Credit card are products that allows you to use funds borrowed from a lender to pay for goods and services. A consumer will apply through their bank or online. Once approved, they receive a plastic card with a credit limit to use at their discretion. When making a transaction for goods or services you are not using your own money. It’s the lenders money, which they’ll let you do on a short-term basis without incurring any interest. At the end of the billing cycle the consumer pays back the borrowed funds in full to avoid fees and charges Debit cards are tools that allow you to use a plastic card to pay for goods and services with your own money from your checking account. There is no interest incurred as you are not borrowing money from the lender. Prepaid credit cards are similar to credit cards, however instead of borrowing funds from a lender or using money in your checking account, you are using funds that have been deposited into a specific account to use with this card. You have paid ahead for your purchases. As with debit cards, you’re not borrowing money from a bank when you use prepaid.


It might seem simple to just use the funds that you have to avoid getting into debt, however using borrowed money is essential to building your credit profile. Great credit scores make it easier to secure loans with good terms in the future. A good credit profile is important when lenders consider you in other parts of your life such as finding an apartment, getting affordable insurance or buying a house. Another benefit of using a credit card as your preferred method of payment is that it will have the potential to earn you rewards in the form of points with generally low fees. Debit and Prepaid options generally have higher fees and do not offer you rewards and points.


Here are some Quick Finance tips on how to use your credit card effectively to build credit, avoid fees and maximise rewards:

  • Pay your bill on time at the end of your billing cycle everytime.
  • Do not let debt charges carry through to the next month. Debt can get expensive and drag down your credit score.
  • Do not apply for too many credit cards - leave a 6 month space between applications.
  • Look for special promotions that your card has that will give you extra points for shopping at certain stores, gas stations, groceries etc
  • Keep a balance on your card of at least 25% available credit per month. Maxing out your card will bring down your credit scores and prove difficult to pay back in time.


There are all types of credit cards for consumers with different requirements and goals. It is important to understand your options when picking a card that suits your credit level and spending habits. Quick Finance suggests to follow these steps to find the card for you:

  1. Know your credit score
    If you know your score is it definitely helps give you an idea about what you are eligible for and avoids applying and getting rejected (this lowers your credit score). You can view your score on sites like CreditKarma.com If the score is lower than expected, figure out what is holding you down and try to improve on those spending habits. Federal Law entitles you to one free copy of your credit report at AnnualCreditReport every 12 months.
  2. Decide what type of card you need. This should be based on your goal:
    A card that helps improve your credit score
    A card that can earn maximum reward points
    A card with low fees to use day-to-day
    There are cards with features to suit each different persons needs. Some people travel a lot and want maximum points to use for flights. Others drive a lot and want points for fuel. Others might have just moved to the USA from another country and need something to build their credit as quickly as possible. Some have been hit with so many fees in the past or only like to use their card in emergencies will look for low interest cards.
  3. Compare similar cards
    Once you have decided what type of card you need to help with your particular goals you should compare cards to see which lender offers the best terms. Students and foreigners looking for prepaid cards need to look at which card will build their credit the quickest. They should compare how much it will cost to open the account and the annual fee and ability to upgrade to a normal credit card in the future. For someone looking for a low interest 0% APR card: How long is the 0% APR period and how much interest is charged afterwards. This will keep you informed about time periods needed to pay off your debt before you get extra charges. You also want to consider if this card offers rewards and what are they compared to other similar cards. As for rewards and travel cards you would want to find a card that delivers the best rewards and benefits based on your spending habits. If you travel overseas a lot then a card with no overseas transaction fees is a must. While others who generally stay in the US but drive a lot should look for gas mileage benefits. Being savvy with these cards can earn someone a great deal of points if you know how to utilize them well. They also offer rewards incentives for referrals etc which is important to know when speaking to friends and colleagues. Finally choose the card that is best for you. This decision should be based on the card that helps you achieve your financial goals in the most affordable, efficient and rewarding way possible.


CREDIT CARDS Avg. APR Last Week 6 Month
National Average 16.06% 16.06% Bob15.42%
Low Interest 12.88% 12.87% 12.22%
Business 13.87% 13.86% 13.41%
Student 15.14% 15.14% 13.67%
Balance Transfer 15.31% 15.30% 14.67%
Balance Transfer 15.31% 15.30% 14.67%
Airline 15.99% 15.99% 15.40%
Reward 16.15% 16.14% 15.48%
Cash Back 16.26% 16.26% 15.57%
Instant Approval 18.51% 18.51% 18.03%
Bad Credit 23.43% 23.43% 22.98%
Source: CreditCards.com
Updated: 2017-07-18