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Credit card networks provide the financial infrastructure for transactions, while credit card issuers are responsible for providing cards to consumers and managing their accounts. To put it another way, credit card networks facilitate transactions between merchants and credit card issuers, and credit card issuers pay for transactions on the cardholder’s behalf when they use their card.

Once you understand this difference, however, you may be confused by the fact that some credit card networks are also card issuers. To get a better understanding, keep reading for a closer look at the differences between a credit card network vs. issuer.

What Is a Credit Card Network?

Credit card networks create the digital infrastructure so merchants can facilitate transactions between themselves and the credit card issuers — meaning they’re key to how credit cards work. In order to facilitate these transactions, the credit card networks charge the merchants an interchange fee, also known as a swipe fee.

Here’s an example of how this works:

•   Say someone walks into a clothing store and uses their credit card to buy a pair of pants. They swipe or tap their credit card to make the purchase.

•   The store’s payment system will send the details of this transaction to the cardholder’s credit card network, which then relays the information to the credit card issuer.

•   The credit card issuer decides whether or not to approve the transaction.

•   The clothing store is alerted as to whether or not the transition was approved.

Essentially, credit card networks make it possible for businesses to accept credit cards as a form of payment, making them integral to what a credit card is. Credit card networks are also responsible for determining where certain credit cards are accepted, as not every merchant may accept all networks.

The Four Major Card Networks

The four major credit card networks that consumers are most likely to come across are:

•   American Express

•   Discover

•   Mastercard

•   Visa

All of these credit card networks have created their own digital infrastructure to facilitate transactions between credit card issuers and merchants. These four credit card networks are so commonly used that it’s possible to find a business almost anywhere in the U.S. that accepts one or more of the payment methods supported by these merchants.

When traveling and using a credit card internationally, it’s more common to come across Visa and Mastercard networks.

Now, for the detail mentioned above that can cause confusion: Two of these popular payment networks — American Express and Discover — are also credit card issuers. However, their offerings as a credit card network are separate from their credit card offerings as an issuer.

Does It Matter Which Card Network You Use?

Which credit card network someone can use depends on the type of credit card they have and whether the credit card network that supports that card is available via the merchant they are purchasing from. Most merchants in the U.S. work with all of the major networks who support the most popular credit cards, so it shouldn’t matter too much which credit card network you have when shopping domestically. When traveling abroad, however, it’s important to have cash on hand in case the credit card network options are more limited.

Merchants are the ones who are more likely to be affected by the credit card networks that they use. This is due to the fact that credit card networks determine how much the merchant will pay in processing fees in order to use their system.

Recommended: Charge Cards Advantages and Disadvantages

What Are Credit Card Issuers?

Credit card issuers are the financial institutions that create and manage credit cards. They’re responsible for approving applicants, determining cardholder rewards and fees, and setting credit limits and the APR on a credit card.

Essentially, credit card issuers manage the entire experience of using a credit card. Cardholders work with their credit card issuer when they need to get a new card after losing one, when they have to make their credit card minimum payment, or when they want to check their current card balance.

Credit card issuers can be banks, credit unions, fintech companies, or other types of financial institutions. Some of the biggest credit card issuers in the U.S. are:

•   American Express

•   Bank of America

•   Barclays

•   Capital One

•   Chase

•   Citi

•   Discover

•   Synchrony Bank

•   U.S. Bank

•   Wells Fargo

Credit Card Network vs Issuer: What Is the Difference?

Credit card issuers and credit card payment networks are easy to confuse. The main difference, as noted, is as follows:

•   Credit card networks facilitate payments between merchants and credit cards.

•   Credit card issuers create and manage credit cards for consumers. If you have an issue with your credit card — like in the instance you want to dispute a credit card charge or request a credit card chargeback — it’s the issuer you’d go to.

These are the main differences to be aware of when it comes to credit card networks vs. issuers, provided in chart form:

How Credit Card Networks and Issuers Work Together

Credit card networks and issuers need each other to function. Without a credit card network, consumers wouldn’t be able to use their card to shop with any merchants, and the credit card issuer’s product would go unused. Credit card networks create the infrastructure that allows merchants to accept credit cards as payment.

However, it’s up to the credit card issuers to approve or decline the transaction. The credit card issuer is also the one responsible for getting credit cards into consumers’ hands when they’re eligible and old enough to get a credit card, thus creating a need for the credit card networks’ services.

Recommended: When Are Credit Card Payments Due

The Takeaway

A credit card network provides the financial infrastructure for cards and facilitates the transaction between the issuer and the merchant. The issuer is responsible for creating, offering, and managing consumers’ accounts. A couple of businesses are both credit card networks and issuers. Understanding the fine points of how credit cards operate can be an important part of your financial literacy and using credit responsibly.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is a credit card network?

A credit card network is the party that creates the necessary infrastructure to process transactions between a credit card issuer and a merchant. In return for processing the transaction, the merchant pays the credit card network an interchange fee, which is how the credit card networks make money.

How do I know my credit card issuer?

To find out a credit card’s issuer, simply look at your credit card. There will be a string of numbers on the credit card, and the first six to eight digits represent the Bank Identification Number (BIN) or the Issuer Identification Number (IIN). The Issuer Identification Number identifies who the credit card issuer is.

Who is the largest credit card issuer?

The four largest credit card networks are American Express, Discover, Mastercard, and Visa. Most merchants in the U.S. work with all four credit card networks. When traveling abroad, it’s more common to come across Visa and Mastercard networks.

Photo credit: iStock/Poike

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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In a nutshell, a credit card balance is the amount of money you owe to a credit card company from month to month. This is an important number to keep track of because if you don’t pay off your balance by the end of the billing cycle, you’ll owe interest. And, as you may know, credit cards usually have a high interest rate, which can lead to credit card debt.

That said, when you go to manage your credit card bill, you might get tripped up on the difference between your statement balance and your current balance. Read on to learn more about what each type of credit card balance is, how you can check yours, and whether carrying a balance affects your credit score.

What Is a Credit Card Balance?

A credit card balance is the amount of money you owe to your credit card company, as well as interest and any fees.

When you look at your credit card bill, you may see two balances posted: your current balance and your statement balance.

•   Your statement balance is the amount of money you owe from the previous billing cycle.

•   Your current balance, on the other hand, is how much you owe at this moment in time. This amount could be higher or lower than your statement balance, depending on whether you’ve paid your credit card bill, charged more items to your credit card, or requested a credit card chargeback.

But when your billing cycle closes with a balance, what does that mean? It depends on your card issuer. Many card issuers have a grace period between when the credit card billing cycle closes and when payment is due. That means, if you pay your statement balance in full when payment is due, you will not accrue interest on any of the charges billed from the previous cycle.

Recommended: Pros and Cons of a Charge Card

How Is a Credit Card Balance Calculated?

What does your credit card balance mean? It’s more than just whatever you’ve purchased during the previous month. A credit balance also consists of:

•   Any accrued interest

•   Late payment fees

•   Foreign transaction fees

•   Annual fees

•   Cash advances

•   Transfer fees

•   Any statement credits

•   Any payments made to the account

If you carry a balance, you’ll have to pay interest on the balance owed. The only exception is if you have a card with a 0% annual percentage rate, or APR, which is the interest rate charged when you carry a balance on your card. (This 0% might be a promotional or introductory rate, for example.)

But generally, your card will have a grace period, during which interest will not accrue on the balance.

Differences Between My Credit Card Balance and Statement Balance

The meaning of your credit card balance can vary depending on whether you’re discussing your statement balance or current balance.

•   Your statement balance is how much you owe at the end of the billing cycle.

•   Your current balance is a continuous tally of any credit card activity.

Here are some points to know about this:

•   You will have a due date by which you’ll need to pay your statement balance.

•   When your statement balance is paid, there may be activity on your balance as you continue to use your credit card throughout the month.

•   The charges made after your statement balance is available will show up on your next statement balance.

•   These charges, as well as any remaining amount from your statement balance, constitute your current balance.

Here’s the information on this topic in chart form:

Your Credit Card Balance and How It Affects Your Credit Score

Some people believe that carrying a balance may benefit their credit score, but that’s not true. Credit card companies do like to see credit card usage, but paying your balance in full is what can help your credit score.

One of the largest determinants of your credit score is your credit utilization ratio. This is the amount of money you’ve borrowed across credit cards compared to the amount of credit you have available. If you had a card with a credit card limit of $10,000 and you charged $3,000 on the card, for instance, your credit utilization ratio would be 30%.

In general, the lower your credit utilization ratio, the more helpful it is in building your score. It’s recommended to keep your credit utilization below 30%, though 10% is ideal. By paying off as much of your credit card balance as you can in a statement period, you’ll lower the amount of money you owe, thus decreasing your credit utilization ratio. This can be part of using a credit card responsibly.

How to Check Your Credit Card Balance

There are many ways to check your credit card balance. You can do so online, over the phone, through an app, or simply keep an eye out for monthly statements, which may be mailed to you or securely delivered through email.

Online

An easy way to check your credit card account balance is to go online to your card issuer’s website, where you can set up your online account. You can then log onto this account to check your balance, pay any bills, and otherwise perform any account maintenance.

As with any sensitive information, make sure you keep your user information secure.

Recommended: When Are Credit Card Payments Due

Over the Phone

Your credit card company likely has a number that you can call to learn your balance, often from an automated voice that reads it off to you. It can also be helpful to know the number to your credit card company in case you want to dispute a credit card charge you don’t recognize or have questions about fees or anything else that appears on your statement, or have lost your card.

Through an App

Most credit card companies have an app in which you can check your credit card balance. The app also may offer additional features, such as a breakdown of spending and your most recent credit score.

Through Regular User Notifications

Depending on how you’ve set up your account, you may receive user notifications and statement balance updates through text message, email, or the mail, or a combination of all three.

Should You Carry a Credit Card Balance?

In general, carrying a credit card balance has the potential to hurt your finances and your credit score.

Sometimes, however, carrying a credit card balance can happen. Perhaps you had a big dental bill or had to buy a new refrigerator. Or maybe you used your card to pay for plane tickets for next summer’s vacation.

Here are some ways to potentially minimize the negative effects of carrying a balance if you end up in a situation where you need to do so:

•   Look for a card with low APR. The lower the APR, the less interest you’ll pay on purchases. A good APR is one that’s below the current average, though what’s considered competitive can also vary depending on the type of the card and the individual’s credit score and history.

•   Pay more than the minimum balance due. Even if you can’t pay the full balance, paying as much as you can above the credit card minimum payment will help keep your credit utilization ratio low. It will also minimize the amount of interest you’ll pay over time.

•   Make a budget. Look through your expenses and find ways to pay down the card over a set amount of time. (There are a variety of budgeting methods available; try a couple and see what works best for you.) Some cards may offer the option to pay off certain purchases in installments, at a different interest rate than the overall card.

•   Treat your credit card as you would cash. If you don’t have the money right now, don’t whip out your card. Using a debit card instead can help you stay within the bounds of your available funds.

The Takeaway

A credit card can be a powerful tool — but carrying a balance can make it harder to achieve financial goals. Keeping track of your current balance and making a plan to pay off your statement balance in full each month can be helpful. Doing so can allow you to make the most of your credit card and minimize credit card debt, which can be important money moves.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What does a negative balance mean on a credit card?

A negative balance means the card company owes you money. This might occur due to a statement credit, a return, or you overpaying your bill. A negative balance won’t affect your credit score. When you make a charge on your credit card, the negative balance will be used to cover the payment.

Is it good to carry a balance on a credit card?

No. While it is good to use a credit card regularly and pay it off on time as a means of building your credit history, carrying a balance won’t help your credit score. In fact, if you rack up too much of a balance that it increases your credit utilization ratio, it could hurt your credit score.

What happens if you cancel a credit card with a balance?

If you cancel a credit card with a balance, you’ll still be responsible for payments, interest, and card fees. There may be downsides to canceling the card, too. That’s because part of your credit score rests on how long you’ve had open accounts.

Can I transfer my credit card balance to another card?

Yes. This is called a balance transfer. In a balance transfer, you’ll put your current balance on a new credit card. This can save you money on interest if you’re moving your balance to a lower-interest card. However, be aware that there are balance transfer fees involved. Also, a balance transfer may affect your credit utilization ratio.

Can I make partial monthly payments instead of settling the entire balance?

You can. Paying more than the minimum each month can minimize the effect of interest and lower your credit utilization ratio. To avoid interest entirely, however, you’ll want to pay off your statement balance in full each month.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Photo credit: iStock/Roman Novitskii
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The dean’s list is a list of undergraduate students recognized for outstanding academic achievement in a given semester, quarter, or year. Each college and university has different dean’s list requirements, but students who finish the term with a high grade point average (GPA) and are in the top percentile of their class for academic performance can earn a spot on the dean’s list.

Not only is having the dean’s list award on your transcript a remarkable personal achievement, but it could also make a big impact on grad school admissions and future employers.

Dean’s List Meaning

The dean’s list is a scholarly award for undergraduate students who achieved high scholastic standing during the academic year. The award is released after each semester, quarter, or academic year and is typically based on a student’s GPA. However, specific dean’s list requirements will vary by institution and can change each term.

Dean’s List Requirements

Dean’s list requirements vary by college and can change each term, but there are typical conditions that a student must meet. To meet basic dean’s list requirements, students must:

•   Meet the minimum GPA requirements set by the school.

•   Be in the top percentile of their class for academic achievement.

•   Be taking a minimum number of credit hours. Most schools require students to be enrolled full-time, but some schools may include part-time students in the dean’s list.

•   Have zero incompletes, no shows, or late grades.

What GPA Is Needed to Make the Dean’s List?

While schools may base eligibility for the dean’s list on the student’s GPA, the award is comparative rather than absolute. The award is only given to the top percentile of students rather than everyone who earns a certain GPA. This means that the required GPA can change each semester based on the academic performance of the student body.

Students can strive for a GPA of 3.5 or higher on a 4.0 scale and be taking a minimum of 12 credit hours, but this may be different depending on your school and your degree program. Check with your school to determine the minimum GPA requirement to make the dean’s list.

Recommended: How Much Does GPA Matter When Applying to College?

What Is the Benefit of Being on the Dean’s List?

Earning a spot on the dean’s list is one of the highest levels of recognition for academic achievement. Students who earn the award can enjoy a variety of benefits that can continue throughout their educational career and beyond.

Personal Achievement

Making it onto the dean’s list requires academic commitment and dedication. Being on the dean’s list means you’ve ranked in the top percentile amongst your peers, which will be noted on your school record and should be seen as a great personal achievement.

Prestige

Having your name on the dean’s list, especially for multiple terms, is one way to help you stand out from the crowd. The dean’s list award is a testament to your academic success and has traditionally been looked upon favorably by the school’s administration as well as by other students.

Recognition

Some schools recognize students who made it onto the dean’s list by posting students’ names on the school website and sometimes local publications. Outstanding academic performance can also help you build relationships with your professors, who may be able to write letters of recommendation and references later on.

Special Events

Because your GPA is ranked among the top of your class, you might receive invitations to special events. These are typically networking events with top company executives. Networking can allow you to form connections with other people in your field of study and open the door to possible employment opportunities.

Attract Prospective Employers

Some colleges may include your dean’s list award on your school transcript, and you can also attract potential employers by mentioning this award on your resume. However, employment website Indeed doesn’t recommend adding this achievement to your resume if you were only on the dean’s list for one or two semesters or inconsistently.

Even if you don’t include the dean’s list on your resume, prospective employers may still consider your GPA when making hiring decisions. According to the National Association of Colleges and Employers’ Job Outlook 2022 Spring Update report, 43.5% of employers screen by GPA when making interviewing and hiring decisions.

Scholarships

While being on the dean’s list doesn’t guarantee any financial aid, a high GPA could make you eligible for merit scholarships. Merit-based scholarships typically use your GPA, test scores, leadership capabilities, and other factors to determine your eligibility.

Are There Any Student Loan Benefits When Getting on the Dean’s List?

There usually aren’t any financial perks for getting on the dean’s list with federal student loans or most private lenders. Some private lenders may offer a reward for a certain GPA, but most lenders typically only consider your GPA if it’s too low.

Your GPA could affect your eligibility for other types of financial aid, like scholarships and grants, though. You’re required to make Satisfactory Academic Progress (SAP) to meet the basic eligibility criteria for certain types of financial aid. A higher GPA also makes it easier for you to receive more financial aid.


💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

What Other Academic Awards Can You Earn in College?

The dean’s list isn’t the only academic award that you can earn in college. There are several other awards that are given to students in recognition of outstanding achievement and as a means to further encourage academic excellence. Here are a few academic awards for college students.

The Honors List

The honors list is similar to the dean’s list; however, it may have different GPA requirements — usually lower. For example, students may be eligible for a spot on the dean’s list if their GPA is 3.5 or higher, while students on the honors list have a GPA between 3.25 and 3.5.

The President’s List

Undergraduate students earn the president’s list award if they get straight A’s in college and earn a 4.0 GPA. Part-time and full-time students may be eligible for this award.

The Chancellor’s List

At schools that offer this award, the chancellor’s list is typically ranked slightly higher than the dean’s list. Both full-time and part-time undergraduate students may usually qualify for the chancellor’s list.

Ways to Pay for College

If you’re aiming to see your name on the dean’s list, financial stress can hinder your ability to succeed academically. According to Inside Higher Ed, 48% of students who experienced financial challenges while in school admitted they had difficulties focusing on their academics.

Luckily, there are options out there for prospective and current students who are struggling with how to pay for college. Here are a few options:

•   Fill out the Free Application for Federal Student Aid (FAFSA®) to see if you qualify for financial aid. Make sure to read our FAFSA Guide and fill this out as soon as possible because many colleges award money on a first-come, first-served basis.

•   Search for scholarships, which are a form of merit aid to help pay for tuition and other education expenses. There are thousands of available scholarships to students with some even offering a full-ride to a four-year institution.

•   Apply for grants. Grants are another form of financial aid that doesn’t need to be repaid. Students can apply for federal, state, or school grants.

•   Find a work-study position. The federal work-study program offers funds for part-time employment to help college students in financial need.

•   Look at student loans. If you are still struggling to afford school-related expenses after exhausting all other forms of financial aid, there are a variety of federal and private student loan options to help.

Recommended: FAFSA 101: How to Complete the FAFSA

The Takeaway

Students who make the dean’s list are recognized for outstanding academic achievement. Benefits include personal achievement, prestige, public recognition, the opportunity to attend special events, being granted scholarships, and standing out on job applications.

And, students who are less stressed financially tend to do better in school. Options for paying for college include scholarships, grants, federal student loans, and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What GPA is required to get on the dean’s list?

The minimum GPA for the dean’s list varies by school and it can change every term. However, most schools require at least a 3.5 GPA on a 4.0 scale.

What does it mean when you get on the dean’s list?

What it means to be on the dean’s list is that you’ve ranked in the top percentile of your class. The dean’s list is one of the highest levels of recognition for scholarly achievement.

What is the benefit of being on the dean’s list?

Earning a spot on the dean’s list comes with several benefits. Not only is it a prestigious award and a significant personal achievement, but you could be invited to special events, network with others in your field of study, and attract prospective employers.

Photo credit: iStock/Prostock-Studio

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Credit cards typically expire two to five years after they are issued. The date on the card reflects the final month and year you can make purchases with your card.

Cards have expiration dates for reasons ranging from security to marketing, but issuers are usually very good about sending a new card before the old one is invalidated.

Here’s a closer look at what credit card expiration dates are, why they exist, and what the expiration date on your card means to you as a credit card user.

What Is a Credit Card Expiration Date?

An important aspect of how credit cards work, a credit card’s expiration date represents the last day you can use it for purchases. Consider these details:

•   Credit card expiration dates are typically printed as a two-digit month followed by a two-digit year. The last day of the month printed is the last day that you can use your credit card to make new purchases. If you try to make a purchase on the first day of the following month, the transaction will be declined.

•   For example, if your card has an expiration date of 06/25, then you can use that card until June 30, 2025. If you were to try to use that card to make a purchase somewhere that accepts credit card payments on July 1, 2025 — or any time thereafter — you could expect a situation wherein your credit card was declined, per credit card expiration date rules.

Fortunately, credit card issuers will typically mail you a new card with a new expiration date long before your card expires — you won’t have to worry about applying for a credit card.

Most card issuers will mail out a new card 30 to 60 days before your old card is due to expire, so you’ll never be without a valid card.

Why Do Credit Cards Expire?

There are several reasons that credit cards expire.

•   For one, the credit card expiration date serves as an additional security feature.

•   Credit cards also expire so that card issuers can keep track of their inventory and provide customers with new cards with updated features and technology.

•   Also, the magnetic stripes and computer chips in credit cards also wear out, so having an expiration date allows card issuers to ensure that cards don’t fail as often.

•   Beyond reasons of functionality, replacing credit cards also gives card issuers an opportunity to market new products (and credit card rewards) and update their brand image.

How to Find Your Credit Card Expiration Date

Your credit card’s expiration date will always appear on the card. In most cases, the expiration date will appear on the front of the card, on the right side, below the account number, which you’ll be familiar with if you know what a credit card is.

However, if the account number is printed on the back of the card, then that’s where you’ll most likely find the card’s expiration date.

Keep in mind that this number is separate from a CVV number on a credit card, which is usually a three- or four-digit number without a forward slash in it.

Recommended: How Many Credit Cards Should I Have?

What Happens After a Credit Card Expires

Once your card expires, it is no longer valid for new purchases. However, you should have already received a new card.

After you’ve activated your new card, there’s no reason to keep your old card, and you should destroy it; more on that in a moment. That’s because your old card still has your account number on it, which could help someone to make a fraudulent transaction with your account (though rest assured in this case there’s always the option to dispute a credit card charge).

What to Do When the New Card Arrives

Once you’ve received your new credit card with the updated expiration date, there’s no reason to continue to use your old card.

•   You can simply activate your new credit card, and replace your old one in your wallet or purse.

•   Your new credit card should have the same terms, including the credit card APR and credit limit.

•   Then, destroy your old card. You can destroy your plastic cards by cutting them up with scissors (it’s wise to cut the magnetic chip in half) or by using a shredding machine that’s designed for destroying plastic cards.

If you have a metal card, the card issuer will typically mail you a return envelope to send the card back for destruction.

However, if you haven’t received your new card and you notice your credit card expiration date is approaching, you should contact your card issuer before your old card expires. For example, if you’ve changed mailing addresses, your new card may have been sent to your previous residence. Or, your old card may have gotten lost in the mail. Either way, you’ll want your old card replaced before it expires so that you can continue making charges to it.

Don’t forget: Once you have your new card, you also may need to update any accounts for which you were using your old card for automatic billing every month or every year. This can include everything from streaming subscriptions to utilities. Doing so will ensure that your services remain uninterrupted when your old card does expire.

With your new card up and running, you’ll continue to make at least the credit card minimum payment as you’d been doing.

Recommended: Revolving Credit vs. Line of Credit: Key Differences

The Takeaway

Your credit card’s expiration date marks the last date it will still be valid for new purchases. You can find the expiration date on your credit card on either the front or the back of the card, and it will usually appear as a two-digit month followed by a two-digit year. You don’t usually have to worry about taking steps to get a new card when your old one is set to expire — the credit card issuer will usually mail you a card with a new expiration date beforehand. Understanding the expiration date can be an important part of using a credit card properly and easily.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can I still use my credit card the month it expires?

Yes, your credit card will remain valid until the last day of the month it expires. It will no longer be valid on the first day of the following month.

Why do credit cards expire?

The credit card expiration date can serve as an additional security feature, as a way to replace worn magnetic stripes and computer chips in cards, and as an opportunity for card issuers to market new products and update their brand image.

Does your credit card automatically renew?

A credit card account isn’t attached to the credit card’s expiration date. The account usually renews every year regardless of whether the card itself expires. Card issuers also will automatically mail customers new cards within two months of their existing card’s expiration date.

Is it safe to give out your credit card number and expiry date?

For a merchant to accept credit card payments with your card not present, such as with a transaction online or over the phone, you’ll need to give your card’s number and expiration date, among other information. Otherwise, you should keep all of your credit card details private to avoid fraud and/or identity theft.

Do I have to pay off my credit card before it expires?

The expiration of your credit card is unrelated to your payments. You need to make at least the credit card minimum payment each month before your account’s due date. This date doesn’t correlate with your credit card’s expiration date.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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A credit card’s annual percentage rate (APR) represents the cost of borrowing money from a lender, typically stated as an annual interest rate. Thus, the APR on a credit card is an important number to know before charging a purchase — especially if you plan on carrying a balance on your credit card account.

Read on to learn what APR means on a credit card, as well as when it applies and how it’s determined. You’ll also find out about the different types of credit card APRs you may encounter.

What Is a Credit Card’s APR?

A credit card’s APR refers to the annualized cost of using your credit card to borrow funds. When an individual charges a purchase from a merchant that accepts credit card payments, they’re actually borrowing money from the credit card issuer. The credit card issuer pays the merchant, and the cardholder pays the credit card issuer based on the terms of their credit card agreement.

Depending on the type of transaction and when it’s paid back, some purchases may be subject to interest given how credit cards work. For instance, the purchase APR applies to any balance remaining after the statement due date. Interest is determined based on the credit card’s APR.

How Is APR Determined?

Because actual interest charges are calculated based on the credit card APR, it’s a good idea to get familiar with how APR is determined.

An integral part of what a credit card is, credit card APR is not a set rate that’s the same for every credit card and credit card holder. Rather, the interest rate on a credit card will depend on a number of factors, such as the cardholder’s credit score, what type of credit card it is (for example, whether it’s a rewards card or a card for people with low credit ratings), how the card is being used, and the current economic conditions (such as the prime rate).

In the US, the average credit card interest rate is currently 21.47%, per the most recent data released by the Federal Reserve. That being said, there is a great deal of variance in APRs.

A good APR for a credit card is one that results in the lowest interest charges — which means the lower, the better.

Recommended: What Is a Credit Report?

Types of Credit Card APR

The concept of charging interest on borrowed money is not unique to credit cards. From car loans to mortgages, all types of loans have an interest rate attached. But one way credit card APR differs from the interest rates on some other lending products is that the interest charges on credit card transactions may vary depending on the type of transaction a cardholder makes.

Understanding the different types of credit card APRs can help an individual better anticipate actual interest costs before they apply for a credit card. Here are some common types of APR on credit card purchases.

Introductory APR or Promotional APR

It’s not uncommon to see credit card offers touting no interest — though it’s important to note that 0% APR is not usually a permanent credit card feature.

•   If a credit card offers an “introductory” or “promotional” APR, that generally means that the rate offered is only applied for a limited time. After that, the interest reverts to another (typically higher) APR.

•   How interest is applied to an introductory or promotional APR period will depend on the specific wording of the offer. For example, if a credit card offers a zero-interest promotional period (“0% APR for X months”), that means no interest is charged during that specified offer period. These periods are typically between six and 18 months.

Once the offer period ends and the APR reverts to the standard rate, interest is only charged on any outstanding balances from the date the promotional period ended. (Other terms, such as always making the credit card minimum payment by the due date, may also apply in order for the promotional rate to be valid.)

•   A promotional APR that defers interest doesn’t work in quite the same way. With deferred interest, the promotional or introductory rate only applies if the balance is paid in full by the end of the offer period. But interest on any remaining balance will be calculated based on the date of purchase, not the end of the offer period.

That’s why it’s important to be mindful of whether your spending is within your budget, even if it is technically within your credit card limit.

While the specifics of a promotional or introductory APR offer should be clearly spelled out in the terms and conditions, one way to spot such an offer is to look out for conditions — for example, “no interest if paid in full within 12 months.”

Cash Advance APR

It may be possible to draw cash from a credit card at an ATM or using convenience checks. However, credit card cash advances are often subject to a different (usually higher) APR and may begin to accrue interest starting from the transaction date.

Balance Transfer APR

Some credit cards may offer a lower APR rate for balances transferred from higher APR cards, which can be helpful if you’re looking to pay off high-interest debt. The balance transfer APR will usually only apply on a promotional or temporary basis, as noted above.

Purchase APR

This is the standard APR that is applied to most regular purchases charged to a credit card. It applies on any balance that remains after the statement due date. This is why, even if you’re disputing a credit card charge, for instance, it’s smart to pay off as much of your balance as you can to avoid interest accruing.

Penalty APR

Just as it sounds, penalty APR is a penalty fee. It’s higher than the regular purchase APR and kicks in as a result of payments that are more than 60 days late. The terms associated with penalty APR are disclosed in the credit card agreement.

Recommended: 10 Advantages of Credit Cards

The Takeaway

While credit cards can be a useful tool for managing cash flow (and even earning rewards and perks), it’s important to understand the costs involved. This includes understanding how credit card interest works and how credit card APR applies to credit card balances. Credit card APRs can vary widely, and it can be important to know what rate applies when so you can use your cards responsibly.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What does the APR not include?

Although the interest rate and when it’s applied may vary depending on the type of transaction, APR typically applies to any funds that are drawn from one’s credit card.

Do you pay credit card APR monthly?

Whether APR is charged depends on the type of transaction and when it’s paid off. For regular purchases, there is no credit card APR at all so long as the balance is paid in full by the statement due date.

Is APR based on current balance?

Like other types of interest, APR is a percentage of the balance owed on a credit card. How APR is applied to various types of purchases and when interest begins to accrue typically depends on the type of transaction and is detailed in the credit card agreement. Most regular balances only begin to accrue interest if any amount is remaining after the statement due date.

What happens if you pay more than the minimum balance on your credit card each month?

Purchase APR typically is applied to any balance remaining after the statement due date. By paying more than the minimum balance, an individual will reduce the amount of funds that are subject to interest.

Photo credit: iStock/Eva-Katalin

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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