Coworkers speaking together in an office

Credit Card Definition, Credit Card Facts & Common Questions

Last Updated: September 27, 2022
6 min read

Key Points About: The Definition of a Credit Card

  1. Credit cards allow consumers to borrow money against a credit line

  2. Applying for a credit card usually requires providing income information

  3. Many credit cards offer rewards, like cash back or miles.

Many people have credit cards, but not everyone understands the definition of a credit card, and how a credit card is different from a debit card.

What Is the Definition of a Credit Card?

A credit card allows you to borrow money from a credit card company. In exchange, you pay interest on any outstanding debt at the end of each billing cycle. Most credit card issuers will report your credit history to credit bureaus, unlike debit cards or prepaid cards.

What is the definition of a debit card?

Credit cards are not the same as debit cards. A debit card pulls money directly from an associated bank account, like a checking account.

Credit Card Facts and Questions

Whether applying for a credit card for the first time or wondering about terms used in your credit card agreement, learn these credit card facts to help you better understand credit cards.

How do I apply for a credit card?

Applying for a credit card is a simple, straightforward process that requires some basic information such as your name, address and income. Students will need the name and location of their school in addition to a social security number and primary address.

How do I get a credit card if I have no credit history?

There are plenty of options on the market for people with limited credit history. Shop around to find the card with the lowest APR and fees you can qualify for. If you are having trouble being approved for cards, consider a secured credit card or ask a friend or relative to add you as an authorized user on their card.

What are instant approval credit cards?

Instant approval means you’ll receive a quick answer to your application for a new credit card. Typically, only people with good to excellent credit scores are granted instant approval. Learn more about instant approval credit card offers.

What does it mean to be “pre-approved” for a credit card?

Receiving a pre-approved credit card offer means that a credit card issuer has verified with a credit bureau that you meet its credit criteria and has pre-approved you as a quality candidate for its product. You’ll still need to apply in order to actually receive a new credit card, at which point you may still be accepted or denied.

How old do you have to be to get a credit card?

Eighteen is typically the minimum age to apply independently for a credit card in the United States. However, someone under 18 can be added as an authorized user on someone else’s account.

How many credit cards should I have to help build credit?

There is no “right” number of credit accounts to build a solid credit history. There are many factors that make up a credit score (and every reporting agency has many formulas), but late or missed payments, frequency of credit inquiries, and your credit utilization ratio are all major factors. When you’re starting out with credit, it can be safer, to begin with one or two cards to ensure you can make payments consistently before adding more.

A more advanced move is to optimize your credit utilization ratio, possibly by adding cards or requesting higher limits. Your utilization ratio is the amount of total debt you’re carrying compared to your total credit limits. If you can responsibly manage multiple lines of credit, you can lower your utilization ratio even if you may be carrying a balance on one or two cards.

Why does your APR go up if you’re making payments on time?

There are a few reasons your Annual Percentage Rate (APR) can go up even if you’re up to date on all payments. These include a decrease in your credit score, the end of a card-related promotion, or a change in the prime rate if you have a variable-rate card.

What tools are available to help manage my Discover Card account?

Online account management at allows you to quickly and securely view transactions and make bill payments. You can also stay up to date on your account through custom e-mail and mobile reminders. Text APP to DISCOV (347268) to download the Discover Mobile App, and receive all of the convenience and security of online account management, including fraud alerts and the Spend Analyzer.

Can I avoid fees on a credit card?

While every credit card has different terms, most credit card fees can be avoided if you:

  • Choose a card without an annual fee. Discover cards all have no annual fee.
  • Pay your bill in full and on time every month. Late fees can impact your pocketbook, and late or missed payments can also have a negative effect on your credit score.
  • Avoid cash advances. Most credit cards have a cash advance fee.

Should I pay by credit card or debit card when shopping online?

Advantages to online shopping with a credit card over a debit card usually include the ability to earn rewards on purchases.

But the most significant difference has to do with fraud. If someone makes fraudulent charges with your debit card, the money comes directly out of your bank account. Even if you are able to get a refund, it can take weeks or months to get that money back. With a credit card, you can dispute the charges and the funds never leave your account. With Discover, you get a $0 Fraud Liability Guarantee–you’re never responsible for unauthorized purchases on your Discover Card.1

How can I lower my credit card interest rate?

Depending on your current standing and credit history, a credit card customer service representative may be able to approve a lower rate. Also consider a balance transfer to a card with a low or zero percent introductory APR offer, but watch out for balance transfer fees if you choose to do this.

What is the definition of cash back?

Cash back is when the credit card company gives you a certain percentage of what you put on the card back in the form of rewards. Different programs offer different redemption options. You may be able to use it as a credit toward your current statement, to shop online, to purchase gift cards, or simply have it deposited back into a connected bank account. Discover also allows card members to make a difference and donate to a charitable cause.

What Is a statement credit?

A statement credit is a positive amount on your credit card bill. For example, if you accidentally overpay, most credit cards will apply a statement credit toward your future purchases. As mentioned above, some rewards programs also allow you to redeem cash back for a statement credit, lowering your balance by using your cash rewards.

When should I redeem rewards on a credit card?

With Discover, your rewards never expire. We will credit your account or send you a check with your rewards balance if your account is closed or if it has not been used within 18 months.

Looking for more answers? Browse our articles by topic to learn more about everything credit, from applying for a new card to making the most of your buying power.

Was this article helpful?

Thank you for your feedback!