Here’s a truism that you might never have considered: you don’t know what you don’t know. That is, there’s not way we can be aware of all the things we don’t know. So if someone asks you what you don’t know about credit cards, you might not really be able to give them an answer!

Since we go around basically ignorant of our own ignorance, here’s a head start on discovering some of those basic facts you may not know – at least, the ones about credit cards. Many of these things are little known; people can have and use credit cards for years without ever being aware of them.

Read and learn…

Never max out your credit card. A credit limit isn’t meant to be a suggested rotating balance; don’t think of your credit limit as the actual amount you can spend on your card. This is not only bad for your finances (how are you going to pay off that balance in a timely fashion?), it’s bad for your credit score. One of the factors that matters most to your credit score is your debt-to-available-credit ratio. If you’ve maxed out your card, it will reflect badly on your credit score.


Never pay just the minimum. Just like your credit limit isn’t the balance you should aim to reach, the minimum payment due isn’t the amount you should ever pay each month. If you rack up credit card debt and only pay the minimum amount due every statement period, it could take you literally decades to pay off your debt. Not only that, but you’ll pay hundreds, or possibly thousands, of dollars in interest charges alone. So even if you can’t pay the full balance due, never, never pay only the minimum due.

Your credit score dictates what annual percentage rate, or APR, you’re offered. This is the interest rate you’ll be charged if you don’t pay off your balance in full each month. When you apply for a credit card, you might notice that the application indicates three different possible APRs for your new purchases. Which one you are assigned upon approval of your account will depend on how good your credit score is. The better your score, the lower your APR. This is just one more reason to cultivate a healthy credit score!

Credit cards aren’t that complicated, but it’s good to be educated about how they work. Knowing these basics is the start to good credit card literacy.

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