What is a credit card?
A credit card lets you borrow up to a set limit to pay for goods and services. You must repay what you borrow according to the agreement, including any interest if you carry a balance.
Debit card vs credit card
A debit card spends money already in your bank account. A credit card borrows from the card issuer up to your limit, then you repay the issuer.
How interest works and what APR means
APR (Annual Percentage Rate) represents the cost of borrowing as an annualised rate, including some fees. If you pay your statement balance in full by the due date, you may avoid interest on purchases — always read your issuer's terms.
Minimum payment
The minimum payment is the smallest amount you can pay to keep the account in good standing. Paying only the minimum can cost more in interest and take longer to clear debt. Paying the full balance each month is usually the safest habit if you can afford it.
Potential benefits
- Build credit history when used responsibly
- Emergency backup for short-term cash flow gaps
- Some purchase protection benefits (see issuer terms)
Risks
- Debt can grow quickly with interest
- Missed payments can trigger fees and harm your credit profile
- Cash withdrawals on credit cards are often expensive
Safe usage tips
- Spend only what you can repay
- Pay the full balance monthly where possible
- Set reminders for payment dates
- Avoid cash withdrawals on credit cards
- Do not apply for many cards at once