Question 1

Can I get a credit card with bad credit?

Accepted Answer

Yes. It may take a little more searching, but generally, even if your credit score isn’t good, you can still get a credit card, and possibly even one that offers rewards. You may be able to get a secured credit card, for which you’ll have to provide a refundable security deposit to 'secure' your account.  Subprime cards may be another option, though these often involve an application fee. And you may even be able to secure a card with alternative means, like linking to your bank account. As with any financial transaction, if you’re getting a credit card, it’s a good idea to do due diligence and make sure you understand the conditions and trust the lender.

Question 2

How many credit cards should I have?

Accepted Answer

There’s no one-size-fits-all answer here, but if you want to build a good credit history, it can be helpful to have at least one credit card and use it responsibly. You may want to consider taking out additional cards if they offer perks, like airline miles, that you’re sure you will be able to qualify for and use. On the other hand, if you find that you’re overextending yourself on credit or paying a fortune in annual fees, it may be time to consider whether you have too many credit cards.

Question 3

What does APR mean?

Accepted Answer

APR stands for annual percentage rate. That rate is related to, but not the same as your credit card’s interest rate. An interest rate is simply the cost of the money you take out on a credit card, usually expressed as a percentage, like 20%. A card’s APR is the total cost of your debt on the card over a year--including the interest rate, but also any fees such as those for late payments, foreign transactions, or returned payments.

Question 4

What’s the difference between a credit card and a debit card?

Accepted Answer

A credit card is issued by a lender. When you charge money on it, the lender pays the vendor and adds that amount to the balance you’re expected to pay back to the lender, when you get your monthly bill or over time, with interest. A debit card is linked to your bank account, and when you charge a purchase on it, the money is taken directly from your bank account. Generally, credit cards have more protections than debit cards, and using a credit card responsibly can help you build a good credit history.

Question 5

What is a collateralized credit card?

Accepted Answer

Also known as a secured credit card, this is a credit card that you have to provide a (refundable) security deposit for. Typically, the amount you put down equals your credit limit. Cards like these may be options for people who don’t have much credit history or who have poor credit scores, since they reduce the risk to the credit card issuer that you could default on the money you owe.

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