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Credit Card Facts

Credit cards are a wonderful invention if you use them properly. However, most people fall into a major trap that can cause serious financial and emotional hardship.

Credit card companies issue cards that are actually loans.

For the privilege of using their money, they charge to user exceptionally high interest rates, sometimes as high as 25% per month.


Each credit card has a limit that you can borrow. However, many people apply for and receive more than one credit card and then the amount they can borrow is more by totaling the limits.

The credit card companies don’t always monitor the number of cards one person holds.

Too Easy to Get and Too Easy to Use

Credit Card companies also make it unbelievably easy for anyone to get a credit card even if the person is young, going to school, or is without a job.


But you need to remember that every time you use the credit card, you are increasing your debt. It is so easy to use a credit card because you don’t actually see the cash being spent.

You can also get cash on your credit card by using it at an ATM, but this can carry a very high interest rate!

ancient bank
Ancient bank

Minimum Payments

When you receive the credit card statement every month, you will notice the amount you spent that month, the amount of interest that is due is you don’t pay it off immediately, and the minimum payment they will accept.

Smart people pay the total amount owing every month to avoid paying the interest. If you don’t pay off the amount owing each month, what is left unpaid is added to the next month with interest.

interest rate

It is an extremely bad idea to just pay the minimum amount, especially if you keep on using your credit card every month. You will eventually end up owing hundreds of dollars in interest.

Extra Fees

Most credit card companies have annual fees that they charge for the privilege of opening an account for you.

Each company decides on the fee it will charge; the fee could be as low as $10 or as high as $60 annually.

Then they have other fees, such as cash advance fees when you use an ATM, fees for going over your limit, and late fees they charge if you don’t make a payment on time.


Some Perks

Some credit card companies offer some perks to encourage people to choose their credit card.

A credit card company may have ‘rewards’ or points you can accumulate and use to buy certain gifts.

Some offer a certain number of air miles for every purchase and when you have enough saved, you can use them to purchase an airline ticket.

Every credit card has different perks.

ticket for Titanic

Credit Card Companies exist to make money. The more people use a credit card, the more money the credit card companies make. For example, a study was conducted of all credit card companies that discovered they made over $90 billion dollars in interest in just one year.

Quiz Time!



Why should you consider a credit card as a loan?

How does a credit card company make money?

What is a limit?

What is a minimum payment?

Name two extra fees that credit card companies can charge.

quiz time


Every time you use a credit card you are being loaned the money and it is a debt.

The credit card companies charge interest to the user for the privilege of using the card.

A limit is the amount that a credit card company sets as the most money you can use.

A minimum payment is the lowest amount the credit card company will accept as a payment.

Two extra fees that a credit card company can charge are an annual fee and a cash advance fee.

Money, Economics & Finance

economics graphic

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