There are several limitations of credit cards that may apply to certain accounts, depending on the terms and conditions of the specific credit card issuer. Below are some examples:
Credit limit: Each credit card has a credit limit, which is the maximum amount of money that a cardholder can borrow at any given time. The credit limit is determined by the credit card issuer based on the cardholder's credit score, income, and other factors. If the cardholder exceeds the credit limit, they may be charged an over-the-limit fee, and their account may be subject to penalty interest rates.
Interest rates: Credit card issuers charge interest on unpaid balances. The interest rate can vary depending on the creditworthiness of the cardholder and other factors. If a cardholder carries a balance on their credit card, they may be subject to high-interest rates, which can result in substantial finance charges.
Fraud protection: Credit cards have fraud protection features to prevent unauthorized transactions. However, some accounts may have limitations on the amount of fraud protection offered or may require the cardholder to report fraud in a timely manner to be eligible for protection.
Acceptance: Credit cards are not universally accepted, and some merchants may not accept certain types of credit cards. For example, some small businesses may only accept cash or certain types of credit cards, and some international merchants may not accept certain types of credit cards due to processing fees or other factors.
Balance transfers: Some credit cards may offer balance transfer options, which allow cardholders to transfer balances from other credit cards. However, there may be limitations on the amount that can be transferred, at a time the duration of the promotional rate, or the fees charged for the transfer.
Rewards redemption: Rewards earned on credit cards may have limitations on how they can be redeemed. For example, cashback rewards may only be redeemable as a statement credit, and points may only be redeemable for certain types of purchases or gift cards.
Foreign transaction fees: When using a credit card for purchases made in a foreign currency or outside of the country, some credit cards may charge foreign transaction fees. These fees can add up quickly, and some credit cards do not waive these fees, making them an expensive option for international travel.
Credit limit: Each credit card has a credit limit, which is the maximum amount of money that a cardholder can borrow at any given time. The credit limit is determined by the credit card issuer based on the cardholder's credit score, income, and other factors. If the cardholder exceeds the credit limit, they may be charged an over-the-limit fee, and their account may be subject to penalty interest rates.
Interest rates: Credit card issuers charge interest on unpaid balances. The interest rate can vary depending on the creditworthiness of the cardholder and other factors. If a cardholder carries a balance on their credit card, they may be subject to high-interest rates, which can result in substantial finance charges.
Fraud protection: Credit cards have fraud protection features to prevent unauthorized transactions. However, some accounts may have limitations on the amount of fraud protection offered or may require the cardholder to report fraud in a timely manner to be eligible for protection.
Acceptance: Credit cards are not universally accepted, and some merchants may not accept certain types of credit cards. For example, some small businesses may only accept cash or certain types of credit cards, and some international merchants may not accept certain types of credit cards due to processing fees or other factors.
Balance transfers: Some credit cards may offer balance transfer options, which allow cardholders to transfer balances from other credit cards. However, there may be limitations on the amount that can be transferred, at a time the duration of the promotional rate, or the fees charged for the transfer.
Rewards redemption: Rewards earned on credit cards may have limitations on how they can be redeemed. For example, cashback rewards may only be redeemable as a statement credit, and points may only be redeemable for certain types of purchases or gift cards.
Foreign transaction fees: When using a credit card for purchases made in a foreign currency or outside of the country, some credit cards may charge foreign transaction fees. These fees can add up quickly, and some credit cards do not waive these fees, making them an expensive option for international travel.
