The Ultimate Guide to Credit Cards

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II. Credit Card Crash Course 101

What is a Credit Card and How is it Different From a Charge Card or Debit Card?

book, Credit Card Crash Course 101
  • Credit Card

    Credit cards represent a line of credit – an account with money that you can borrow repeatedly. Your account will be assigned a certain limit based on the information you provide in your application. After approval, you can swipe your card to make purchases.

  • Debit Cards

    A debit card functions the same way as a credit card while shopping; however, your debit card is linked directly to your bank account. Therefore, the amount of your purchase is deducted from your checking account or some other designated account. It’s useful to think of a debit card as a paperless check that clears immediately.

Charge Cards

Charge cards and credit cards are very similar, with one major difference. A credit card is a revolving credit line in which you are only required to pay a minimum payment, or a percentage of your total bill each month. Charge cards require you to pay the entire balance in full each month or be charged a hefty penalty. According to, travel and entertainment cards, such as some American Express cards and Diners Club, are charge cards, not credit cards. Consumers may be able to obtain a larger credit line with a charge card, however they are not as widely accepted as traditional credit cards. Charge cards and credit cards offer services such as annual accounting of charges, traveler’s checks, and cash in an emergency.

Whichever route you take, any form of plastic is safer to carry than cash. If someone steals your wallet or purse that’s full of cash, there’s no way to retrieve it unless the thieves are caught. When you use debit and credit cards, however, the bank will cover those unauthorized charges up to a certain amount, usually $50, so you don’t lose every dime to your name.

How Do You Apply for a Credit Card?

Applying for a credit card is surprisingly simple, especially if you don’t have to pay an application fee. All you have to do is fill out a form and wait to be approved. You must be 18 or older to apply for any type of credit card, and you must have a job. This shows that you will have the income to pay for purchases you make with the card. You can either complete an online application, send an application through the mail, or fill out an application in a store, depending on the card you’re applying for. Online applications can be approved in seconds, depending on your creditworthiness, but mail-in applications may not be approved for 7-10 business days.