5 Things You Didn’t Know About Credit Cards

If you are like most Americans, you probably have several credit cards, and you have been using these products throughout most of your adult life. Yet for all their popularity, cardholders tend to know remarkably little about these products. To illustrate this fact, here are five things that you probably didn’t know about credit cards and your credit score:

credit card facts image
  1. Just because you pay your balance in full, it doesn’t mean you have no debt. The smartest way to manage your credit cards is to always pay each month’s balance in full and on time. But even if you do this, your credit report will still show debt. That is because the reports are generated based on your current balance. And as far as the credit agencies are concerned, it is still money you own and it still represents debt.
  2. Applying for a new credit card won’t hurt your credit score. Just a single inquiry on your credit report will have a negligible effect on your score. Only those who open many cards in a short period of time should be worried.
  3. Opening a new credit card account may actually raise your credit score. When a new account is opened, the cardholder is granted a new line of credit. For a given amount of debt, this will lower your debt to credit ratio which can slightly improve your credit score.
  4. You can get the same sign-up bonus over and over again. Many cardholders assume that once they have reaped a generous sign up bonus, they are ineligible to receive it again. However, reward travel experts have learned that if they wait one and a half to two years before re-applying, most banks will actually award these bonuses again and again.
  5. You can negotiate the annual fee. Each year when cardholders are billed their annual fee, they probably think that they must either pay it or cancel their card. In fact, they can contact their credit card issuer and ask to have it waived. Sometimes their request will be granted, but other times cardholders will only be offered bonus points or miles. And while it is rare for a good customer to be denied any compensation for continuing to keep the account open, it can never hurt to ask.

If you were to own five cars that you used every day, you would probably be considered an automotive expert. But those who have as many credit cards rarely learn much about these products. By understanding some of the lesser known facts about credit cards, you can start leveraging them to your advantage.

Picture by FreeDigitalPhotos.

About the Author

By , on Nov 30, 2012
Jason Steele is a freelance writer who specializes in credit cards and travel rewards. He is a regular contributor to the blog at Smart Balance Transfers and many other top personal finance sites.

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  1. Shilpan says:

    You are absolutely right about the annual fee. So far, I have never paid annual fees simply by negotiating up front before accepting the card. It works.

  2. I have several credit cards in the UK and none have an annual fee. Competition has driven such practices away – only our account-linked charge card has a fee but it includes so many other benefits that this is well worth it.

    Credit cards make enough money anyway from your debt/liability, which is their asset and used to generate more business. However they are very useful both at smoothing cash flow over the month (as long as you have full repayment set) and as an emergency line of credit.

  3. I did not know you can negotiate the annual fee! I always thought that if you don’t like it, do a balance transfer.

  4. I’m often surprised at how few people know that they can get hundreds of dollars or travel miles just by signing up for the right card. One of my co-workers recently received a new card and was mystified we I asked how much money they paid her for joining. She had no idea what I was talking about.

  5. I was wondering if we would be able to get the same bonuses more than once. I didn’t know how long we would have to wait. Thanks for the info!

  6. Andy Hough says:

    I used to have a card with an annual fee and every year I would call to have the fee waived. After four or five years they finally just made the card a no annual fee card. I suppose it depends on the card on whether they will waive the fee or not.

  7. This was a great refresher on credit cards, thank you. I really should try to negotiate the annual fee. The fees on my Amex Gold are outrageous but, then again, the perks have paid for the card many times over, which is why I utilize it as my primary card still.

  8. We don’t have any annual fees with our credit cards so I don’t even know what they charge normally. I had no idea you could negotiate however with so many credit cards out there I can see why they would take that into consideration. It’s all about competition.

  9. King says:


    Here’s a question I have about the credit card system as a whole. If everyone used cash to purchase daily items, would stuff have a lower price point overall? I notice many establishments put a minimum amount on credit card purchases, OR give a percentage discount if you paid in cash. That got me thinking… maybe all these “rewards” Visa gives us is just a smokescreen because companies already raise prices to pay credit card companies.

    • Andy says:

      That’s a very good thought, King, and I’m not sure that I know for certain. First thing is stores ARE NOT allowed to place a minimum on credit card usage; at least that’s the way it was a few years ago. If they are going to accept credit cards, then Visa, MC, etc. require that they take any transaction, regardless of the amount. If the company refuses, you can report them and they’d get in some trouble.

      Some stores offer discounts for paying in cash, but it’s rare from what I’ve seen. There are only a few places I’ve personally be able to save money by paying cash, but it’s never as much as the rewards that I get. For instance, if I get 5% cash back and the store only gives me a 2% cash discount, then the rewards are still better. In addition, it’s hard to beat the bonuses that the credit cards offered (such as the $400 I got from Chase for spending $3,000 over 3 months).

      I do think prices would go down a bit as that makes logical sense, but of course we’d never get to a point where people stopped swiping those cards. 🙂

  10. Mackenzie says:

    I didn’t know you could get the annual fee waived. Good to know; I will look into this with my own credit card.

  11. Debt RoundUp says:

    Nice article Andy. I actually just included it in my weekly roundup because it was great.

  12. #4 all the way. It’s ca;;ed churning, and there are MANY success stories out there about it, especially in the travel world. Of course, 99% of people won’t be able to reap the benefits because they are overspending or getting into trouble with credit cards, but those who can play the game well, I say more power to you!

    Also, I’ve never tried to have the annula fee waived, I’l give it a shot. Thanks for the info!

  13. Michelle says:

    That’s interesting about being able to sign up for a reward bonus again, I had no idea!

  14. Well, #1 sucks. No one told me that! So thanks for telling me, lol.

  15. AverageJoe says:

    I didn’t know you could get the sign up bonus again. That’s a cool perk.

  16. i have tried a few of these, with mediocre success… even the tried and true “negotiate a lower rate” never really worked for us… what i like here, is that you talk about how all of these things effect your credit score.. after we are out of debt, i think we may continue to use our rewards cards, to get the free bonuses.. but you can guarantee that we will be paying in full each month

  17. I think the annual fee is the difficult one to negotiate. I’ve tried, on the one I have, and have been successful maybe half of the time. I may try asking them for reward points next year.

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