Credit cards can be used to make online and in person purchases by tapping into a revolving line of credit.
Each time a purchase is made on a credit card, the amout of credit available reduces. When a repayment is made, the credit line goes back up. Normally if the entire amount that was borrowed in a given month is paid back in full on time, interest will not be charged. If a balance is carried over to the next month, interest will be charged on the amount carried over. Depending on the card, other fees and charges may apply too.
Credit cards come with potential benefits and risks. It’s important to consider interest, fees, and other associated costs before deciding to apply for or using a credit card. Always read and understand a credit card’s terms and conditions as these may vary depending on the type of card and provider.
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The Payment Card Industry Data Security Standard, or PCI DSS, is a set of standards merchants must comply with to accept card transactions.
Security measures such as tokenisation, data encryption and secure payment gateways are normally used by merchants to help keep credit card details secure during transactions.
Using a credit card responsibly is important. Shopping around for the most suitable card option based on individual needs, staying within the card’s limit, and making repayments on time are a few examples of responsible credit card use.
Potential uses of credit cards include:
There are risks that come with using credit cards. Spending beyond one’s means and missing repayments are two examples.
Things to consider when using credit cards:
It is possible to create a budget for credit card spending and repayments. This could be done by tracking and keeping records of all spending in a given month. Possible ways to do this include tracking bank statements manually or using an app that syncs with the credit card provider.
Having spending records laid out in one place could help to create a realistic budget — one which accounts for their spending habits and credit card repayments. This could help to avoid overspending and accumulating debt.
Monitoring credit card activity is an important part of financial safety. Regularly checking card statements and account activity for any unauthorised transactions could help a customer spot potential fraud. If fraud is suspected, credit card providers and credit reporting bodies should be contacted.
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