3 common questions on credit cards

3 common questions on credit cards

author: Holly

By Holly

Before taking out any form of credit - whether that’s a credit card or a loan - it’s important you understand the ins and outs of the product.


This way you can weigh up your options and make sure it’s the right choice for you.

To make that a little simpler, we’ve put together a little guide to answer three questions that are commonly asked about credit cards.  

Credit limit on credit cards

1. What is a credit limit?

Your credit limit is the amount of money your lender is willing to let you spend up to on your card. Spending limits can range from hundreds to thousands of pounds.

Typically, the credit limit you’ll be accepted for depends on three key things: how good your credit history is, the lender, and the type of card you’ve applied for.

When you apply for a credit card, lenders will look at how well you’ve managed credit in the past. Typically, lenders will offer a higher credit limit to those with a good credit history, as they have proven they can be a responsible borrower.

If you’ve previously missed payments and defaulted on your accounts, this will leave a negative mark on your credit history. This will affect whether your application is accepted and may mean the credit limit you’re offered is lower than you hoped.

You should only borrow what you can realistically afford to pay back. Don’t make the mistake of spending up to your limit. If you max out your credit limit, you may find it a struggle to clear your balance.

Interest rate advertised on credit cards

2. Will I always get the interest rate advertised?

It all depends on how well you’ve managed your payments in the past, among a host of other factors like your income and outgoings.

As we mentioned earlier, lenders will look at your credit history when you apply to borrow from them. They will use it to determine what interest rate you’ll be accepted for.

You’ve probably come across the term ‘APR representative’, especially when looking for a credit card. It’s important you’re familiar with this particular piece of financial jargon.

APR stands for Annual Percentage Rate. It refers to the total of your interest rate and any other charges (not including late fees) you pay to use your credit card over the year.

If you’re accepted for a credit card with a 0% APR, you won’t pay any interest on top of what you spend for the length of the deal. However, the actual interest rate you’ll be offered when you apply for a credit card will depend on your credit history.

Although a credit card is promoted at a specific rate, you’re not guaranteed to be accepted for this rate. If the lender feels that you are a ‘risky’ borrower, they may still offer you the card but at a higher interest rate. 

Before taking out any form of credit, it’s worth checking your credit history. If it’s not in the best shape, you can look at ways to improve it. This may open you up to more competitive deals from lenders.

minimum payment on credit cards

3. What is a minimum payment?

One of the key advantages of using a credit card is that you can spread the cost of your spending over a longer period. You have the choice of whether to make the minimum payment or clear your balance in full.

You’ll receive a credit card statement each month detailing what you’ve spent, how much you owe and what the minimum payment is for that month.

Your minimum payment may be a percentage of what you’ve borrowed or it could be a set amount each month. This will depend on your lender. Whatever it is, it’s important you pay it. You don’t have to clear your balance in full but if you don’t make at least the minimum payment your credit history will be negatively affected.

If you can, it’s a good idea to clear your balance in full each month. If you do this, you won’t have to pay any interest – no matter what the interest rate attached to your card is.

Even if you can’t totally clear your balance, try to pay back more than the minimum payment each month. This way you’ll be clearing the debt quicker and paying less interest.

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Disclaimer: All information and links are correct at the time of publishing.

author: Holly

By Holly

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3 common questions on credit cards 3 common questions on credit cards