Credit Card Questions People Are Too Embarrassed to Ask, Answered by Financial Advisors


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A photo of a young couple working on their finances at a dining room table.

Navigating the ins and outs of credit cards can be tricky if you’re a beginner.

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  • I’ve always limited myself to one credit card because I’m afraid of falling into debt and lowering my credit score.
  • To clear up the confusion I asked financial advisors questions about credit cards that many are afraid to ask.
  • They clarified how credit card interest works, whether cash advances are worth it, and what happens if you carry a balance.
  • Read Insider’s guide to the best rewards credit cards.

Whenever I’m out with friends and we’re about to pay the bill for dinner or drinks, the topic of credit cards usually enters the conversation. When we put our cards on the table, everyone shares their opinion on what the best one is and what kind of perks they have access to.

As someone who is terrified of taking on any credit card debt or doing anything to lower my credit score, I usually store their suggestions in the back of my brain and continue to live my life with just one single credit card.

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Yet I always find myself wondering if I’m truly being financially savvy by limiting my exposure to credit cards. The truth is, I have a lot of financial questions that I’m embarrassed to ask, because I feel like by age 34, I should know the answer to most of them. 

In an effort to make sure I don’t fall victim to any money mistakes, I sat down with financial advisors and asked them the most common questions involving credit cards. Their answers cleared up doubt and confusion about things I never knew before. Here’s what they said.

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

How many credit cards should you have?

Most of my friends have more credit cards than they can count on one hand. I only have one. This made me wonder how many credit cards a person should have

Certified financial planner Andrew Rosen said that the answer to this depends on how responsible you are with credit cards, and your own financial situation.

“As a financial advisor, I have four credit cards and I treat them like debit cards, meaning that I pay them off the same day that I use them,” says Rosen.

If you’re going to go this route, it could be a good idea to make sure these credit cards benefit you in different ways. Rosen says he has one card to earn cash back, another for travel points, one for Amazon purchases, and another that is specific to the airline that he uses most often.

Do I need to carry a balance to build credit?

In a past conversation with a friend, I remember her sharing her credit card strategy of carrying a balance every month to help improve her credit score. As someone who pays off their balance as quickly as possible, I wondered if I was lowering my credit score by doing this.

The answer is no.

Certified financial planner Jason Noble says that this route generally will not help you build credit, and most likely will cost you money due to the interest payments. 

Noble mentions it can also lower your credit score, and that is due to your payment history representing 35% of your credit score and the amount owed representing 30%. 

“Payment history takes into account if you have paid your credit accounts on time and make consistent payments, while the amount owed shows how much you owe in relation to how much total credit you have available,” says Noble.

This is why carrying a balance can actually turn out to be counterproductive in terms of building up your credit score. 

Should I take advantage of credit card cash advances?

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Earlier this year, I was in need of an influx of cash to pay for an unexpected and expensive purchase I had to make. When I was exploring ways I could get access to fast cash, I came across the option of taking a credit card cash advance, which lets you withdraw cash from your credit card account, but not without a fee. I ended up not doing this and borrowing money from a friend, but wondered if, in the future, this is a good idea.

Noble says that generally speaking, you should not take advantage of cash advances due to the higher interest rates associated with this type of transaction. 

“A particular credit card may offer a low or 0% APR on a cash advance, but read the fine print as there are typically time frames that the balance needs to be paid off or you will get a high interest rate,” says Noble.

When you’re in need of money quickly and are considering taking a cash advance from your credit card, Noble says just remember that no credit card will lend money for free for a long period of time.

“They are in the business to get transaction fees from the business and the interest rates from the consumers,” says Noble. 

How does credit card APR actually work?

Recently, I’ve decided to shop for a second credit card and I’m finding a lot of 0% APR offers, that after a certain time period, climb back up to an 18-20% APR. While I understand that APR stands for annual percentage rate and is how much interest you will pay on money you borrowed for credit card purchases, I wondered if there was anything else I needed to know about APRs.

Noble says that APR will only come into play when you don’t pay your statement balance in full. For example, if you have a balance of $3,000 on a credit card with an APR of 18%, that month you would be charged around 1.5% in interest (the APR divided by the number of months in a year) which would be $45. 

“Please keep in mind that $45 is now added to the new balance and is subject to charged interest in the future,” says Noble. “If you did not pay off the balance and now owe $3,045 the next month, your interest would be $45.67.”

How can I benefit from doing a balance transfer on a credit card?

A few of my friends have recently found themselves in credit card debt and did balance transfers to a new credit card. While I’ve never done this before, I was curious to know the benefits of this strategy.

Noble says that if you find a credit card that offers 0% on balance transfers, you can move money from a high APR credit card to that other credit card getting 0% on that balance for a limited time. 

While it might sound like a good option, Noble says to be aware that many credit cards have balance transfer fees, even if there is a 0% introductory offer, and those fees might impact your decision if they are high. 

“If you do go down this path, have a plan to pay off the entire balance before that time runs out to save money on interest rate charges,” says Noble.