So, you’ve decided to apply for a credit card, huh? Ready to make your plastic-powered dreams come true? Before you dive into the deep end of credit card offers, let’s pump the brakes for a second. You’ve got some important terms to learn. Think of these terms as the cheat codes to the game of credit cards. If you know them, you’ll level up faster than you can swipe.
Let’s get to it: here are 5 credit card terms you need to know before you apply. Trust me, your future self will thank you.
1. APR (Annual Percentage Rate)
First up, we have APR. This one’s a doozy. APR is the annual interest rate you’ll pay on any balance that you don’t pay off in full each month. In simple terms: it’s the price you pay for not paying your bill. The higher the APR, the more you’ll end up owing. So, if you’re the type of person who might forget to pay off your credit card every month (guilty as charged), you’ll want to find a card with a low APR.
Funny Take: APR is like that one friend who borrows your stuff and returns it later with a penalty fee. You let them borrow it for free at first, but when they give it back late, you start charging them interest. Don’t let that friend be your credit card.
Pro Tip: Shop around for a card with a low APR, especially if you tend to carry a balance (we won’t judge… much).
2. Credit Limit
Your credit limit is the maximum amount of money you’re allowed to borrow on your credit card. If you have a $1,000 credit limit and you’re out buying the latest tech gadget, you better make sure that purchase doesn’t push you over that limit. Otherwise, it’s like a bouncer at a club telling you, “Sorry, buddy, you’re not getting in.”
Funny Take: Your credit limit is like the “suggested portion” at an all-you-can-eat buffet. Sure, you can eat a lot, but don’t push it unless you want to deal with the consequences.
Pro Tip: Always stay under 30% of your credit limit. That way, you’ll look responsible and your credit score will thank you.
