Credit Runner - FAQ, Frequently asked questions

What is an introductory annual percentage (APR) rate?

Answer
Introductory APR is a temporary rate that normally changes to a higher one after the specified intro period (normally 3-12 months). These promotions are commonly used to make large purchases (or perhaps only one large purchase) which then can be paid off in a number of months. In some cases the introductory APR is attached only to purchases, in some it's attached only to balance transfers and some credit cards have an intro APR attached to both. Keep in mind that every credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

What must I know about balance transfers and/or balance transfer rates?

Answer
Balance transfers are often done to save money. Essentially, it's way of moving a debt from one credit card to another. This is obviously favorable if the new credit card has a lower finance rate (APR) than the older one. In some cases credit cards have promotional balance transfer rates that normally last from 3-12 months. Keep in mind that every credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

Balance transfer fees – how do they work?

Answer
These fees are charged by credit card companies when you transfer a balance from one credit card to another. The fee is usually 1% to 5% of the balance transferred (in some cases up to a certain dollar value). For example, a balance transfer fee might be 4% of the transferred amount up to a maximum of $100. Some credit cards do not charge this type of fee. Keep in mind that every credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

What must I know about fixed APR credit cards?

Answer
This type of card carries a stable (fixed) interest rate that typically will not change for as long as you use it. For example, if you transfer a balance to a credit card with a fixed APR of 8%, the APR for this balance will stay at 8% until you have paid the balance in full. Fixed APR credit cards are commonly used to avoid constant balance switching between cards (which often will be the case when low intro APRs disappear and gets replaced by higher APRs). In some cases the fixed APR is attached only to purchases, in some it's attached only to balance transfers. Keep in mind that every fixed APR credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

What must I know about instant approval credit cards?

Answer
When you apply for this type of credit card you will get an approval (or disapproval) right away, hence the name instant approval credit cards. Normally you will know if you're approved or not in a matter of minutes, but there are no guarantees. Sometimes the credit card issuer will need more time to make a decision.

What must I know about reward credit cards?

Answer
Reward credit cards give the user different rewards (bonuses) for purchases made. Rewards are accumulated based on the dollar amount of purchases made with the card over a period of time. Entertainment rewards, automotive and gasoline rebates, free air travel and other travel rebates are some of the offers that are available today. However, some rewards programs can be expensive for the credit card issuer. This is why some reward credit cards come with an annual fee. Keep in mind that every reward credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

What are cash back credit cards?

Answer
Cash back credit cards give the user cash rewards for purchases made. Rewards are accumulated based on the dollar amount of purchases made with the card over a period of time. The normal cash back rate is about 1 %, but there are exceptions. In some cases increased usage mean a higher cash back percentage, other cards give a higher cash back percentage for purchases made at select merchants. It's common that cash back cards offer cash back on purchases only and not on balance transfers or cash advances. Many of these cards come with restrictions, for example there might be a limit on how much can be accumulated in a year. Keep in mind that every cash back credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

Student credit cards – what must I know?

Answer
The typical student has little or no credit history and therefore often finds it hard to get approved for a credit card. This is why there are student credit cards. These cards are usually less advantageous when it comes to rewards, features and other benefits but will still be valuable if used wisely. A student can start building a solid credit history with the help of a student credit card. Keep in mind that every student credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

How do credit cards for bad credit work?

Answer
Credit cards for bad credit are made to help build or rebuild credit histories. For those with no credit or poor credit there are secured credit cards, but there are also unsecured cards that can be used for this purpose. These cards generally come with low credit lines (around $250) and additional fees (for example applications fees). If you apply for a card like this you have to be aware of all the extra fees you will have to pay. This kind of card will not allow you to on shopping sprees but it will certainly help you restore your damaged credit history. If you're disciplined and pay all your bills on time you can ask for a credit increase after a while. Keep in mind that every credit card for bad credit is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

What are secured credit cards?

Answer
This type of credit card is generally used by people with no credit or poor credit that are trying to build or rebuild their credit history. When you apply for secured credit cards a security deposit (collateral) is required. The size of the collateral is normally the same as the credit limit for the card. Keep in mind that every secured credit card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.

What must I know about unsecured credit cards?

Answer
Unsecured credit cards do no require any form of collateral. Approvals (or disapprovals) are instead based on:

  • " Credit history.
  • " Financial strength.
  • " Earnings potential.

    • Prepaid (debit credit) cards – how do they work?

    Answer
    Prepaid (debit credit) cards, basically allow the user to determine the credit line. Normally, the credit line depends on how much money the user transfers to the specific card. Consequently, the risk of running up credit card debt is small. This obviously makes budgeting easier. Another advantage is that these cards generally come without finances charges. However, there might be other fees to pay - for example startup or applications fees, over limit fees and ATM fees. Keep in mind that every prepaid (debit credit) card is slightly different. Be sure to carefully study the terms and conditions for each specific card before you apply.