Personal Finance

Credit Cards

With the right strategy and responsible spending, credit cards can help you build credit, earn rewards, and more. Learn how credit cards work, what interest rates they charge, and how to use your cards in smart and effective ways.

Credit Cards

A woman uses a credit card to make a purchase.

How to Use a Credit Card to Build Credit

Federal Reserve Average and Median Available APRs - Dec. 2024

Average Credit Card Interest Rate for August 2025: 23.99% APR

Credit Card: What It Is, How It Works, and How to Get One

Two illustrated payment cards facing each other with ribbons surrounding them symbolizing a comparison between credit and debit cards

Credit Cards vs. Debit Cards: What’s the Difference?

A person using credit card to pay for coffee to a card machine.

9 Perks of Credit Cards That Cash Just Can't Offer

Frequently Asked Questions

How Do I Apply for a Credit Card?
You can complete a credit card application in several ways: online, on a paper application, or on the phone. Applying for a credit card online is convenient and you can get a decision almost immediately. Be prepared with personal details like your date of birth and social security number; details on income and housing costs; and information on any authorized users you want to add to the account.
Learn More:How to Apply for a Credit Card
How Long Does it Take to Get a Credit Card?
Credit card approval can often be obtained instantly online but getting the plastic in your hands is another matter. If you are in a particular hurry many issuers can ship your card for overnight delivery, but at a significant cost. Otherwise it generally takes 3 - 10 business days to get your new credit card through the U.S. mail.
Learn More:How Long Does It Take to Get a Credit Card?
How are Credit Limits Determined?
Credit card issuers determine each cardholder’s credit limit based on many factors, the most important of which is the customer’s credit score. Other factors typically include employment status, income level and debt to income ratio. Whether credit limits are a set dollar amount or are dynamic, i.e. not pre-set, the creditworthiness of the borrower is the most important consideration for lenders in determining how much credit to extend.
Learn More:How Credit Card Companies Determine Credit Limit
Is it Possible to Get Interest Rates Lowered on Credit Cards?
Very often it is quite possible to lower the interest rate on your credit card account if you contact your card issuer’s customer service department with the request. Your account must be in good standing to be eligible for an interest rate adjustment, however, which means you have not been late with previous payments or exceeded your credit limit.
Learn More:How to Lower Your Credit Card Interest Rate
What Should You Do if You Want to Dispute a Charge on Your Credit Card Statement?
Credit card disputes typically arise when consumers unsuccessfully attempt to get a refund from a merchant for unwanted or defective merchandise or they notice an unauthorized charge on their credit card statement. In these cases the customer should contact their card issuer to dispute a charge either online or by calling the toll-free number on the back of their card.
Learn More:How to Dispute a Credit Card Charge

Key Terms

Credit Card
A credit card is a small plastic payment device connected to a revolving credit account issued by a financial services company or national bank that is accepted by network merchants for the purchase of goods and services. Credit cards typically feature an embossed account number, expiration date and cardmember name on the front of the card along with the payment network logo, security chip and card issuer name. The back of a credit card features a magnetic strip, holographic network logo and security number along with customer service numbers to contact in case of loss or theft.
Learn More
Credit Card Balance
A credit card balance is the sum total of all the charges made during the current billing cycle in addition to any balances that were carried forward from previous billing periods. Credit card balances can not exceed the credit limit on the account. The ratio of credit card balances to the credit limit determines the level of utilization of the account, which is factored into the calculation of the individual’s credit score.
Learn More
Credit Card Debt
Credit card debt is the unsecured liability that is incurred by a consumer when they carry balances forward past the due date. Revolving credit card debt is subject to minimum payments of approximately 3-5% of the total balance each month and is subject to the regular interest rate on the account unless promotional or penalty rates are in effect.
Learn More
Minimum Monthly Payment
The minimum monthly payment on a credit card account is the greater of either a stated percentage of outstanding balances (typically 3-5%, depending on the issuer) or a fixed dollar amount (typically $5 - $10). Cardholders must make at least the minimum payment due each month on their account in order to keep it in good standing. Balances that remain after making the minimum monthly payment are subject to interest rate charges.
Learn More
Grace Period (Credit)
A credit card grace period is the amount of time in days between the statement closing date and the due date for the charges made in the current billing cycle. Interest is not assessed on balances accrued during the current billing cycle if payment is made in full on or before the due date. The interest-free grace period only applies to current balances if no previous balances were carried forward from the previous billing period.
Learn More
Schumer Box
A Schumer box is a set of credit card terms and conditions disclosure in table form that are mandated to be displayed within credit card advertising material. The Schumer box displays such details as annual percentage rates for new credit card purchases, balance transfers, balance transfer fees, annual fees and other potential costs to consumers.
Learn More