A credit card is a type of financial product issued by banks and other financial institutions that allows you to borrow funds within a pre-approved credit limit. You can use it to make purchases, withdraw cash, and pay for services. The money used must be repaid, often with interest if not paid back within a certain period.

When you're approved for a credit card, you're given a credit limit, which is the maximum amount you can borrow at any time.

You can use the card to buy goods and services up to your credit limit.

Credit cards operate on monthly billing cycles. At the end of each cycle, you receive a statement listing all transactions, the total amount owed, and the minimum payment due.

You must make at least the minimum payment by the due date each month. However, paying only the minimum means you'll accrue interest on the remaining balance.

Most cards offer an interest-free period (typically up to 56 days), where no interest is charged on purchases if you pay your balance in full and on time each month.

Standard Credit Cards

• Good for everyday use with no special features.
  
  

Balance Transfer Cards

• Offer low or zero interest on the balance transferred from another card for a set period.
  
  

Rewards  Accounts

• Earn points, miles, or cashback on purchases.

• Credit Builder Cards: Designed for people with poor or no credit history to help build credit.

Look for a card with a low Annual Percentage Rate if you plan to carry a balance.

Some cards have annual fees, late payment fees, and fees for overseas usage. Make sure you’re aware of all potential charges.

Consider what rewards align with your spending habits, such as travel rewards, cashback, or discounts.

Credit Cards can be handy to have for convenient purchases if they are paid off regularly. The list below shows the advantages.

• Regular, responsible use can improve your credit rating.
  
  

• Credit cards offer strong consumer protection, including chargebacks and insurance on purchases.
  
  

• Provides a safety net for emergencies or spreading the cost of large expenses.

There is a downside to over-reliance on credit cards. The list below shows the disadvantages:

• It’s easy to accumulate debt if you’re not careful with your spending.
  
  

• Can be costly if balances are not managed properly.

Aim to pay your balance in full each month to avoid paying interest.

Try to use less than 30% of your credit limit to help maintain a good credit score.

Keep track of purchases to ensure you can afford to pay them off.

Automate payments to always pay at least the minimum due, preferably more.