Services

What is a credit card, how it works, and how to manage expenses

Credit card meaning

A credit card is a credit facility provided by a bank or credit card provider. It comes with a pre-approved credit limit based on your financial credibility. This allows you to buy things, do online transactions, and pay back the amount with interest each month within your billing cycle.

It's important to understand credit card terms, such as your credit card number, expiry date, Card Verification Value (CVV) code and password. Learning about the common benefits will help you make the most of your card, too.

Benefits of credit cards

A credit card comes with a wide range of features and benefits that vary based on the type of credit card you use.

Separate from your bank account

One of the best thing about using a credit card is that it's not directly linked to your bank account. So when you use the card to pay for any online transaction or purchases at the store, the amount will not be deducted from your bank account. Instead, when you use the card to make payments, the amount is deducted from your credit limit.

No need to carry cash

Credit cards virtually eliminate the need to carry cash. Just carry your card in your wallet and avoid the risk of losing money or having it stolen

Credit cards can be categorized by their reward type, user, or spending purpose, with common types including rewards cards (for points or cashback), travel cards (for miles and airport benefits), and secured cards (for building credit). Other types include store cards (for specific retailers), business cards (for commercial use), and premium cards

Visa and Mastercard offer different tiers of credit cards, from entry-level options like Visa Classic and Mastercard Standard to premium cards like Visa Infinite and World Elite Mastercard. The specific benefits, spending limits, and rewards vary by card type, with higher tiers typically offering more exclusive perks and higher spending power.

Types of credit cards