 TITLE: The Simple Guide to Using Credit Cards CONTENT: How Credit Cards Work\n---------------------\nA credit card is a physical symbol of a revolving credit line that a bank or other financial institution grants to you. It's a form of loan, except that instead of taking all the money out at once and repaying it in equal installments, you can borrow just what you need, then pay accordingly.\nIt all begins when you apply for a credit card. After submitting the application, the issuer will check your credit history and credit scores to determine how much of a credit risk you are. It will also assess your income and, usually, a rundown of your basic household expenses. If you qualify, the issuer will notify you of the good news. At that stage you'll learn what your credit limit is and the interest rate that's tied to the account.\nSoon you'll receive a credit card, which will be imprinted with your name, account number, expiration date and a security code—a three or four digit CVV (card verification value). It will also display a symbol from whichever payment network the card uses, such as Visa or Mastercard. Your card will also have a magnetic strip and a computer chip so you can pay at a register or mobile point of sale system (such as Square). The issuer's customer service numbers will be listed and there will be a box for your signature.\nWhen you activate the account by calling the number on the back of the card or using the link written on the acceptance letter, you're ready to charge. Any business that accepts credit cards, in person or online, will let you pay with it, but if you want a cash advance, you'll make the withdrawal at an ATM or by going into a bank branch.\nYou may charge or extract any amount up to the card's credit limit. The statement will arrive in about 30 days, and on it you will see your account activity, the ending balance, minimum requested payment (typically 2% to 3% of the balance) and the payment due date. If you send at least the minimum by the date listed, the issuer will consider the account in good standing. However, the remaining debt will be carried over to the next month, and interest will be applied.\nAs an example, let's say you have a credit card with a $2,000 limit and an 18.9% annual percentage rate (APR). Let's also say you charge it up to the limit, resulting in a minimum payment of $60. If you only send that minimum amount, $31.50 in interest would be assessed as finance fees. That means $28.50 would be applied to the principal, which would also be your current available credit. If you paid the total amount owed, though, no fees would be applied and the $2,000 would once again be at your disposal.\nBe aware that the APR will be high if you're just starting out in the world of credit, or if you have had credit problems in the past. APRs on cash advances are often higher than for purchases, and unlike with purchases, there is no interest-free grace period, so it starts accumulating when you withdraw funds. END