{"id":214700,"date":"2026-01-04T18:00:49","date_gmt":"2026-01-04T18:00:49","guid":{"rendered":"https:\/\/entertainment.runfyers.com\/index.php\/2026\/01\/04\/credit-cards-101-the-beginners-guide-the-points-guy-2\/"},"modified":"2026-01-04T18:00:49","modified_gmt":"2026-01-04T18:00:49","slug":"credit-cards-101-the-beginners-guide-the-points-guy-2","status":"publish","type":"post","link":"https:\/\/entertainment.runfyers.com\/index.php\/2026\/01\/04\/credit-cards-101-the-beginners-guide-the-points-guy-2\/","title":{"rendered":"Credit cards 101: The beginner’s guide – The Points Guy"},"content":{"rendered":"


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Here at TPG, we love credit cards<\/a>. We\u2019ve experienced the power of redeeming credit card rewards, and we want to help everyone else have that great experience.<\/p>\n

But if you\u2019re new to the world of credit cards, reading a credit card application (or even a review<\/a>) can make you feel like you missed a course somewhere everyone else appears to have taken. If that\u2019s you, you\u2019re in the right place.<\/p>\n

Below, we\u2019re taking the mystery out of credit cards. We cover everything from terms to types of credit cards and even breaking down a credit card bill. So settle in, maybe grab a notepad, and let\u2019s get into it.<\/p>\n

Credit card debt<\/h2>\n

Before we go over anything else, it\u2019s important to note that while we\u2019re huge fans of credit cards at TPG, we never recommend carrying a balance from month to month. Carrying a balance means you\u2019ll be charged interest, which costs you far more than the value you\u2019ll get from any rewards you earn.<\/p>\n

If you\u2019re considering a credit card, first make sure you have a plan to stay within your budget and pay off your balance each month. Never charge a purchase to a credit card unless you\u2019re 110% sure you can pay it off when your bill is due.<\/p>\n

Related: Credit card debt hits new record of over $1 trillion \u2014 here\u2019s how to consolidate and pay off your debt<\/a><\/strong><\/p>\n

Credit scores<\/h2>\n

A credit score<\/a> is a number \u2014 usually between 300 and 850 \u2014 that potential lenders use to determine their risk in lending you money.<\/p>\n

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Your credit score is made up of multiple factors, including payment history, the amount you owe and new credit opened. To build and keep a good credit score, you must borrow and pay it back on time. Using your credit card and paying your balance in full each month is a great way to improve your credit score<\/a>.<\/p>\n

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When you apply for any type of credit, including a credit card, the potential lender will check your credit score to help them decide whether or not to approve your application. Typically, the best rewards cards require good to excellent credit scores for approval.<\/p>\n

However, if your score is less than stellar, don\u2019t worry. We can show you how to improve your credit score<\/a> and how to earn rewards while you\u2019re improving your credit<\/a>.<\/p>\n

Related: How to check your credit score for free<\/a><\/strong><\/p>\n

Debit vs. credit cards<\/h2>\n

When you use a debit card, money is pulled directly from your bank account to cover your purchase. That\u2019s why your $1,000 purchase will be declined if you only have $500 in your bank account.<\/p>\n

However, when you use a credit card, you borrow money from the credit card company to make your purchase. When you pay off your balance, you\u2019re paying them back for your loan. If you fail to pay within the given time frame (typically around a month), you\u2019ll be charged fees and interest, and your credit score could drop.<\/p>\n

The main benefit of using a debit card is that it keeps you from overspending. If you use a credit card responsibly, however, you\u2019ll earn rewards, get additional benefits and improve your credit score.<\/p>\n

Related: Why a credit card is a smarter choice than a debit card<\/a><\/strong><\/p>\n

How to read your credit card bill<\/h2>\n

The terms, dates and different numbers on a credit card bill can make reading one feel like a decoding activity. However, the good news is that the code can be easily broken by understanding some key terms.<\/p>\n

First, let\u2019s clarify the terms \u201cbill\u201d and \u201cstatement.\u201d Before online banking, cardholders received a paper statement (also called a bill) in the mail each month. That statement would outline the cardholder\u2019s charges for the billing period (the time since the last bill), statement balance (amount the cardholder charged during the billing period), minimum payment amount and payment due date.<\/p>\n

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Now, we have the luxury of checking our accounts online at any time. We still have statements that reflect our billing periods, but we can also see the transactions we\u2019ve made since our last statement. This extra information is nice, but it can make things a bit confusing.<\/p>\n

Here\u2019s a breakdown of what you might see when you log in to your online account:<\/p>\n

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The statement balance<\/strong> is the amount charged during your most recent billing period. You must pay this amount by the due date to avoid being charged interest or late payment fees.<\/p>\n

The due date<\/strong> for your billing cycle depends on your card (you can find this in your card’s terms and conditions).<\/p>\n

In the example above, the cardholder must pay their statement balance of $89.86 by the Nov. 22 due date to avoid fees.<\/p>\n

The minimum payment<\/strong> is the lowest amount you can pay by the due date to avoid being charged a late payment fee. However, if you only pay the minimum payment (or anything lower than the full statement balance), you\u2019ll carry a balance over to the next billing period and be charged interest on that amount.<\/p>\n

The \u201ctotal balance\u201d<\/strong> refers to the entire amount that you owe on your card: the statement balance from the previous month, along with any charges that have been made since that billing cycle closed. In this example, the cardholder has charged $11.44 since the closing date, so the total balance is the statement balance of $89.85 plus the recent charges of $11.44. The cardholder can pay the total balance, but they can also just pay the statement balance and still avoid paying any fees. If they do this, the $11.44 will show up on the next bill, which they\u2019ll have to pay the next month.<\/p>\n

Another number you\u2019ll likely see is \u201cavailable credit,\u201d<\/strong> which is the amount left in your credit limit. This number will fluctuate as you pay off your balance or charge more to your balance. For example, if this user\u2019s credit limit were $4,000, their available credit would be $3,898.70 (the total balance of $101.30 subtracted from the credit limit of $4,000). Avoid maxing out your credit limit, as your card may be declined or charged an over-the-limit fee.<\/p>\n

Related: After 15 years, why the Chase Sapphire Preferred should still be your first rewards card<\/a><\/strong><\/p>\n

Rates and fees<\/h2>\n

Now that you understand how to pay your credit card bill, let\u2019s review all the essential fees a credit card company might charge.<\/p>\n