrate

  • Rewards cards

    Maximize the value of your everyday purchases by earning miles, points, cash back, and more on every purchase you make.

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    From our partner Bankrate

  • Business cards

    When you’re starting or growing a business, these cards can help cover costs while earning you rewards and other business-related perks.

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    From our partner Bankrate

  • No annual fee

    While some rewards cards charge a hefty annual fee, these cards let you skip the yearly charge and still enjoy some nice benefits.

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    From our partner Bankrate

  • Cards for bad credit

    Cards specifically designed for people with credit scores in the 300-578 FICO range that can help build your credit score.

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    From our partner Bankrate

More Resources

Frequently asked questions

At their most basic, credit cards offer cardholders a short-term loan on purchases they make. Each month, you can spend up to a pre-set maximum (your credit limit) without having to pay for any of those purchases out of your own bank account.

At the end of the month, you’ll receive a credit card bill with a balance that reflects the purchases you’ve made throughout the month (plus any outstanding balance from months past as well as applicable fees), at which point you can pay anything between the minimum payment and your entire balance.

If you pay only the minimum, the remainder of your credit card balance will start accruing interest. But if you pay your entire balance each month, you won’t have to pay any interest.

You can think of credit card interest as the amount of money you have to pay for the privilege of using a bank’s money to fund your purchases. Just like with a personal loan or student loan, credit card interest accrues based on the APR you agree to when you open your account. Credit card interest compounds daily, so it can add up quickly—so it’s a good idea to pay your full balance as often as possible.

Because there are so many different kinds of cards, the first step should always be determining exactly what you’re going to use the card for. If you don’t have any specific credit card need in mind, then start by asking yourself, “what do I spend the most money on; grocery stores, dining out, entertainment, travel, gas, etc.?” In other words, let your spending habits guide your decision on what type of card will best meet your needs.

Be sure to read the fine print on any card you’re offered. Some of them have interest in excess of 30 percent APR, steep annual (or even monthly) fees, and easily triggered penalty fees and rates.

Under the law, every credit card issuer is required to lay out the main points about the credit card such as APR, late payments, fees, etc. in the same way, making it easier for you to compare one credit card with another. You’ll also want to review any exclusions, especially on rewards cards. For example, if you are looking for a cash back card for groceries, you’ll want to make sure that the store where you shop is not excluded.

Yes. Each credit card application will generate a “hard credit pull” that can lower your credit score. This mark will go away after a few years, but it’s generally a good idea to do your research and apply for a card you really want—and that you think you’ll have a high chance of being approved for.