Last Updated: September 13, 2023
5 min read
Getting a credit card
Key points about: advantages of credit cards
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Credit cards offer fraud protection
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Some credit cards allow you to earn cash back rewards on purchases
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Using a credit card responsibly can help you build credit history
Acredit cardis an account that lets you borrow money to pay for everyday purchases such as gas and groceries. It can also be a great resource for purchasing big-ticket items such as TVs, travel packages, and jewelry because the funds for these items aren’t always immediately at your disposal.
The advantages of credit card spending may include earning rewards, traveling, handling emergencies or unplanned expenses, and building credit.
Credit card benefits
- Rewards such as cash back, miles, or points
- Protection against fraud
- Increased purchasing power
- Not linked to a checking or savings account
- Putting a hold on a rental car or hotel room
- Building credit history
Understanding credit card terms
When making a purchase with a credit card, it’s important to remember that the credit card company is giving you a loan that needs to be paid back. This loan has anannual percentage rate (APR), which is the rate applied to your balance that subject to interest, according to the terms in the agreement with your credit card issuer.
What are the benefits of using a credit card?
Credit cards offer many benefits, ranging from rewards to fraud protection. Check the terms of each card you’re considering to see what benefits are included.
A rewards credit card does exactly what its name implies: rewards the cardholder for making purchases. Rewards can vary by issuer and card type. Some rewards come in the form of cash back, discounts on gas station purchases, and even travel miles.
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Credit cards can also be beneficial when traveling. This is because some major car rental companies and hotels require aholdon a credit or debit card to reserve a vehicle or book a room. This procedure can take several days or longer. During this time, the amount of the hold on either a credit or debit card is not available to use. Credit cards may offer greater flexibility if you do not have enough funds in your bank account to cover the hold and all other charges you’ll incur while traveling.
Did you know?
Some credit cards offer fraud alerts to serve as a safety net if someone experiences a theft of their card or information when traveling. In the case of potentially fraudulent activity, an alert may be sent via a phone call, email, or text message, and the transactions can be stopped. Also, with Discover’s$0 Fraud Liability Guarantee, you’re never responsible for unauthorized purchases on your Discover Card.1
How do I use credit cards responsibly?
Paying your credit card bill by the due date and keeping your balances low are two ways to use your credit card responsibly.
Discover Card advantages
Discover credit cards offer advantages worth considering. Each card has its own terms, and you’ll want to study them carefully. But here are a few of the benefits you may be able to look forward to if you become a cardmember:
- Cash Back and Cashback Match: Discover Cardmembers can earn cash back from purchases made using theirDiscover credit card. Different cards offer different rewards programs, such as cash back or Miles, so you’ll want to choose the one that rewards your spending habits. Discover has unlimited Cashback Match: we'll match all the cash back you've earned at the end of your first year.2
- FICO®Credit Scorecard: Discover Cardmembers can get a free Credit Scorecard with their FICO® Credit Score and important information behind it.3 That means you can easily keep track of your progress toward building good credit.
- Security: All Discover Cardmembers are protected by Discover’s $0 Fraud Liability Guarantee, which means you’re never responsible for unauthorized purchases on your Discover Card.1 You can also get an alert if we find your Social Security number on any of thousands of dark web sites.4Activate for free.
- Convenience: Check out quickly when you tap and pay with your contactless card, or add your card to your digital wallet for a fast and easy checkout.
- Nationwide Acceptance: Discover credit cards are accepted nationwide at 99% of places that accept credit cards5.
What to look for in a credit card
To choose the best credit card for you, consider these features:
- Fees: Credit cards may come with fees, such as annual fees, foreign transaction fees, balance transfer fees and late payment fees. If you use your card responsibly, you can avoid some of the fees — like late-payment fees. Others, like annual fees, might be unavoidable, and you could be on the hook for them year after year.
- Rewards: Credit card rewards run the gamut, from cash back andairline milesto hotel points and retail perks. Every rewards credit card has a unique offering, and a unique set of terms around how rewards can be earned and redeemed. The trick is to find a card with rewards that favor your spending profile. For example, an airline miles card that rewards spending on airfare may not be a good fit if you only fly once a year. But a gas rewards card might be just the match for your hour-long commute to work.
- Promotions: Promotions, such as welcome bonuses that offer enhanced rewards for a limited time, introductory APRs, or 0% APR on balance transfers, are common ways for credit card issuers to appeal to applicants. These offers can be a great way to squeeze extra rewards out of your credit card, or temporarily lower your interest rates, but make sure you understand them fully before taking advantage. Many promotions are time-limited (like introductory APRs) or come with spending thresholds (like sign-up points or miles that are only awarded if you spend a certain amount of money).
- APR: Credit cards can havemultiple APRssuch as introductory APR, balance transfer APR, standard purchase APR, cash advance APR, and penalty APR. You’ll want to understand all of them and compare across cards while you’re weighing your options. Of course, if you pay your balance on time and in full every month, you won’t have to worry about paying interest.
- Acceptance: Is the card accepted where you shop? Some credit card networks are wider than others. It’s a good idea to research the footprint of the card issuers you’re considering to ensure the one you choose is widely accepted.
- Security: What security features does the card offer? Will the issuer text you if your Social Security number is used to run a credit check? Can you disable your card easily if you lose it or it’s stolen? Having features like these can give you critical peace of mind if something goes wrong.
Armed with the knowledge of how credit cards work, the benefits they can provide, and how to use them responsibly, it might be time to take the next step and find that perfect card.
