11 Interesting Credit Card Facts

Aug 01, 2025

Using a credit card may be as easy as swiping it at checkout, but there’s a lot more going on under the surface. Knowing the ins and outs of how credit cards work may help you avoid common missteps. Then, you can get to the good parts of these common financial tools.

When used responsibly, for example, some credit cards may let you earn points or miles to redeem on rewards, and some can give you more financial flexibility. The more you know about how credit cards work, the more you may utilize their benefits responsibly.

Here are 11 facts about credit cards that will help you learn how credit cards work.

Credit card fact 1: There are different types of credit scores

The way you use your credit cards may help shape your credit scores. However, the exact impact will likely depend on the credit scoring model used by the lender. There are multiple credit scoring models, and each calculates credit scores slightly differently.

The main difference is what variables they prioritize when calculating your score. Some may put more weight on credit utilization, which compares your current revolving debt to your total credit limit. Meanwhile, others might weigh a positive payment history more.

Credit card fact 2: Your credit card interest rates may change

Most credit cards come with a variable APR, and that’s usually based on the prime rate. This means economic conditions, issuer policy, as well as Federal Reserve policy, may affect a credit card’s variable APR.

Credit card interest rates may also change depending on certain conditions. For example, if you miss payments or your low intro APR period ends, your interest rate may also change.

Credit card fact 3: Having multiple credit cards isn't always a good thing

While many people don't want to have a thin credit file, having multiple credit cards may raise the risk of damaging your credit score if you're unable to pay the balances.

If you don't pay your credit card balance off fully each month, your monthly balance could become unmanageable over time. High credit utilization and falling behind on payments may damage your credit history and harm your credit score.

Credit card fact 4: Opening a new card may affect your credit score

When you apply for a new credit card, it adds a hard inquiry to your credit report. This means the issuer checks your credit file to determine your creditworthiness as a borrower and decides whether to approve you.

Hard inquiries may negatively impact your credit score, so your credit score may dip by a few points after you apply. Hard inquiries typically stay on your credit report for up to 2 years but may only affect your credit score for 1 year.

Credit card fact 5: Credit card accounts don't really have an expiration date

When your credit card expires, your credit card account typically stays open.

In fact, credit card companies often send you a replacement card before your current card expires to keep your account active. You should also note that credit card debt has no expiration date, even if your account is closed.

Credit card fact 6: You can use credit card pre-qualifications for your benefit

Credit card pre-qualifications may give you a general picture of what kind of cards you may be able to qualify for.

Being pre-qualified doesn’t guarantee a credit card issuer will approve you for a card when you apply. However, it may be a useful tool when shopping for a new credit card.

Credit card fact 7: A high credit limit may be a plus

A high credit card limit may be beneficial to your credit score if you use it responsibly.

Higher credit limits may improve your credit utilization ratio, which may in turn help improve your credit score. Keep in mind, though, that savvy credit card users often may refrain from using a large portion of their credit limit.

Credit card fact 8: Paying less than the minimum may be considered a late payment

Making the minimum payment is one factor that keeps your credit card account in good standing. If you pay less than the monthly minimum payment on your balance by the payment due date, penalties, such as a late fee or penalty APR, may be applied.

Credit card fact 9: Most negative information can stay on your credit report for up to 7 years

Most negative information, such as late credit card payments, may remain on your credit report for 7 years, which may affect your credit score. However, not all types of information stay on your credit report for the same amount of time. Minor dents, such as hard credit inquiries, may only stay on your credit report for 2 years. Larger issues, such as bankruptcies, may last up to 10 years.

Credit card fact 10: Credit reports may be scrutinized by potential lenders

When you're applying for a credit card, the lender will usually pull your credit report.

New creditors may look at your payment history, credit utilization, length of credit history, credit mix and other new credit you’ve applied for when evaluating your application. If your credit report consistently shows responsible credit use, your chances of being approved for a new line of credit are generally better.

Late payments can be one of the more significant factors in determining a credit score. They’ll remain on your credit report for up to 7 years, so it's important to work on maintaining on-time payments to keep your credit options open. The longer you can maintain an on-time payment streak, generally, the better it is for your credit score.

Credit card fact 11: Credit cards can charge residual interest

Credit card interest is typically charged every day you have a currently due balance. If you carry a balance from month to month, you might be charged residual interest.

Sometimes referred to as trailing interest, residual interest is charged from the time your credit card statement is issued until your payment posts. Since these interest charges apply after the billing period ends, they won't show on your current credit card statement and the charges may accrue even if you paid the full balance on that statement. Residual interest charges will instead show up on your next credit card statement.

You may eliminate residual interest by paying off your credit card statement balance in full by the due date each month.

Why credit card facts matter

Understanding how credit cards work may help you use them responsibly. You can time payments to be paid by the payment due date to avoid missteps and help build your credit. This can help improve your credit score over time. This could be beneficial because a higher credit score may help you qualify for low-interest loans or valuable rewards credit cards.

Credit cards may be an important financial tool. But like any tool, the benefits come when you know how best to use them.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

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