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Your available credit and the total credit limit on a credit card are both tied to the potential amount that you can spend. But there is a difference between them. Your credit limit is the total amount of credit that the card issuer is willing to lend you. On the other hand, your available credit is the potential amount you can spend right now.

Unlike your credit limit, your available credit takes into consideration your outstanding balance and any pending charges. So, for example, if your total credit limit is $10,000, and you have an outstanding balance of $2,000, then your available credit is $8,000.

Read on to learn more about these two different types of credit, what happens if you go over them, and how to increase your credit limit and/or available credit.

What Is Available Credit?

Your available credit on a credit card is the total amount that you can spend with your credit card. It is usually calculated as your total credit limit minus any outstanding balance or pending charges. If you attempt a transaction that is larger than your available credit, the credit card company will typically decline the transaction.

What Is a Credit Limit?

The way most credit cards work is that the credit card company issues you a maximum amount that they are willing to lend you. This is called your credit limit. It is usually determined by your financial situation, such as your credit score, income, and other factors related to your credit history.

Why Is Available Credit Important?

Your available credit is one of the most important things about your credit card. The amount of available credit you have is the total amount of money that you can spend on your credit card. Knowing how much available credit you have can help keep you from overspending.

And if you do try to make a purchase that’s more than your total available credit, your credit card company will usually decline your transaction.

Differences Between Credit Limit and Available Credit

The main difference between credit limit and available credit is that your credit limit is the maximum amount that the credit card company is willing to lend you. If you’ve used a portion of your credit limit, that amount is subtracted from your total credit limit and it becomes your available credit. This is the most that you can spend right now on your credit card.

In other words, your credit limit will generally remain the same (unless the creditor adjusts it or you ask for an increased limit), while your available credit will vary based on your spending. If you haven’t spent any money using your credit card, meaning your balance is $0, your credit limit and available credit are the same.

What Happens If You Go Over Your Available Credit?

If you have a credit card balance or outstanding pending charges on your credit card, those amounts are subtracted from the total credit limit that you have on that card. This marks your current available credit, and it’s the most you can charge on your credit card at the current point in time.

If you try to make a charge for more than your available credit, it’s likely that your credit card company will decline the charge. With some credit card companies or specific credit cards, it’s possible that the credit card company will allow a charge above your available credit, but they may charge interest and/or additional fees. Check with your credit card company for the specific rules and terms for your particular card.

What Happens If You Go Over Your Credit Limit?

If you continue to spend all of your available credit until you’ve reached your total credit limit, you may not be able to continue to use your credit card. You’ll first need to make payments to lower your total balance and raise your available credit.

In some cases, if you continue to keep your outstanding balance near your total credit limit, the credit card company may choose to close your credit card account. Or, your card issuer may increase your interest rate, lower your credit limit, or even raise the minimum payment requested.

Going over your credit limit can also have serious implications for your credit score. This is because credit utilization — how much of your available credit you’re currently using — is a major factor used to help determine your score. It’s recommended to keep your credit utilization ratio below 30% to maintain a healthy score; if you’ve reached your credit limit, your utilization will be at 100%.

Recommended: When Are Credit Card Payments Due?

How to Increase Your Available Credit

The best way to increase the available credit on a credit card is to spend less on the card and make additional payments toward the total outstanding balance. Every dollar paid toward the outstanding balance will increase your available credit.

Ideally, you might get to a situation where you’d pay off your statement balance in full, each and every month. In that scenario, your available credit and your total credit limit would be equal.

How to Increase Your Credit Limit

You have a few options for increasing your credit limit. Some credit card companies may regularly review the accounts of their cardmembers, and proactively increase their credit limits.

You also have the option to contact your card issuer directly and ask them to increase your credit limit. Keep in mind that most issuers are more likely to increase your credit limit if you’re already using your credit card responsibly.

If you’re not having any luck increasing the credit limit on your existing credit card, another option is to open a new credit card. This could substantially increase your available credit if you’re approved — especially if the new card’s limit is at or above the average credit card limit.

Recommended: Tips for Using a Credit Card Responsibly

The Takeaway

Your total credit limit and available credit are two terms that refer to the amount of money that you can spend on your credit card. However, there is a difference between credit limit and available credit. Your credit limit refers to the maximum amount that your card’s issuer is willing to lend you. Meanwhile, your available credit is the amount you have to spend right now. It’s calculated by subtracting from your credit limit any outstanding balance or pending charges on the card.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Why is my available credit less than my credit limit?

Your available credit will often be less than your credit limit based on any outstanding balance or pending charges that you have on your credit card. For example, if you have a total credit limit of $7,500 on a card, and an outstanding balance of $1,000, then your available credit is $6,500. The available credit amount is the maximum amount that you can charge on your credit card at the current moment.

Why is my available credit higher than my credit limit?

It’s rare that your available credit will be higher than your total credit limit. Instead, it’s much more common for your available credit to be less than (or equal to) your total credit limit. One scenario where your available credit may be higher is if you have a credit on your account, such as from a refunded transaction.

How is my credit limit determined?

Credit card issuers typically determine your total credit limit based on the financial information that you provide when you apply for the card. This includes your bill payment history, income, and overall creditworthiness. If your financial situation has materially changed since you first applied or if you have a history of responsibly using your card, you may be able to contact your issuer and have your credit limit increased.

What is a good amount of available credit?

Currently the average credit limit for U.S. cardholders is more than $32,000, according to the most recent data from Experian, though credit limits vary widely by card issuer, credit card, and individual. A good amount of available credit is one that allows you to make all of the transactions that you need to make each month, with a little bit of buffer room, and without your utilization going above 30% of your limit.

Photo credit: iStock/Georgii Boronin

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Contactless credit cards are a method of payment that allows you to simply tap or wave your card near a payment terminal, as opposed to inserting or swiping it. This kind of card has grown in popularity over the past few years.

Here’s a look at the tech that enables contactless credit card payments, as well as the pros and cons of using this type of card.

What Is a Contactless Credit Card?

A contactless credit card looks like a typical credit card, featuring the bank name, account number on the front, and usually a magnetic stripe on the back. However, contactless credit cards allow cardholders to tap or hover instead of inserting or swiping their card in a merchant payment machine.

This technology enables a consumer to complete a purchase at a retail location without their card physically touching a payment device, a feature that led to increased adoption during the COVID-19 pandemic due to health and hygiene concerns.

What Does Contactless Payment Mean?

Contactless payment is a secure and fast way to pay for goods or services without physically swiping or inserting a card into a terminal. Often called “tap-to-pay,” it allows you to complete a transaction by simply tapping or hovering a contactless-enabled card, smartphone, or wearable device (like a smartwatch) near a payment terminal.

Contactless payments use near-field communication (NFC) to create an encrypted, one-time code for transactions, eliminating the need to swipe or insert cards.

How to Know If Your Credit Card Is Contactless

Most major credit card providers now offer contactless cards. You can determine if your credit card is contactless by looking for a contactless card symbol on the front or back of your card. This symbol looks like a wifi symbol flipped on its side, with four curved lines that increase in length from left to right.

Before paying, ensure the merchant’s card reader displays the same symbol. If you don’t see it, you can always ask the cashier. If your physical card isn’t contactless, you can still tap-to-pay by adding the card to a digital wallet like Apple Pay or Google Pay on your smartphone.

How Contactless Credit Cards Work

Like many other credit cards, contactless credit cards have small chips embedded in them. But instead of requiring you to insert the card, this chip transmits a unique, encrypted, one-time code to the terminal, authorizing the transaction faster than traditional dipping or swiping.

You don’t actually even need to tap your contactless credit card to pay — all you have to do is place your card within an inch or so of the contactless symbol. This will initiate payment.

You might then have to wait a few seconds while the transaction processes. Once the transaction is approved, the terminal will provide a confirmation signal, such as a beep, check mark, or green light.

Technology That Enables Contactless Credit Card Payments

Instead of inserting a credit or debit card into a merchant payment terminal, contactless credit cards today typically rely on near-field communication (NFC), which is a specific type of radio frequency identification (RFID), to complete a retail transaction. The card’s NFC chip sends encrypted payment details to the terminal. Once the device grabs the card information, the transaction can be completed and the purchase confirmed.

To protect sensitive data during a contactless transaction, the card’s chip generates a unique, one-time-use code. Even if a criminal intercepts this code, it cannot be reused for another purchase because the bank will recognize it has already been “spent.” In addition, NFC technology has an extremely short range, typically requiring the card to be within about one-and-a-half inches of the reader. This physical constraint makes remote “skimming” from a distance nearly impossible.

Pros and Cons of Contactless Credit Cards

Contactless credit cards come with numerous benefits, along with some tradeoffs:

Pros

Benefits of contactless credit cards include:

•   Quick and convenient to use: Contactless credit cards are extremely convenient to use. All a user has to do is wave their contactless credit card in front of the contactless symbol on the card reader, and the deal is done in less than a second.

•   Added security: Tapping to pay is considered more secure than swiping your card. Like inserting your card’s chip, contactless payment generates a one-time code that protects your card’s sensitive details. Contactless payments also sidestep the risks involved with skimming and shimming since you aren’t inserting your card.

•   Less physical contact: Contactless payments can help reduce the spread of germs since they minimize contact between your card with public surfaces, especially if you hover instead of tap.

•   Reduced wear-and-tear: Cards generally last longer when they are not repeatedly inserted into or swiped through payment terminals.

Cons

Some drawbacks of contactless credit cards include:

•   Spending can feel too easy: Quick taps can make spending even faster and more frictionless than slower payment methods.

•   Not accepted everywhere: Not all merchants or regions accept contactless payments. As a result, you may have to fall back on using your card’s chip or magnetic stripe even if you have a contactless card.

•   Transaction limits: Some credit card issuers put a cap on the amount you can spend using contactless payment (such as $250).

•   Technical Issues: As with any technology, there is the potential for glitches, such as a terminal malfunction or signal interference.

Guide to Using a Contactless Credit Card

When using a contactless credit card, the transaction is enabled and completed in three key steps: look, tap, and go.

1.    Look: Check for a contactless symbol on a merchant’s payment device (this will look like a wifi signal tipped on its side).

2.    Tap: After being prompted by the payment device, wave the credit card an inch or so over the contactless symbol or actually touch (tap) the credit card on the symbol.

3.    Go: Once the payment device confirms the credit card payment, you can take your purchase and receipt and go.

When making a contactless credit card payment, be sure to hold one card — not multiple cards or your entire wallet — over the reader. If more than one card is detected by the reader, the terminal could potentially charge the wrong one. While you’re not at risk of being charged multiple times for the same transaction, you want to be sure to hold only the card you want to use over the contactless symbol.

Are Contactless Credit Cards Safe?

Yes, contactless credit cards are considered highly secure. For one reason, they protect against physical card skimming devices sometimes placed illegally on magnetic stripe readers. In addition, contactless credit cards use dynamic encryption (tokenization) to generate a unique, one-time code for each purchase, making intercepted data useless for fraud. These cards also require close proximity to a terminal, which reduces risk of accidental or remote theft.

As with any credit card, it’s important to monitor your accounts regularly for unauthorized charges and report any suspicious transactions to your issuer as soon as possible.

The Takeaway

Contactless credit cards are emerging as an effective payment technology that’s gathering steam among consumers and retailers alike. Thanks to the tech that enables contactless credit card payment, these credit cards allow you to simply wave or tap the credit card near the contactless symbol on a payment terminal. Though contactless payments aren’t available everywhere, you can figure out if a payment terminal — and your credit card — offer contactless payment as an option by looking for the contactless payment symbol.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Are there extra charges for using contactless credit cards?

No, there are no extra, direct charges to the consumer for tapping instead of swiping or inserting, since these transactions are processed using the same standard card rates. While some merchants may apply general credit card surcharges, they are not specific to the contactless method itself.

What are the risks with contactless credit cards?

The primary concerns include the risk of overspending due to transaction speed and potential technical issues, such as terminal malfunctions or signal interference. While tokenization (one-time codes) effectively minimize data interception, lost or stolen cards are still vulnerable to unauthorized use. As with any credit card, it’s important to monitor your account and immediately report loss or theft of the card.

Where can I use my contactless credit card?

You can use your contactless credit card wherever you see the contactless payment symbol — the icon that looks like a sideways wifi signal with four curved lines. This symbol must be displayed on both your card and the merchant’s payment terminal for you to use the tap-to-pay feature.

What happens if I lose my contactless credit card and someone else uses it?

If you lose your contactless credit card and it is used for unauthorized purchases, report it immediately to your issuer to freeze the card. Under federal law, your liability for fraudulent credit card charges is generally limited to a maximum of $50, though many issuers offer zero-liability policies. The issuer will cancel the card, issue a new one, and initiate a fraud investigation.

Photo credit: iStock/milan2099

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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 card residual interest is interest that builds up between when your billing cycle ends and when the issuer actually receives your payment. Read on to learn more about what is residual interest, when it may apply, and how you can avoid it.

What Is Credit Card Residual Interest?

Residual interest, also known as “trailing interest,” is the interest that accrues daily on a credit card balance from the end of a billing cycle until the day a credit card payment is fully processed. It commonly appears as a small, unexpected charge on the following statement, even after paying the previous statement balance in full.

How Credit Card Residual Interest Works

If you thought you paid your last credit card bill in full, you might be surprised to see a residual interest charge on your next statement. However, this can occur if you keep a rolling balance on your credit card, meaning you’ve carried an unpaid portion of your credit card balance from month to month.

If you pay your full statement balance on the due date, you may still owe interest that accumulated in the days after that statement was generated but before your payment arrived.

Some credit card issuers charge interest based on a daily periodic rate. To calculate your daily periodic rate, the issuer divides your annual percentage rate (APR) by 360 or 365 days. They then multiply your average daily balance by the daily periodic rate. The result of that multiplication is the daily interest charge.

Here’s where credit card rules around interest get tricky, so take a closer look:

•   Your card issuer is required by law to provide you with your billing statement at least 21 days before your credit card payment due date. If you always make on-time full payments, your card issuer typically won’t charge interest during this grace period.

•   However, if you rolled over a balance to your new statement, trailing interest on the old charges are applied. You’ll also lose your grace period for new purchases made during the billing cycle so interest charges start accruing immediately.

•   Since this residual interest accumulates during the days after your billing statement was issued, they can feel like unexpected credit card charges on your next billing period despite making the “full” payment the prior month.

Do All Credit Cards Charge Residual Interest?

Generally, the practice of charging residual interest is common across credit card companies. However, how and when it charges trailing interest varies between issuers.

If you’re unsure how your card issuer handles this type of interest charge, review your credit card agreement, or contact your issuer directly to learn more about its terms.

Why Is It Important to Keep Track of Residual Interest?

Residual interest can impact your finances in many ways. For starters, you’ll owe more money on interest fees and miss out on a grace period. Additionally, a residual interest charge can easily slip past your radar if you thought you’ve zeroed-out your credit card balance.

If you didn’t add new card purchases during a billing period, you might not even look at your new statement and can easily miss a residual interest charge. This seemingly small issue can snowball into a late payment — or worse, a missed payment — that adversely affects your credit rating.

Tips for Avoiding Credit Card Residual Interest

You can avoid residual interest charges by practicing smart habits and smart credit habits.

Making the Full Payoff Amount

Given how credit cards work, the best way to know your card’s true outstanding balance is to directly ask your credit card issuer for your “full payoff amount.” Since residual interest is charged daily, your full payoff amount will change each day your account goes unpaid.

On the day you’re ready to make your credit card payment, contact the phone number on the back of your credit card. Ask the associate for your full payoff amount to date. Or look for this information on the credit card issuer’s website or in their app. This is the payment amount you can make toward your bill to fully pay your account.

Paying Your Bills on Time

If you haven’t carried a balance between statements and your credit card offers a grace period, making a payment for the full statement balance by the credit card’s due date is enough to prevent residual interest. This can also help you maintain your grace period.

If you’ve already rolled over a balance, pay off your total account balance before the billing cycle closes. This can help you avoid trailing interest charges that start between the date your statement is issued and when the bank receives your payment.

Considering a Balance Transfer to a 0% APR Card

A 0% APR balance transfer card can be a useful tool if you have a balance that’s too large to pay off early or in one fell swoop. Balance transfer cards effectively allow you to pay a credit card with another credit card by transferring the prior balance onto the new card at no interest.

Keep in mind that the promotional interest rate is only valid for a short period of time. For example, the transferred amount might incur no interest for six months or a year, depending on the balance transfer terms. After that, the standard interest rate will apply.

When considering this strategy, make sure you weigh the pros and cons of a balance transfer card, such as the cost of a balance transfer fee. This fee might be a fixed dollar amount or a percentage of the amount you’re transferring. Always do the math to ensure that the amount you’ll save on residual interest from your original card outweighs the balance transfer fees.

Recommended: How to Avoid Interest On a Credit Card

How Long Does Credit Card Residual Interest Last?

Typically, if you’re hit with residual interest, it might take about two consecutive statement periods to clear out residual interest charges. However, you can get rid of residual interest faster by contacting your card issuer to request your full payoff amount.

The Takeaway

Residual interest (or trailing interest) is the interest that accrues daily on a carried-over balance between the date a billing statement is generated and the date your payment is received. Even if you pay the full statement balance, interest continues to build during that period and appears on the next statement.

To avoid unexpected credit card charges, always pay your entire statement balance in full. If you do this consistently, you’ll avoid paying residual (or any) interest on your credit card purchases.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

What is credit card residual interest?

Residual interest (also known as trailing interest) is the interest that accumulates on a credit card balance between the date a statement is issued and the date your payment is actually received and processed. If you pay off your balance in full every month, however, you typically won’t be charged residual interest.

Do all credit cards charge residual interest?

Credit cards typically charge residual interest when you carry over a balance between billing statements. However, when and how your card issuer applies residual interest can vary; check your card’s terms of agreement to learn more.

How can I pay off residual interest?

One of the best ways to pay off residual interest is to contact your credit card issuer to request an exact, up-to-date payoff amount, then pay that amount immediately online or by phone. Because interest accrues daily between your statement date and when your payment is received, this final payment clears the remaining balance.

Photo credit: iStock/fizkes

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If you want to avoid dealing with local currency or carrying traveler’s checks or cash when traveling abroad, an international credit card can be an asset. Having this kind of card in your wallet, which you can use both at home and abroad, can make for smoother trips overseas.

Here’s a closer look at what an international credit card is, its main features, and how to get an international credit card that’s right for you.

What Is an International Credit Card?

An international credit card is a type of credit card that you can use outside of the United States to make purchases and to withdraw cash at an ATM. The major networks that issue international credit cards include Mastercard, Visa, Discover, and American Express. Most credit cards can be used outside the U.S., but international credit cards have specific benefits designed for global travelers.

However, having an international credit card doesn’t mean you can use it anywhere in the world. The places where you can use a certain card depends on the network. For instance, Mastercard’s international cards can be used in over 210 countries and territories, whereas Visa’s global network spans over 220 countries and territories to date.

Features of International Credit Cards

Besides the fact that you can use the card overseas, here are some of the other features an international credit card may have:

International Chip and Pin

International credit cards feature an international chip and pin. Chip cards, or EMV cards (which stands for Europay, MasterCard, and Visa), add an extra layer of security to transactions.

With the chip and pin feature of international credit cards, you dip your card into the reader, then insert your PIN. This differs from in the U.S., where EMV cards come with chip-and-signature technology, which means you insert your chip and then may input your signature. Chip-and-pin is the standard most everywhere else and, as such, this is what international credit cards offer.

Welcome Offer

An international credit card might have a welcome offer featuring an attractive introductory bonus. Typically, with how credit cards work, you’ll need to spend a certain amount on the card within the first few months of opening your account in order to earn the bonus. The amount you’ll need to spend, the time frame in which you’ll need to do it, and the number of bonus rewards points you can earn will vary by card.

Travel Perks

Some international credit cards come with attractive travel perks, such as trip cancellation insurance, rental car insurance, and lost luggage insurance. They might also feature access to exclusive airport lounges around the world.

To qualify for an international credit card with some of these luxury perks, however, you’ll usually need to have a good or even excellent credit score (meaning 670 or above).

Rewards Points

While many credit cards come with the ability to scoop up rewards points, international credit cards might offer a higher credit card rewards rate for travel-related purchases. This might include hotel stays, car rentals, dining out, and booked flights. For example, you might get 5x points on these travel-related purchases, whereas other purchases earn 1x points.

Recommended: When Are Credit Card Payments Due?

Credit Card Foreign Transaction Fees

An international credit card might come with a foreign transaction fee, which is a fee that applies when you make a payment with your card in another country. This fee is typically 1% to 3% of the total cost of the purchase, and it is charged in U.S. dollars. For example, if your total purchase came to $50, then the foreign transaction fee of 3% would be $1.50, for a total of $51.50.

If you’re not careful, foreign transaction fees can easily take a bite into your travel budget. Some international cards might not charge foreign transaction fees, which can put money back into your pocket and help you avoid credit card debt that’s hard to get rid of.

How to Get an International Credit Card

To get an international credit card, follow these steps:

1.    Do your homework to see which cards are most attractive to you. Which have the best perks, lowest fees, and most enticing rewards?

2.    You’ll also want to see which cards you can qualify for. By checking your credit score, you can better determine which cards you might get approved for.

3.    Apply for a credit card. The process of how to apply for a credit card is similar whether or not it’s an international credit card. You’ll usually need to provide basic personal and financial information, such as your Social Security number and details on your income.

4.    Once your application is submitted, the credit card issuer will do a hard pull of your credit record to determine your creditworthiness, which helps inform whether your limit will be above or below the average credit card limit. Be aware that a hard pull will likely result in a temporary ding to your credit.

5.    Find out if you’re approved. If you are, you can expect to receive your new card in the mail in seven to 10 business days. Your card will have a unique account number as well as the CVV number on a credit card.

Recommended: What is the Average Credit Card Limit?

How to Choose the Best International Credit Card

What’s the best international credit card for you will depend on a handful of factors. Specifically, you’ll want to consider:

•   Where you’ll be traveling. Are you planning on using your card on business trips, and do you frequent certain countries for work? If so, there are certain countries or parts of the world where a particular international credit card may be more widely accepted. Different cards may be accepted in different locations.

•   Rates and fees. Look to see what the APR on a credit card will be. If you are likely to keep a balance, it’s particularly important that you have a good APR for a credit card. The lower the APR, the less you’ll pay in interest when you carry a balance. Also take a look at any other fees that may apply with the card, such as annual fees, late fees, cash advance fees, and, of course, foreign transaction fees.

•   Perks and rewards. Not all credit cards are equal when it comes to the perks and rewards they offer. It’s easy to be dazzled by attractive travel-related perks, but make sure they’re ones you’ll actually use. Also look at the earn rate for different categories, and see if the categories with the higher earn rates are in line with your spending habits. You want to use your credit card responsibly vs. overspending to earn rewards.

Pros and Cons of Using an International Credit Card

International credit cards have pros and cons, both of which are important to weigh. You can learn more about credit cards by exploring this credit card guide.

Pros of International Credit Cards

First, the upsides of international credit cards:

•   Less hassle when traveling: Perhaps the top advantage of using an international credit card is that you won’t need to fuss with local currency or carry around cash or traveler’s checks. Plus, if something were to go amiss, you have the usual credit card protections in place, which could allow you to dispute a credit card charge or request a credit card chargeback.

•   Opportunity to earn rewards: Many international credit cards allow you to earn rewards for your everyday spending. Plus, some may offer higher rates of rewards for travel-related spending, which could be a big benefit for frequent travelers.

•   Travel perks: As mentioned before, international credit cards can come with a host of travel-related parks. For instance, international credit cards may offer trip cancellation insurance, car rental insurance, and free upgrades on hotels and flight bookings, to name a few.

Cons of International Credit Cards

Next, consider the potential downsides of international credit cards:

•   Fees: Some international cards have high annual fees, though these may translate to more attractive perks. You’ll also want to look out for foreign transaction fees, as these can quickly add to your costs when traveling.

•   Might not be accepted everywhere: Not all retailers within a country may accept payments with an international credit card. Some retailers might still only accept the local currency or certain payment methods. Additionally, international credit cards’ networks may not include particular locations.

•   Need to plan ahead to maximize perks: While international credit cards might come with some nice travel benefits and perks, it can take a bit of work and planning to make the most of them. For instance, if you want to rake in the bonus offer, you’ll need to plan for some big-ticket purchases to put on your card within the first few months of opening it.

Or, if a card features a travel credit that expires each year, the clock is ticking to use that benefit. This all could incentivize you to overspend, leaving you in a scenario where it’s hard to pay off more than the credit card minimum payment.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Takeaway

Having an international credit card while traveling overseas can eliminate the hassle of dealing with foreign currency or carrying cash. When looking for a good that suits your needs, it’s important to weigh the perks against the downsides, particularly the fees involved. 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.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Can I use my credit card internationally?

Yes, most credit cards can be used internationally since they are part of a global payment network such as Visa, MasterCard, or American Express. And some international credit cards have benefits that are specially designed for international travelers. Exactly which countries you can use your card in will depend on the network.

Should I withdraw cash with my international credit card?

While withdrawing cash from an international credit card is an option, note that doing so often comes at a cost. On top of the foreign transaction fee, which could be 1% to 3%, there’s also a fee that applies to cash advances, and cash advances tend to have a higher APR. Interest on cash advances typically starts accruing immediately, as there’s no grace period on cash advances. Instead, you might bring your debit card on the trip and use that to withdraw cash at a bank ATM.

How can I find out which countries accept a given card?

Check the credit card network’s international use network to determine which countries you can use your card in. You may find this on the credit card network’s website or in the app or by contacting customer service.

Do I have to pay fees annually for an international credit card?

Some international credit cards do have an annual fee. Do your homework ahead of time to see what the annual fee is, and if the perks will offset the costs. Other costs you want to check include foreign transaction fees, cash withdrawal fees, and late fees.

Photo credit: iStock/Drazen_

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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, when used responsibly, could enhance your financial life, allowing you to build your credit score, earn rewards, and more. Unfortunately, if you’re not careful and make credit card mistakes, using a credit card can have the opposite effect on your finances.

Here are some of the most common credit card mistakes to avoid, including some specific travel credit card mistakes to watch out for.

Credit Card Mistakes to Avoid

When using your credit card, here are some credit mistakes you could be making — plus how to avoid them by following some basic credit card rules.

1. Making Late Payments

Payment history is one of the most significant factors in determining your credit score. The more payments you miss, the more your credit score could go down.

A late or missed payment can stay on your credit report for up to seven years — unless you can prove it was a credit report mistake.

How to avoid it: Setting up automatic payments, or setting reminders can help you remember when your credit card payment is due.

2. Making Only Minimum Payments Monthly

While making minimum payments is important to avoid incurring late fees, it doesn’t allow you to avoid interest charges. In fact, by only making the minimum payment, you’ll end up paying a high amount of interest (assuming you’re not using a card in its 0% introductory period). You also risk getting further into debt if you keep using your credit card, and it could take years to pay off your balance in full.

How to avoid it: Budgeting carefully could help you pay off more than the minimum amount due, or ideally, the entire balance off, each month.

3. Misunderstanding Credit Card Interest

Interest is a key part of what a credit card is, but the way credit card interest is charged can be confusing. A credit card can have a few different annual percentage rates (APR) depending on the type of transaction, including on purchases, cash advances, and balance transfers.

The bottom line: To avoid interest on new credit card purchases, pay off the balance in full each month. You’ll owe interest on any amount you carry over.

How to avoid it: Check your credit card agreement to understand how interest is charged, and aim to pay off your balance in full to avoid incurring interest.

4. Ignoring Your Credit Card Agreement

Credit card agreements contain important details like fees, your credit limit, and other important terms you’ll benefit from knowing. Ignoring credit card terms could lead to nasty surprises, like fees you didn’t anticipate paying.

How to avoid it: Set aside time to read your credit card agreement, and contact your credit card issuer if you have any questions about how credit cards work.

5. Neglecting Your Monthly Statement

Reading your monthly statement is important to staying on top of your credit card account. For starters, it includes a lot of important information, such as your statement balance, the amount of your minimum payment owed, and your payment due date. Plus, regularly reviewing your credit card statement can help you spot signs of fraud.

How to avoid it: Set reminders to look at your monthly statement to see how much you owe, and dispute credit card transactions you didn’t approve.

6. Getting Close to Your Credit Limit

Your credit card limit is the amount that you can charge your card. If you get close to hitting your limit, it could hurt your credit score because you’ll have a higher credit utilization ratio. This ratio compares your balance to your available credit, and the higher it is, the more adversely it could affect your score.

How to avoid it: Monitor your balance to ensure you’re not close to your limit — ideally, you’re only using up to 30% of what’s available to you or less. Some financial experts suggest using no more than 10% of your limit.

7. Applying for Multiple Credit Cards at Once

Each time you apply for a new credit card, lenders will conduct a hard inquiry, which tends to temporarily lower your credit score. While this dip might not make a huge difference, applying for multiple accounts could cause lenders to take pause. It can possibly give them the wrong impression as to why you want so many new cards.

How to avoid it: Get preapproved for a credit card before applying to see your chances of getting approved before submitting a full application.

8. Applying Without Comparing Credit Cards

There are many benefits and features that come with credit cards, and without comparing them, you may end up opening a card that’s not the right fit. Shopping around and exploring different credit card rewards can help you understand your options and make a more informed choice.

How to avoid it: Take the time to think about the features you want the most from a credit card and do some research to narrow down your choices before applying.

9. Canceling Your Card on a Whim

Canceling a credit card could mean the issuer will require you to pay off your entire balance with interest. Plus, it could affect your credit utilization ratio since it will lower your overall credit limit. Canceling a credit card also could shorten the length of your credit history, which is another factor used when calculating credit scores.

How to avoid it: Consider the consequences of canceling your credit card, and make sure to pay off the entire balance before you do so.

10. Not Reporting Lost or Stolen Credit Cards Instantly

The longer you go without reporting a lost or stolen credit card, the more likely you may be responsible for fraudulent changes that show up. Some credit card companies waive all fraudulent charges (or up to $50 worth) as long as you’re quick to report.

How to avoid it: As soon as you notice your card missing, report it to your credit card company, and then continue to monitor your statements for any fraudulent charges.

11. Loaning Your Credit Card

When you give your credit card to someone else to use, you’re still responsible for the charges made on it. If the person you lent your credit card to doesn’t pay you back, then you’re stuck with the bill. The same applies with an authorized user on a credit card — you’re the one ultimately responsible for paying even if you didn’t make the charges yourself.

How to avoid it: Don’t let anyone borrow your card, and if you do, ask them to pay you upfront for the changes they intend to make.

Travel Credit Card Mistakes to Avoid

In addition to the mistakes above, take care to avoid these particular mistakes if you have a travel rewards credit card.

12. Overspending

To earn welcome or bonus offers, credit card companies typically require you to spend a minimum amount within a certain period of time. If you don’t plan ahead properly, you could end up making unnecessary purchases and racking up charges you can’t afford to pay off.

How to avoid it: Have a plan for how you’ll meet the minimum spending requirements, such as by timing a necessary big purchase with opening a new card.

13. Underspending

On the opposite spectrum, opening a new credit card and not meeting the minimum spend requirements could mean you’re disqualified from earning the welcome bonus. This would mean passing up a big benefit of getting the card.

How to avoid it: Review your spending habits before opening a credit card to ensure you can meet the card’s minimum spending requirements.

14. Spending Points vs Paying a Low Cash Price

Redeeming your credit card points is fine, but spending them on low-value rewards may be a waste. For example, you might be able to book a flight or hotel at a much lower price in cash than you’d get if you used points for the purchase.

How to avoid it: Research reward redemption options to maximize the value from the points you’ve earned.

15. Not Using Your Benefits

Travel credit cards can offer other perks, such as annual credits toward travel and free stays at hotels. However, you’ll typically need to take advantage of them within a year, and they won’t roll over. In other words, if you don’t use these benefits in time, they’ll go to waste.

How to avoid it: Read your credit card agreement to see what additional benefits you can take advantage of.

16. Losing Your Points

Some points earned through rewards programs expire. In other cases, you’ll automatically lose your points when you decide to cancel your credit card.

How to avoid it: Use up your points before canceling your card, or check if they expire and make sure to use them up in time.

Recommended: What Is a Charge Card?

17. Failing to Transfer Points

Most card issuers allow you to transfer points to travel partners like airlines and hotels. This can offer a greater value for your points compared to what you’d get through the card issuer’s travel portal.

How to avoid it: Before booking travel, check whether it’s more valuable to book through the card issuer’s travel portal or by transferring points instead.

18. Not Understanding Credit Card Bonus Categories

Many travel credit cards offer bonus points if you spend in certain categories. These bonus rewards tend to vary for different cards. Not understanding what each card offers could result in losing out on earning extra points.

How to avoid it: Read through the terms and conditions of each travel credit card you own to maximize your earnings.

19. Redeeming Points at Low Value

Not all points are created equal. You might not get the same value from your travel points if you redeem them for a gift card as opposed to redeeming with partner hotels or airlines, for instance.

How to avoid it: Do your research on how best to redeem your rewards for your credit card, to get the most value.

Recommended: When Are Credit Card Payments Due?

The Takeaway

Knowing and avoiding common credit card mistakes can be a good way to avoid excessive credit card debt and keep your finances in good order. Responsible use of credit can be a foundation of financial fitness. What’s more, avoiding credit card mistakes can also help you enjoy perks, like rewards, that come with your account.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

What are some of the most common credit card mistakes?

Some of the most common credit card mistakes include not making payments on time, only making the minimum payment, and not understanding the terms of your credit card agreement.

What credit card mistakes can damage my credit?

Major factors that can damage your credit include late or missed payments, having a high credit utilization ratio, and having too many new credit inquiries. Making these mistakes can lead to damage to your credit.

Can problems arise from not using my credit history?

Having a lack of credit history could make it harder to qualify for credit cards, loans, and even housing. Or you may only qualify for cards and loans with higher interest rates.

Photo credit: iStock/Mikolette

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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