See more tips on applying for the right credit card here. When used correctly, credit cards can be a wonderful addition to your wallet. They have a number of great features:. Will you only charge what you can afford, so you can pay the balance on time and in full each month? If that sounds difficult to you, credit cards may not be for you — and could cause a spiraling cycle of credit card debt. To see which cards might be right for you, check out our list of the best credit cards.
Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker. Do you have a correction, tip, or suggestion for a new post?
Contact us here. The responses below are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. How Does a Credit Card Work? You can avoid paying interest on purchases if you pay your balance in full each month. If you're an FNB customer, you can get a personalised interest rate on your credit card that's based on your credit profile and affordability. Using a credit card is one of the smartest and most convenient ways to book your return travel tickets and accommodation online.
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Marketing Cookies These cookies are used for tracking and online advertising purposes. Credit Cards. Understanding credit. For Me. For My Business. Private Banking. Careers at FNB. What would you like to do? Start new application. Retrieve existing application. Please select. Need help with the process? Daily Banking. Switch to FNB Do it now! Your login details have been entered incorrectly Please note that on your 3rd attempt, your profile will be blocked. Forgot your login details?
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Reset password and username. Forgot password. Reset password or username. Manage your credit card on the app with ease. How to increase your credit card limit. How to download your credit card statements. How to temporarily block your credit card. How to unblock your credit card. How to transfer money from your cheque account to your credit card. How to redeem vouchers. Responsible spending will also help you build your credit along the way.
Of course, letting your credit card spending get out of control can lead to mounting debt, excessive interest charges, late fees and bad credit. A credit card is a revolving credit account that allows you to borrow money from the issuer to pay merchants for products and services.
When the bank approves your credit card application, it will cap your account with a credit limit, which is the maximum amount of money the bank will allow you to spend with the card. Your credit card limit is based on your income, debts, credit history and other criteria. When you make purchases with your credit card, the transaction is processed by one of the four major payment networks: Visa, Mastercard, American Express or Discover.
Their role is to ensure the merchant receives money for the transaction and that your card issuer bills you for the purchase. Once you purchase goods or services with a credit card, the purchase amount is deducted from your available balance.
Conversely, when you make a payment on your credit card account, you will have more available credit to use for future purchases or cash withdrawals. You will receive a credit card bill every month.
Instead, you only have to make a minimum payment, which usually ranges from 1 percent to 3 percent of your outstanding balance plus any interest and fees from the previous month. Ensure your payment is on time by setting up automatic monthly payments for the minimum amount or another amount you determine.
Most banks also offer email or mobile notifications to alert you when your due date is near. You can avoid paying any interest on your purchases by paying your balance in full by the due date.
If you pay in full each month your issuer is required to provide a grace period , usually 21 days or more, from the end of your billing cycle to your payment due date during which you can pay for your transactions interest-free. The bank establishes the APR for your credit card account by reviewing your income, credit history and other factors. Credit cards and debit cards look nearly identical, but in practice, they are not.
The major differences between them include how purchases are processed, the impact or not on your credit score and your liability when it comes to fraud. When you make a purchase with your credit card, you are borrowing money from your card issuer. By contrast, debit cards are linked to your checking account. When you purchase goods or services with your debit card, money is automatically transferred from your bank account the moment you complete the transaction.
Creditors report your credit card payments to the three major credit bureaus — Equifax, Experian and TransUnion. Using your credit card responsibly and paying your bill on time each month can help you build good credit. Conversely, paying your bill late or missing a payment can hurt your credit score. Credit cards are a valuable tool to earn rewards , build credit and pay down debt. The interest that your credit card issuer charges you is calculated as an annual percentage rate , or APR.
Because the APR is an annualized percentage, it is divided by 12 and applied to your outstanding balance each month. This example applies to a typical revolving credit card, which allows you to roll your balance over between billing periods. Another type of card, often referred to as a charge card , looks and works much like a credit card but requires that you pay off your balance in full each month.
Some cards have more than a single APR, such as one for purchases and another one for cash advances. That is all spelled out in the credit card's terms, which you should receive when you open your account.
If you're shopping for a credit card, you can usually find its terms online. Credit cards charge a wide range of fees and penalties, many of which are avoidable.
But if you aren't careful, they could end up representing a substantial part of your monthly payments. Credit cards usually come with a lot of fine print regarding fees, penalties, and other charges you can rack up, sometimes just by accident.
Some important ones to know about:. Late fees. If you miss the due date for your minimum payment, you may be hit with a late fee. What's more, your late payments will be reported to the credit bureaus and reflected in your credit history, which can be damaging to your credit score. Over-limit fees. If you exceed the credit limit on your card, your credit card issuer may charge you an over-limit fee. Note that some card issuers will simply decline any charges that exceed your credit limit when you attempt to make a purchase.
Annual fees. This is the yearly fee you pay simply to have the card. Many credit cards are available without annual fees, although those with annual fees may have rewards programs that offer higher rewards on your purchases. Cash advance fees. Some credit cards allow you to take out cash advances.
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