15 Credit Card Facts You Probably Don’t Know But Will Protect Your Money

According to the American Bankers Association, 73% of American families have at least one credit card. That means the majority of Americans use credit cards for purchases, at least now and then. 

However, even if you’ve been with a specific credit issuer for decades, you probably don’t know everything there is to know about your card. Credit card rules aren’t stagnant, and they can change for many reasons. 

From recent federal regulations to things you probably missed in the fine print, this list has all sorts of surprises for credit card users. So, before you blindly accept an interest rate change or freak out about a missed payment, you’ll want to read this. 

1: You Can Reject an Interest Rate Change

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Thanks to the CARD Act, credit card holders can refuse interest rate hikes. If your credit card issuers say they’re upping your rate, you can say, “No, thank you.” 

If you do that, your credit card issuer could lower your credit limit or close your card. In some cases, though, they may work with you on a new rate. 

What they can’t do is require you to pay off your balance immediately, even if they close your account. You have just as much time to pay off the balance as you would have before, which is typically years. 

2: Interest Rates Can Change Significantly

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When you sign up for a credit card, you might think your interest rate is locked in. However, that’s rarely the case. 

Most credit cards use variable APRs, which means interest rates will change over time. According to Bankrate, most credit card issuers don’t have to follow state laws limiting interest rates either, so they can charge as much as they want. 

Issuers can also change your interest rate under certain conditions, like if you miss a series of payments. Typically, they have to provide 45 days’ notice before initiating a rate change. 

3: Your Card Protects Purchases

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If you’re making online purchases, you should use a credit card. Unlike other forms of payment, credit cards come with purchase protection. 

So, if a hacker steals your card number and starts making purchases, you’re not liable for payments. And, per the Fair Credit Billing Act, you’re not liable to pay for purchases that you’re not happy with. However, the purchase must be made within 100 miles of your home, and you must try to work out the issue with the seller first. 

4: You Could Be Denied Abroad

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Some credit card holders may be surprised to learn that certain cards don’t work internationally. Often, cards from Discover or American Express only work in domestic locations. 

Cards from Mastercard and Visa work in more non-domestic areas. However, before traveling, it’s always a good idea to check where your specific card is accepted. 

5: You Could Upgrade Without an Inquiry

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Every time you open a credit card, the issuer runs an inquiry into your credit score. This helps them determine whether or not they should give you a line of credit, but each inquiry also negatively impacts your credit score. 

However, if you’re upgrading (or downgrading) your credit card with the same issuer, you can usually bypass another credit score inquiry. So, if you’re looking for different perks, like air miles rather than cashback, you might want to see if your current card issuer has a different card that would suit your needs. 

6: Having Multiple Cards Isn’t Always Good

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When you’re trying to build your credit score, it might be beneficial to have more than one line of credit. However, having multiple cards can be risky. 

If you can’t keep track of the balances on multiple cards and begin to fall behind, your debt can quickly spiral out of control. Credit card interest rates can be astronomically high, and having multiple balances can lead to financial distress. 

7: There Can Be Lots of Fees

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The American Bankers Association lists possible fees for credit card holders. There are more than many people realize.

While most credit card holders are aware of annual fees and late fees, they may not know about balance transfer fees, returned payment fees, foreign transaction fees, and expedited card replacement fees. Many credit cards also allow cash advances, but there are usually steep fees for using that service. 

8: Card Balances Aren’t Always What You Think

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When calculating your credit score, credit bureaus analyze your debt-to-income ratio. Keeping this ratio low helps keep your credit score high. And, to keep it low, you need to keep your card balances mostly or fully paid off. 

But let’s say you pay your card off every month, and your credit score doesn’t look any higher — or worse, drops a few points. In that case, it could be that your card issuer is reporting your balance after the end of a billing cycle but before your balance is due. 

This can cause problems if you’re applying for a mortgage or other loan. So, rather than wait until balances are due, it’s a good idea to pay your card off as soon as transactions post. 

9: Use Pre-Approvals For Your Benefit

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Pre-approvals don’t guarantee that a card issuer will give you a card if you apply. However, they may give you insight into what an issuer is likely to approve you for. 

Since approval processes typically involve a hard credit inquiry, which negatively impacts your credit score, it’s important to seek out cards you think you’ll be approved for. If you’re getting pre-approvals in the mail, choosing a pre-approved card (or something very similar) is a good idea. 

10: You Shouldn’t Pay Less Than the Minimum

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Credit card issuers call them minimum payments for a reason. You have to pay at least that much on your balance to avoid a late payment. 

So, if your minimum is $50 and you only pay $40 before the due date, you could incur late payment fees. Eventually, you may also notice that less-than-minimum payments detract from your credit score. 

11: Negative Information Remains on Reports a Long Time

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Let’s say your credit score is dinged because you make a late payment or have a high balance sitting on your credit card. While paying the balance off quickly can help your credit score, your credit history doesn’t just disappear. 

Lenders can typically see your credit history for the past seven years. Minor dings, like hard credit pulls, often only last for two years, though. 

12: Late Payments Aren’t Good, but They’re Also Not Terrible 

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If you miss a credit card payment, don’t totally fret. While late payments aren’t good and often lead to a penalty fee, they’re not as terrible as some people make them out to be. 

Card issuers can’t report a late payment to credit bureaus unless you’re more than 30 days behind. And, per the CARD Act, they can’t raise your interest rate until you’re at least 60 days past due. 

13: Your Issuer Can Help If You’re Struggling

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If you’re dealing with a financial issue, it’s worth reaching out to your card issuer. Many companies offer programs for customers dealing with financial hardships. 

If you qualify for your card issuer’s program, you may receive a reduced interest rate or fewer fees. Calling them sooner rather than later is the best approach. So, if you realize you’re not going to be able to pay off a balance, reach out right away. 

14: Issuers Sometimes Pay to Keep You

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Credit card issuers don’t like losing customers, which means they despise having to close an account. If you’re annoyed with something about your card, it might be worth calling the issuer to complain before you cancel it. 

Many issuers will try to incentivize you to stay with them. They may reduce or waive your annual fee, give you bonus points, or even offer a statement credit. 

15: You Should Always Shop Around 

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There’s no need to stay loyal to one credit card provider for life. New cards often come with big perks that you might want to take advantage of. 

Shopping around for a new card that provides better rewards or a low annual fee is a good idea. Just make sure you pay attention to the fine print before choosing a new card. Penalty fees, grace periods, and the current (annual percentage rate) APR should all influence your decision. 

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