Credit cards can be a friend or foe of your finances – it depends on how they’re managed.
Before you start swiping away, you want to be fully aware of how they work. It’s also best if you’re aware of the impact credit cards they have on your credit health and overall financial wellbeing.
We’ve outlined some important questions to ask your credit card issuer.
Table of Contents
- 1. How long does it take to get a credit card?
- 2. How do I get my first credit card?
- 3. What is the difference between APR and interest rates?
- 4. How do I get a lower interest rate?
- 5. Do I pay interest on every purchase made on a credit card?
- 6. Can I choose my payment due date?
- 7. Do credit card issuers forgive late payments?
- 8. Will a credit card company forgive the late payment if you call and plead your case?
- 9. How do I get a credit limit increase?
- 10. Do I need a credit card?
- Understand How Credit Works
1. How long does it take to get a credit card?
It only takes a few minutes to apply for a credit card online. In most instances, you’ll receive an approval or denial right away. But some cardholders may put your application on hold and request additional information to determine if you’re eligible. Once you’re approved, you should expect to receive the card in the mail in 7 to 10 business days.
Applying by mail? Expect a lengthier process since the credit card issuer has to receive your application and input the contents into their system to get a response. And should they request documentation to verify the information included in your application, it will take even longer to get an answer.
2. How do I get my first credit card?
If you have little to no credit history, it may be challenging to get an unsecured credit card. However, secured credit cards that require a deposit that’s equivalent to your credit limit are also an option. The credit card issuer will review your account activity for a set period and may upgrade you to an unsecured card and refund your deposit if you demonstrate responsible use.
Another way to build your credit to qualify for a credit card is through a Credit Builder Loan from MoneyLion. There’s no credit check or deposit requirement, and most payment activity is reported to the 3 credit bureaus – Experian, Equifax, and TransUnion – each month to boost your credit score. Even better, you will receive a portion of the loan proceeds right away, and the remainder will be held in an interest-earning Credit Reserve account until the loan is paid in full to help you save while you build credit. The Credit Builder Loan is part of the Credit Builder Plus membership, which includes access to credit monitoring, exclusive cashback, and more.
3. What is the difference between APR and interest rates?
Interest rates define the amount of interest that is accrued on charges. The APR (annual percentage rate) goes a step further to include both interest and fees. In the world of credit cards, the two are essentially the same.
There are many types of APRs you should be aware of. The purchase APR is the interest assessed to credit card purchases, and you may qualify for an introductory APR of as low as 0 percent for a set period when you open a credit account.
Planning to transfer a balance from another credit card? A balance transfer APR may apply. Or you may pay a cash advance APR if you withdraw funds from an ATM using your credit card.
Read the fine print when you apply to learn more about applicable interest rates and charges.
4. How do I get a lower interest rate?
Don’t like the interest rate on your credit card? You may qualify for a lower rate if you’ve managed the card responsibly by keeping the balance low and making timely payments each month. A significant increase in your credit score could also warrant an interest rate reduction. Either way, it’s best to call and inquire. Note that Instacash advances from MoneyLion always have a zero percent APR.
5. Do I pay interest on every purchase made on a credit card?
All purchases made on a credit card are subject to interest unless you:
- Pay off the charges before the due date.
- Make purchases during the promotional period and pay the balance in full before the introductory APR ends.
6. Can I choose my payment due date?
If the payment due date isn’t quite working out for you, contact the creditor to change it. You can call the customer service hotline and speak with a representative directly. Some credit card issuers also allow you to modify your due date online.
7. Do credit card issuers forgive late payments?
Most credit card issuers assess a fee if you fail to make a payment by the cutoff time on your due date. You can find this information on your statement or their website. If your payment is due by 5pm and you hit submit at 5:02, expect the fee to appear on your account.
8. Will a credit card company forgive the late payment if you call and plead your case?
It depends. Some will waive the penalty as a one-time courtesy if you typically pay on time. But if you’re a repeat offender, don’t expect the credit card issuer to be as understanding unless you have an extenuating circumstance that warranted the untimely payment.
You should also know that a late payment could subject you to an increased interest rate for a set period. This is referred to as a penalty APR and could cost you a fortune. And if the account remains delinquent for 30 days or more, the creditor will more than likely report it to the credit bureaus, which is bad news for your score.
Try to avoid late payments at all costs. Enroll in auto-payments if you have trouble keeping up with due dates. Struggling to make your payments? Reach out to the credit card issuer to inquire about a forbearance, payment arrangement or financial hardship plan.
9. How do I get a credit limit increase?
Credit card accounts are routinely reviewed for credit limit increases. So, don’t be alarmed if you log in to your online dashboard and notice a much higher limit with no effort on your part.
Or you can ask the credit card issuer to manually evaluate your account if you want a higher limit. Be mindful that a manual review could warrant a hard credit inquiry, which dings your score by a few points.
A word of caution: credit limit increases can improve your overall credit utilization and boost your credit score. They can also backfire if you start swiping right away as you’ll rack up more debt and end up with a higher monthly minimum payment.
10. Do I need a credit card?
This is a personal decision that depends on your financial situation. Credit cards grant you access to a line of credit that can be used to cover big-ticket purchases or unexpected expenses when money’s tight. They can also help you establish a solid credit history over time if used responsibly.
Unfortunately, some come with hefty fees and interest that can mean bad news for your finances or land you in the hot seat with creditors if you don’t understand what you’re getting into. Or you can find yourself buried in a mountain of debt if you run the balance up and can only afford to make the minimum payment each month.
Still not sure if a credit card is a good fit for your finances? Consider a no interest Instacash cash advance from MoneyLion as a viable alternative. You can get up to $250 in extra cash when you need it. Plus, the payment is scheduled to coincide with your income deposits to make the loan more manageable.
Understand How Credit Works
The most important thing is that you understand how credit cards work and why having a couple in your wallet is a good thing as long as you manage them properly. Take some time to do your homework before deciding if a credit card is right for you.
If you are looking to build credit and don’t necessarily want to dive into applying for a new card, you can always apply for a Credit Builder Loan. This loan puts cash in your account, builds your credit score, and is easy to apply for. MoneyLion handles setting up the payments and reporting your positive payment history to the credit bureaus.