Used to their full advantage, credit card features can help you build your credit score, furnish your pad, or even save for a dream vacation. The basic features of credit cards will shape your user experience. That’s why paying attention to the details as you choose a new credit card is essential.

Let’s break down standard credit card features and how they’re impacted by factors like the type of credit card you have, its terms, and your payment schedule. Plus, we’ll ensure you know all about the hidden gems, like the benefits you’ll find with credit union credit card features available through your local credit union.

Standard credit card features

While terms and conditions vary by card, there are some basic features that all credit cards share, whether they’re credit union credit cards or come from another financial institution. The more familiar you are with these features, the better equipped you will be to choose the right card for your budget, lifestyle, and goals.

Here are some of the standard features of credit cards:

• Credit limit. All credit cards have a credit limit or the amount of money you can charge to the card. Keep an eye on the credit limit because if your spending exceeds the limit, you could be slapped with a penalty fee, higher interest rate, reduced limit — or all three. While exceeding your credit limit can lower your credit score, consistently spending within your limit (and paying off your bill each month) can raise your spending power with a higher credit limit.

• Annual percentage rate (APR). All credit cards have an APR that determines the interest you’ll owe if you don’t pay off your balance every month. Depending on the card, interest rates vary from below 10% to more than 20%. Compounding interest can blow up your budget if you make only the minimum payment. On the other hand, a low APR helps make balance transfers from cards with a high APR, a handy step in reducing debt.

• Fees. Fees are a fact of life with credit cards, but they vary widely. Lenders commonly charge fees for things like signing up, making late payments, transferring balances, etc. Fees depend upon the type of credit card you get and how you use it. Avoid fees by looking for a credit card with no annual fee and making timely payments. 

Types of credit cards

As you might imagine, credit card features vary depending on the type of card you choose. For a full breakdown, check out our post on seven types of credit cards to consider, but overall, you can expect your credit card company to emphasize certain features that align with a card’s intended objective.

Here’s a brief overview:

• Rewards credit cards. Collect points for incentives like cash back, swag, and gift cards with these credit cards.

• Travel credit cards. With every dollar spent, these cards enable you to earn points toward airline tickets, extra bags, hotel stays, and more.

• Cash-back credit cards. Earn money back with every purchase using these cards.

• Balance transfer credit cards. Designed to help you pay down debt, these cards often feature the lowest interest rates.

• Low-interest credit cards. Also known as zero-interest credit cards, these cards typically offer no or low interest for a set time.

• Credit-builder credit cards. Use these cards for a fresh start, whether you’re a student taking on your first credit card or need to rebuild poor credit history.

• Co-branded credit cards. Specific to a brand or retailer, these cards offer perks, sales, reward dollars, and more for spending with their company.

The difference between credit card APR and interest

Now that you’ve got an idea of the types of cards, you can zero in on the details, like APR vs. interest. You’ve likely seen credit card ads highlighting APR in bold letters, but few explain what the acronym means. Simply put, the APR, or annual percentage rate, is the rate you pay over a year to use the credit, which sounds an awful lot like the interest rate. So, are APR and interest the same thing?

In mortgages and other consumer loans, the APR is higher than the interest rate because it bundles fees or additional charges the lender includes. However, credit cards rarely include fees or other costs in their APR. This is because lenders can’t predict what kind of late fees, balance transfer fees, foreign transaction fees, or other costs customers might rack up.

So, in most cases, your credit card’s APR and interest rate are the same. However, double-checking never hurts because finance charges can snowball if you don’t pay them off each month.

What to know about credit card limits

Your credit card limit is the largest amount the lender will allow you to borrow. However, because your current balance is part of the picture, you won't always have that top-dollar amount available. To see your available credit, subtract your card’s balance from the limit. 

Lenders use several factors to set your credit limit. They’ll check your credit history to see if you usually pay your debts on time. They will also consider your income to establish an amount they think you can reasonably pay back. How much of your existing credit you’re using will also come into play. Most experts recommend using 30% or less of your existing credit.

Having a high credit limit sounds good on paper, but in reality, it can be a mixed bag. It does give you more flexibility for major purchases and emergencies. But that wiggle room makes overspending easier if you aren’t cautious. So, responsible use should always be the target, regardless of your credit limit. 

What's involved in paying a credit card bill?

So, you’ve reached the end of the billing cycle, and your credit card bill is due. What happens next is a numbers game. Ideally, you’ll pay off your balance, the total amount you owe. Your balance includes the amount you’ve charged and any accrued fees or other costs assessed during the billing cycle. 

If you don’t pay your balance in full, the unpaid portion carries forward to the next cycle and starts collecting interest. That accrued interest is commonly known as a finance charge. Finance charges may also include late payment fees, depending on your card's terms. 

Many lenders set hard-and-fast payment deadlines, and missing them means you'll get hit with finance charges immediately. Others give customers a grace period. You won't have any finance charges if you pay in total during the grace period. Most grace periods run around 21 days, but they only apply if you're not carrying a balance from the previous month. And if you make the minimum or partial payment, you'll still owe the interest on the unpaid amount.

Common fees and costs include:

• Annual fees. Some lenders charge customers yearly fees for using their cards. These usually apply to upper-tier cards with travel, cash back, or other rewards. Lenders also charge fees for many customers with less-than-desirable FICO credit scores. Fees can range from below $50 to around $500, depending on the card and the purpose.

• Late payment fees. You will likely see a late payment fee if you don't make the minimum payment by the due date. By law, your lender can only charge $30 the first time you miss your payment, but the costs can increase if it happens again. Interest usually accrues on the late fee and the unpaid balance and can cost you the loss of promotional interest rates or rewards points. 

• Balance transfer fees. If you transition a balance from a high-interest card to one with a lower interest rate, you will pay a balance transfer fee. The fee usually ranges from 3% to 5% of the balance you move. While you'll pay a little upfront, switching to a card with a lower interest rate or promotional rate of zero can save you in the long run.  

• Foreign transaction fees. You may pay a foreign transaction fee if you use your card overseas or with a merchant based in another country. This fee is generally between 1% and 3% of each purchase you make. A one-time transaction may not be a significant concern, but the fees can really add up throughout a vacation. If you're a globetrotter, consider finding a travel card that foregoes these fees. 

• Cash advance fee. Occasionally, you might need a cash advance on your credit card. A cash advance differs from withdrawing cash from your account using a debit card. When you get a cash advance, your lender gives you money and adds it to your credit card balance. You’ll also pay a fee and likely a higher interest rate than you do for standard charges. Plus, you’ll start paying interest on the cash advance immediately. 

Credit card perks

Credit card terms and conditions aren’t all cause to be wary. Both traditional credit card and credit union credit card features can include fun perks that benefit their customers.

As noted under types of cards, rewards cards let customers rack up bonuses with each purchase. Generally, you'll earn points toward gift cards, airline flights, or hotel stays. Other cards even give you a percentage of what you spent as cash-back or credits on your monthly statement.

Several credit cards give customers discounts at their favorite restaurants, stores, and other outlets. These cards are often affiliated with a particular retail company and reward spending at that store and partner shops. Sometimes, cards give customers special offers on hotel stays, cruises, or special events. Others may provide financial offers, like a low- or zero-percent APR for a promotional period. 

Many lenders, including credit unions, reward customers when they sign up for a new card. These bonuses may include cash, gift cards, travel miles, or other incentives. 

Further resources on standard credit card features

Check out these additional sources for more information on standard credit card features and how their details may vary by card. Learn more about:

• Your credit score’s impact on spending options. Learn what your credit score means, how it’s calculated, and how it affects your borrowing options.

• Credit card rate changes. Can your credit card lender change your interest rate? If so, when?

• Whether or not to carry a balance. Is carrying a credit card balance a good financial strategy? Talking heads may be at odds, but government financial experts have a strong opinion.

Credit cards can be a powerful tool for building a solid financial future, especially when you fully understand the features of credit cards. Find a credit union near you and discover how credit union credit card features can help you meet your goals. 

Did you know?

Credit union credit cards are built around features that highlight members’ needs, from cards tailored for small business owners to students and everyone in between. From longer grace periods to amazing low rates, credit union credit card features often have a more personal touch and better perks than banks.