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Credit Card Basics: Annual Fees, APR & Rewards Explained

New to comparing credit cards? Here are the core terms you’ll run into, explained simply.

Annual Fee

A yearly charge some cards apply just for having the account open, regardless of how much you use it. Many cards, especially entry-level ones, charge $0.

APR (Annual Percentage Rate)

The interest rate applied to any balance you carry past the due date. Paying your full statement balance each month generally avoids interest charges altogether, regardless of the card’s APR.

Rewards Rate

How much you earn back per dollar spent, usually expressed as a percentage (cash back) or a points/miles multiplier (travel cards). Rates often vary by spending category.

Credit Utilization

The percentage of your available credit you’re currently using. Keeping this lower is generally considered good practice for maintaining a healthy credit profile over time.

Introductory Offer

A limited-time incentive — like a 0% introductory APR period — offered when you open a new account. Terms and length vary by issuer.

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