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Credit Card Primer
What are the cash advance features?
Some credit cards let you borrow cash in addition to making purchases on credit. Most credit card companies treat these cash advances and your purchases differently. If you plan to use your card for cash advances, look for information about:
- Access. Most credit cards let you use an ATM to get a cash advance. Or the credit card company may send you “checks” that you can write to get the cash advance.
- APR. The APR for cash advances may be higher than the APR for purchases.
- Fees. The credit card company may charge a fee in addition to the interest you will pay on the amount advanced.
- Limits. Some credit cards limit cash advances to a dollar amount (for example, $200 per cash advance or $500 per week) or a portion of your credit limit (for example, 75% of your available credit limit).
- How payments are credited. Many credit card companies apply your payments to purchases first and then to cash advances. Read your credit card agreement to learn how your payments will be credited.
How much is the credit limit?
The credit limit is the maximum total amount--for purchases, cash advances, balance transfers, fees, and finance charges--you may charge on your credit card. If you go over this limit, you may have to pay an “over-the-credit-limit fee.”
What kind of card is it?
Most credit card companies offer several kinds of cards:
- Secured cards, which require a security deposit. The larger the security deposit, the higher the credit limit. Secured cards are usually offered to people who have limited credit records--people who are just starting out or who have had trouble with credit in the past.
- Regular cards, which do not require a security deposit and have just a few features. Most regular cards have higher credit limits than secured cards but lower credit limits than premium cards.
- Premium cards (gold, platinum, titanium), which offer higher credit limits and usually have extra features--for example, product warranties, travel insurance, or emergency services.
Does the card offer incentives and other features?
Many credit card companies offer incentives to use the card and other special features:
- Rebates (money back) on the purchases you make
- Frequent flier miles or phone-call minutes
- Additional warranty coverage for the items you purchase
- Car rental insurance
- Travel accident insurance or travel-related discounts
- Credit card registration, to help if your wallet or purse is lost or stolen and you need to report that all your credit cards are missing
Credit cards may also offer, for a price,
- Insurance to cover the payments on your credit card balance if you become unemployed or disabled, or die. Premiums are usually due monthly, making it easy to cancel if the payments are higher than you want to pay or you decide you don’t need the insurance any longer.
- Insurance to cover the first $50 of charges if your card is lost or stolen. Under federal law, you are not responsible for charges over $50.
- Before you sign up to pay for any of these features, think carefully about whether it will be useful for you. Don’t pay for something you don’t want or don’t need.
