Understanding Credit Cards
A credit card is a plastic card that lets you pay for products or services, or withdraw cash from an ATM. These cards are issued by banks, financial institutions, and sometimes by retailers, charities, or clubs. You can use a credit card wherever it’s accepted—stores and service providers usually display which cards they take.
Credit Limit: How Much You Can Spend
Every credit card comes with a spending cap called a credit limit. This limit varies depending on your financial situation and creditworthiness.
Each time you use your credit card, the amount spent is added to your account balance—the total amount you owe.
Interest-Free Period
Most credit cards offer an interest-free period, typically lasting between 20 and 55 days. During this time, no interest is charged if you pay off the full balance by the due date.
However, if you don’t clear the entire balance on time, interest will usually be applied from the date of each transaction.
Some cards come with promotional offers that allow you to carry a balance without paying interest, even if you don’t pay it off in full right away. These terms are outlined in your credit agreement, including the interest rate and when charges will begin.
Your Monthly Statement
Your card provider will send you a monthly statement, either by post or electronically. This document shows:
- A list of all purchases and transactions since your last statement
- Any interest or fees that have been added
- The total amount owed (your current balance)
- The payment due date
- The minimum payment you need to make
- Ways to make a payment (e.g., online, by phone, by mail)
- Contact information for the card issuer
It’s important to review your statement closely. If you spot any unfamiliar or incorrect charges, notify your provider as soon as possible.