I’m A Credit Card Expert — Here Are 30 Things I Always Tell People

As a personal finance journalist and a credit counselor, people often ask me for credit card advice. And I’m happy to give it! But I find myself sharing the same set of basic facts because they’re helpful for so many people.

And then it dawned on me: Credit cards can be as simple or as complicated as you make them. But behind (or is it beneath?) every credit card strategy is a set of basic facts and ground rules that are true and relevant to every strategy.

So here they are: The 30 basic credit card facts I’m always sharing with people.

1. Your credit card interest rate can change

Credit card issuers can charge interest rates as high as they want (with very few execeptions) — and they can change them at any time. The interest rate on your credit card must only remain the same for the first year. After that, your card issuer is only required to give you a 45-day notice before changing the rate. And if you’re late on your card payment by 60 days or more, even that doesn’t apply.

2. You can say no to an interest rate increase

You don’t have to agree to have your card APR raised, thanks to the Credit Card Accountability, Responsibility and Disclosure Act (or CARD Act). You can decline the rate hike or try to negotiate new terms. However, the issuer might decrease your credit limit as a result or shut down your account altogether.

3. You can ask for a retention offer

If you’re unhappy with your credit card, see if you can get a retention offer before you cancel it. A retention offer is an incentive some issuers provide to keep you as a customer. It can come in many forms, such as your next annual fee waived or reduced, extra rewards or a bonus for a certain amount of spending. Not all issuers provide such offers, and not every cardholder qualifies, but it never hurts to ask.

4. You might not always qualify for a welcome bonus

A welcome bonus can sometimes be a deciding factor when you’re considering whether to apply for a credit card. However, such offers aren’t guaranteed. For instance, if a credit card requires an excellent credit score, but yours is only good, you might still get approved — but without the sign-up bonus. Some issuers also have their own rules. One example is a once-per-lifetime policy that prevents cardholders from receiving a welcome offer on the same credit card more than once.

5. You aren’t charged interest on purchases if you pay in full

The prospect of paying credit card interest can be a huge deterrent to using a credit card. The good news is, you don’t have to pay it. In fact, the healthiest credit card habit you can have is avoiding it by paying your card bill in full every month. Remember, you only owe interest on purchases when you carry a balance. This is because the vast majority of credit card issuers offer a grace period, during which you aren’t charged purchase APR if you pay by the due date. Still, check your terms and conditions: some predatory cards might not provide a grace period. Plus, the rules and rates are different for other types of transactions, such as balance transfers and cash advances.

6. You can pay multiple times per month to always keep your credit utilization low

Another excellent habit to adopt is paying down your balance a few times per month. This helps your credit utilization (the percentage of your credit line you’re using). Credit utilization is the second most important credit score factor after payment history. You want to keep it under 30 percent. The lower, the better.

7. Your late credit card payment might not impact your credit right away

A missed credit card payment is bad news. It’s expensive, as you could have to pay a penalty APR, and many cards also charge late fees. Luckily, your late payment won’t impact your credit score right away. Issuers generally only report missed payments once they’re at least 30 days late.

8. You can ask your card issuer for help if you’re in financial trouble

If you know you’re going to have to pay late (or if you can’t pay at all), don’t just ignore your credit card bill. Call your credit card issuer and work out a solution. Your bank might agree to move your due date. Or, if your financial difficulties might be more long-term, your issuer might offer to enroll you in a hardship program.

9. Card issuers might find it suspicious if you apply for cards frequently

Try to limit your credit card applications to one per six months at most. Otherwise, the card issuer might think you’re in financial trouble and attempting to secure multiple credit lines urgently. In other words, you might look like a risky borrower, and banks tend to minimize the risk.

10. You can dispute credit card charges if something is wrong with the purchase

Credit cards offer plenty of protections. One of them is against charges for a faulty product or unsatisfactory service. First, you’ll need to try to resolve the issue with the merchant or service provider. If that fails, you have the right to dispute the charge on your credit card and possibly get a refund.

11. “You’re preapproved” is very powerful language

If you get a promotion from a card issuer saying you’re “preapproved” or “prequalified” for a credit card, the issuer would really love to have you as a customer. In this highly regulated industry, such language means you have a very good chance of getting the card unless something in your credit history drastically changes.

12. You can ask for a higher credit line

The higher your credit line, the easier it is to keep your credit utilization low — if you keep your spending at the same level. Your card issuer might increase your credit limit automatically every once in a while, but you don’t have to wait for it. If you’ve been a responsible cardholder, you can get in touch with the bank and request it. Again, just make sure you don’t do it too often to avoid raising any red flags to the issuer.

13. Paying only the minimum amount can keep you in debt for years

When you make only minimum payments on your credit card, you keep your account current. Sadly, you also keep yourself in debt. For example, if you have a $500 debt at 20 percent APR, and you only make 2-percent minimum payments, it will take you 50 months to pay off the debt, and you’ll pay $236 in interest. And that’s if you don’t add more charges.

14. Missed credit card payments and account defaults stay on your credit report for seven years

Paying late or letting your account go into default are some of the most harmful things you can do to your credit. These negative marks stay on your credit reports for seven years, weighing your scores down. The longer the delinquency, the more an impact on your credit.

15. Your credit card has more than one APR

Your card terms include more than one APR. What’s usually referred to as an interest rate is actually just the purchase APR which you pay, as the name implies, on regular purchases. Other types include a balance transfer APR that applies to balances you move from other cards, and a cash advance APR that you pay when you take out cash from your credit card. Read your card’s terms and conditions to find out what you’ll be charged on different kinds of transactions.

16. Credit card benefits can change at any time with little warning

Your credit card might fit your lifestyle and spending habits perfectly today — and completely change tomorrow. Credit card issuers adjust their offers to attract and retain cardholders in a way that’s best for the bank’s bottom line. Popular cards are most likely to go through changes every few years.

17. Your credit card issuer can close your account or cut your credit limit at any time

Access to a credit line is a privilege your issuer has the right to take away. And unless it’s done illegally, such as due to provable discrimination, there isn’t much you can do. For instance, if you don’t use your card at all, the bank might cancel it due to inactivity. Or if you’re maxing out your card, the issuer might also close the account, seeing it as risky behavior.

18. You can lose your 0 percent APR offer

If you have a 0 percent APR card, you probably know that the no-interest period is temporary. But you can make it even shorter if you pay late. As soon as you miss a payment, you’ll forfeit the promotional 0 percent rate.

19. Your card rewards can lose value

Card rewards are currencies, and like any currency, they’re prone to devaluation. A thousand points might be redeemed for $15 today — and just $10 a year later. For that reason, it’s best to avoid hoarding points and miles.

20. You can downgrade or upgrade your credit card

If you’re unhappy with your credit card, you don’t have to close the account. Instead, you can switch to a different card with the same bank. Issuers have different rules for upgrades and downgrades, so make sure to check your issuer’s policies. Keeping the account will allow you to maintain the credit line, which is good news for your credit.

21. Closing a credit card can lower your credit score

Speaking of credit, closing a credit card can result in a drop in your credit scores. This is because you’re removing a portion of your available credit, causing your overall credit utilization to increase. Additionally, it can reduce your credit mix, which is another credit factor that shows you have a variety of credit accounts, such as credit cards, auto loans, a mortgage, student loans and others. This is especially true if this is your only credit card.

22. You can avoid paying interest with a balance transfer

A balance transfer card allows you to move a balance from another card and pay it off without interest during a promotional period. This can be an excellent way to pay off credit card debt and save money on APR charges. That said, this method requires discipline. You’ll need to stop charging your credit cards as you’re paying off the balance to avoid finding yourself in more debt than you started with.

23. You’re not responsible for fraudulent purchases on your credit card

Major credit card issuers, as well as many smaller ones, offer zero fraud liability. That means that you’re not responsible for any fraudulent charges on your credit card. Further, even if your bank doesn’t offer such protection and your physical card gets stolen, you’re only liable for up to $50 in charges, according to the federal Fair Credit Billing Act, as long as you report the fraud within 60 days. And if it’s just your card information that’s been stolen, but you still have the card, you’re not responsible at all.

24. When you pay less than the minimum, it’s reported as a missed payment

A minium payment allows your account to stay current. But if you pay less than the minimum amount, the issuer will consider the payment missed or late and report it as such. As a result, you’ll likely be hit with a penalty APR and late fees, and your credit score might suffer.

25. Carrying a balance won’t help your credit score

It’s a stubborn myth that carrying a balance is beneficial for your credit. In fact, lower credit utilization is better for your score. Rolling a balance month over month has no advantages — and it can land you in expensive debt.

26. A credit card has more protections than a debit card

It’s safer to pay with a credit card because it offers more powerful fraud protection and dispute resolution. While it’s possible to get your money back on a debit card too, you might be liable for a higher amount. Plus, it can take you longer to dispute charges. And since the money comes from your personal funds rather than the bank’s, you won’t have access to this money until the dispute process is complete.

27. If you’re redeeming travel rewards for cash, you’re missing out on value

Travel card rewards can be incredibly valuable, especially if you’re good at moving them between airline or hotel loyalty programs to score the best deal. But if you redeem for cash, you might get less than a cent per point or mile. If you prefer to get cash from your rewards, a cash back card might be a better fit.

28. Maxing out your card can hurt your credit score

If you’re using more than 30 percent of your credit limit, your credit utilization can have a negative impact on your scores. And if it’s closer to 100 percent, that impact can be especially significant. Plus, it’s a red flag to your potential lenders.

29. You can combine rewards from two or more rewards credit cards

If you’re a rewards maximizer, it might make sense to carry multiple cards from the same bank. If the issuer allows pooling rewards from different cards, you can reach your travel goals more quickly. Some issuers, such as Capital One and Chase, even let you combine rewards from cash back and travel cards.

30. You can change your card’s due date

If your payment due date doesn’t align with when you receive your paychecks, you might be able to move it. Many issuers allow it — you just need to get in touch and ask.

The bottom line

When it comes to credit, there’s always more to learn. And every new piece of information can help you shape healthier credit card habits. I hope my list of favorite card facts helps you — and if so, feel free to bookmark it. I might revisit it later and add more to continue saving you money, stress or both.