Credit Card FAQs

Frequently Asked Credit Card Questions

Frequently Asked Credit QuestionsWhether it be for rebuilding credit, managing your finances or simply keeping track of purchases, credit cards are a part of the modern family. You may love your credit cards or you my hate them, but in the end you have one (or more). The reason this is the case is because of the golden rule of commerce: convenience. They’re compact but carry on them our financial ‘power’ and in turn our ability to provide for needs and wants alike. The average person American has 3 credit card[1].

As with any powerful thing, there are several questions that come along with credit cards. You may use your credit card for a number of reasons but you may not know everything there is to know about that card in your pocket. Hopefully, we can provide some insight and guidance. Below are the common questions we receive about credit cards, debit cards and improving credit. Good people make bad decisions sometimes, and that’s okay! There are always ways to find your way back with time, patience and know-how.

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What is a good APR?

The annual percentage rate (APR) determines the amount of interest charge on credit card balances. Obviously the best APR would be 0% but that is unrealistic. The APR varies per card issuer but most individuals with good to okay credit will find their rates between 8%-12% while others, on the lower end of the credit scoring system may find their rates between 12%-30%.

What is a fixed-interest rate and variable-interest rate?

Fixed interest rates mean that the interest applied to the amount financed, borrowed or extended will not change over the course of time. Of course, there are stipulations and situations that may cause that to change, but normally the rate stays where it is if there is no negative payment behavior such as late or less-than-agreed payments.

Variable is exactly that, a variable interest rate. These are usually attached to higher balance credit cards and are meant to motivate the card carrier to pay off high balances quickly. Some card issuers may use variable interest rates as a reward for good payment/spending behavior. Such as paying more than the minimum or charging over a certain amount monthly can result in a lower interest rate on the purchases. It is best to review the terms and conditions of the card issuers to see what plans are available and what rates they offer; as the rates and types changes with each frequently.

How can I improve my credit if no one gives me a chance (aka ‘a credit card’)?!

First, know that you are not alone in that plight. With the climate in the financial world following the housing crash and recession, banks are being careful who they allow into their fold. According to, 15% of consumers applied for credit cards in 2012, and 7 percent were rejected[3].

So how can you improve your credit score without being given credit? Specifically, how can credit cards help if you can’t get one?! If you have a job or access to monthly income, you can actually obtain secured debit or credit cards that are reported to the agencies. By securing the debit or credit card with some type of funds, equipment or collection of items, you are ‘securing’ the credit line; which means if you are delinquent to the point of the card being charged off, the lender can lay claim to the security.

Is there really such a thing as a 100% guaranteed approval (with credit cards)?

Quick answer, yes. There are many businesses that are willing and able to extend credit to those struggling with debt, low credit scores, or even bankruptcy. The term 100% guaranteed approval is often attached to a disclaimer that provides stipulations of the guarantee. Meaning that you have to read the fine print to determine if the guarantee applies to you. If you are in the market for a guaranteed approval credit card, it may be better to look into debt consolidation.

I’ve been denied repeatedly for credit, what should I do?

It may seem bleak and you may be discouraged, but there are a number of other ways to get ahead of your debt or financial burden. Depending on the nature of the debt, you may find it possible to request a reduced settlement amount. In some cases, creditors, lenders and collectors actually have credit card programs in which your existing debt can be transferred or ‘paid off’ on a credit card that you then make payments on. By doing this, you are paying on your existing debt(s) but still have access to the funds in the form of available credit.

I have a credit card that I need to get rid of, what’s the best way?

Depends on you, your credit situation and what you’re willing to do. That may sound intense, but really it comes down to how soon you want to eliminate the credit card. If you are willing and able to make a second payment during the month, you can quickly eliminate the credit card debt. This is because of how the APR is applied. By doubling up your payments you are not only meeting the minimum payment but reducing the amount the interest is applied to. offers this example:

$2,000 on a card with a 17 percent interest rate. If you make only the minimum monthly payment (which is about 2 percent of the balance), it will take more than 21 years to pay off the balance. But if you make an additional payment of the original amount two weeks later, you will be debt-free in less than three (!) years[2].

Another option is to pay off the credit card. This is can often be lower than the amount of your current balance, but doesn’t improve your credit as much as paying on time and more than the minimum does. You can also take out a personal loan or transfer the balance to a credit card with a lower interest rate, see next question though.

My credit card has an introductory rate, what is that?

The introductory rate is often a promotional, limited time APR that incentivizes new clients of a creditor to either open new credit accounts or transfer their balances. The introductory rate usually last for 12 to 18 months and is in the single digits. After the promotional period ends, the interest rate will then increase to an arbitrary number outlined in the terms and conditions. In many cases, any outstanding balances are immediately assessed and the interest applied. In extreme cases, where the initial purchases or transfers have not been paid off during the promotional period, the introductory interest is dropped and the original amount is used to calculate the interest due. Meaning, you owe the arbitrary interest on the original amount charged to the card no matter what payments were made.

I’m pre-approved! What does that mean?

Being pre-approved is similar to the introductory rate in that it is often a means of promotion or advertising. Pre-approval without filling out paperwork is, for lack of another term, impossible. Nevertheless, you may be pre-approved because of your public records, existing credit relationships with a lender or previously applied for lines of credit. Whatever the reason, you will still need to complete an application and follow the creditors approval process to obtain the loan or credit line.


  1. “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010
  4. Good general information on improving you credit once you’ve been approved for a credit card: