Personal Finance

Better Finances for a Better You

Topic: "Credit Cards"

← Curating the web to find the most interesting and helpful information about your money.

Did you know?

According to TransUnion, the average credit card balance for Canadians at the end of 2023 was $4,265.

Use our credit card payoff calculator to help you plan for a brighter future →

Did you know?

Many credit card companies offer their customers, and sometimes others, a free look at their credit scores.

Top sources for free credit scores →

Serious Stuff

Your credit score is based on five core factors:


  • 35% – Payment history
  • 30% – Credit utilization
  • 15% – Length of credit history
  • 10% – Inquiries and new credit
  • 10% – Diversification of credit
Work out how long it would take to pay off a credit card with our free calculator →

Word of the week

Penalty APR

When you make a late payment, card issuers have the right to penalize you with a penalty annual percentage rate (APR) that is greater than your standard APR.

Start planning to pay off your credit card with our credit card payoff calculator →

Did you know?

At the end of 2023, the average credit card debt per borrower was $6,360, or about 10% higher than the year before—ushering in an all-time high

Credit Card Statistics And Trends →

Word of the week

Prime Rate

The best interest rate that lenders charge customers is known as the prime rate, or prime lending rate. It's possible that your credit card's real interest rate is higher than the prime rate. Variable APRs frequently fluctuate in tandem with changes in the prime rate. It follows that your variable APR will probably increase if the prime rate does, and vice versa.

Here’s a breakdown of the most common personal finance terms →

Budgeting

It's more useful to measure the average American's credit limit by age group, so you can compare your limit to others like you. Here's a look at how each generation fared in Experian's 2022 consumer debt report (ages in parenthesis):

  • Silent generation (77+): $32,379
  • Baby boomers (58-76): $40,318
  • Generation X (42-57): $35,994
  • Millennials (26-41): $24,668
  • Generation Z (18-25): $11,290
What is the average credit card limit? →

Did you know?

US credit-card delinquency rates were the highest on record in the fourth quarter of 2023, according to a Federal Reserve Bank of Philadelphia report.

Use our free Credit Card Payoff Calculator to find out how fast you can be debt-free →

Word of the week

Purchase APR

Purchase APR, which can be fixed or variable, is the interest rate applied by credit card companies to new purchases you make on your credit card when you don't pay off your full balance.

Learn more about Purchase APR and how it impacts you →

Word of the week

Credit Card Cash-Advance APR

The interest rate that applies to cash advances made using a credit card. Often, this is one of the highest annual percentage rates that you may pay. Cash advances have no grace period and start accruing interest right away.

See other key terms to increase your knowledge and guide you to financial wellness →

Did you know?

Members of Generation X have the highest average credit card debt at $7,155, followed by baby boomers and millennials, according to credit bureau Experian’s latest consumer findings.

Experian Study: Average U.S. Consumer Debt and Statistics →

Word of the week

Balance Transfer APR

A balance transfer APR (Annual Percentage Rate) is the interest rate you'll pay on balances you transfer balances from one credit card to another. Some credit cards offer a promotional balance transfer APR. You may be eligible to receive one of these promotional offers when you transfer credit card debt to their card from an existing credit card.

Best balance transfer credit cards of April 2024 →

Word of the week

Annual Fee

The annual levy imposed on credit card holders. The first year's yearly charge may be waived for some cards.

Use our free Credit Card Payoff Calculator to find out how fast you can be debt-free and how much you'll save →

Word of the week

Balance Transfer

Transferring debt from one credit card to another with an introductory 0% APR for a predetermined amount of time—typically six to 21 months—is known as a balance transfer. Balance transfers give you extra time to pay off debt and can result in interest savings. Be aware that you cannot move balances from one card to another issued by the same bank.

11 best balance transfer cards with 0% APR of April 2024 →

Saving

Credit scores determine whether you can get a mortgage, credit card, auto loan and more. So if your score is subprime, how do you bump it up to above a 700?

Saving NPR Life Kit on Effective ways to repair your credit score →

Word of the week

Billing Cycle

A billing cycle is the interval of time between the last statement closure date and the subsequent date is known as a billing cycle. The CARD Act stipulates that billing cycles must be at least 21 days long.

What Is a Billing Cycle and How Does It Impact Credit Score? →

Did you know?

U.S. consumers owe a record $1.129 trillion on their credit cards, and the average American credit card debt is $6,501.

Use our free Credit Card Health Check to see your credit utilization ratio and plan for a brighter future →

Word of the week

Grace Period

A grace period is the amount of time between the end of a credit card billing cycle and the day when your bill is due. During a grace period, interest is often not charged on your balance. Although the grace period varies per credit card issuer, it must always be at least 21 days following the conclusion of the payment cycle. Remember, grace periods do not apply to cash advances or debt transfers!

25 key terms everyone with a credit card should know →

Word of the week

Avalanche Method

With the avalanche debt payoff strategy, you focus on repaying debts based on their interest rates. This method prioritizes interest rates and paying off debt with the highest interest rate first. You move on to the next highest interest rate debt after the first is paid off. This helps you pay less interest over time.

Strategies for Paying Off Debt Faster →

Serious Stuff

Total Credit Card Debt Reaches $1 Trillion: 5 Ways to Get Out of Debt by Evelyn Waugh

Here are 5 steps to get out of debt:

  1. List everything you owe
  2. Decide how much you can pay each month
  3. Reduce your interest rates
  4. Use a debt repayment strategy
  5. Avoid new debt
Detailed steps to get out of debt →

Serious Stuff

8 steps to helping children build good credit from Megan DeMatteo at CNBC Select

  • Start early
  • Teach the difference between a debit card and a credit card
  • Incentivize saving
  • Help them save early for a secured credit card
  • Co-sign a loan or a lease
  • Add your child as an authorized user
  • Have them report all possible forms of credit
  • Encourage them to apply for a student card
Learn more details on the best tips for parents trying to help their children build good credit →

Word of the week

Snowball Method

The snowball repayment method consists of listing all your debt balances and tackling them from smallest to largest depending if the interest rates are the same. This method prioritizes balances as you move on to the larger ones next. This helps build momentum and motivation by settling debts faster.

Explore different strategies for paying off debt faster and how you can utilize our debt payoff calculators →

Serious Stuff

The 6-step method that helped a 34-year-old pay off $30,000 of credit card debt in 1 year


Step 1: Survey the land

Step 2: Limit and leverage

Step 3: Automate your minimum payments

Step 4: Yes, you must pay extra and often

Step 5: Evaluate the plan often

CNBC: How a personal finance blogger managed to pay off 5-figure credit card debt in just 12 months →

Infographic of the week

Holiday Survival Guide

The winter holiday shopping season is the most expensive time of year for most households. This year, spending is expected to be even higher due to rising prices. This infographic helps you start planning to shop and save for the 2023 holiday season.

Holiday Survival Guide How to plan and save for the 2023 holiday shopping season →

Word of the week

Creditworthiness

The term "creditworthiness" describes the degree of a lender's trust in a borrower's capacity to return a loan. The borrower's creditworthiness is mostly based on how successfully they have handled their prior financial commitments.

Discover how long it would take to pay down your credit card with our free credit card payoff calculator →

Did you know?

In 1950, Diners Club introduced the first payment system resembling a credit card. This wasn't a real credit card, though. It was a charge card instead, and the cardholder was expected to pay the whole debt each month.

Use our credit card payoff calculator to help you plan for a brighter future →

Word of the week

Credit Limit

The most you can spend with your credit card is determined by your credit limit. When you first receive a credit card, the issuer sets your limit. You can request a decrease or increase.

What Is a Credit Limit? How It's Determined and How to Increase It →

Word of the week

Credit Utilization Ratio

A comparison of your available credit to how much you have actually utilized. A good credit score can be attributed to a low utilization ratio. The ideal target is to use 30% or less of your available credit.

You can view your personal ratio with our Health Check →

Word of the week

FICO

The three-digit FICO Score, or a Beacon Score, determines whether your credit is good or bad. Fair Isaac & Company, also known as FICO, is a US-based business that sells Equifax and TransUnion Canada their unique rating system. When you apply for credit, lenders can quickly and reliably learn details about your finances thanks to the FICO Score.

Getting your credit report and credit score →

Word of the week

Credit

Credit is money that you may borrow from someone (like a bank or credit card company). You must consent to repaying them on a predetermined timeline, typically with interest, by signing an agreement. The four basic types of credit: - Revolving credit - Charge credit - Instalment credit - Service credit Each serves a different purpose and works in a different way.

Learn more about credit and why credit scores are important →

Did you know?

Credit card and auto loan missed payments increased by 19% in the first quarter of 2023, according to Equifax, as Canadians struggled to keep up with rising living expenses and interest rates.

Don’t let credit cards rule your life. Our credit card paydown calculator will help you plan for a brighter future →

Serious Stuff

Why you got into debt, and how to get out "Between massive mortgages, student loans, lines of credit and credit cards, a lot of us are struggling to pay what we owe and stressed about it."

Serious Stuff Podcast: Why you got into debt, and how to get out →

Word of the week

Cost of Borrowing

The total cost for you to borrow money. This includes the principal amount of the loan, interest, fees and any other costs associated with the loan.

Keep track of all your debt and the true cost of borrowing →

Word of the week

Credit Score

"Your credit score is a three-digit number that comes from the information in your credit report. It shows how well you manage credit and how risky it would be for a lender to lend you money. Your credit score is calculated using a formula based on your credit report. Note that you: - get points if you use your credit responsibly - lose points if you have trouble managing your credit Your credit score will change over time as your credit report is updated."

Learn more about your credit score →

Word of the week

Annual Percentage Rate (APR)

APR stands for Annual Percentage Rate. It's the yearly interest rate you pay on a loan or credit card. However, a credit card's advertised APR isn't the true interest rate because it compounds daily.

Learn how to calculate the effective APR to find a credit card's true interest rate →

← Curating the web to find the most interesting and helpful information about your money.