A credit card could be a handy addition to your financial toolkit, allowing you to earn rewards, access extra funds when you might need them, and enhance your purchasing power. But to get the most out of a credit card, it’s a good idea to understand how it all works.
In this guide, we’ll break down things to note about credit cards, from the different types available, to fees, interest rates, and making informed decisions. Whether you’re a seasoned cardholder or uncertain first timer, we’ll help navigate the ins and outs of all things credit cards.
What is a credit card?
A credit card is a payment card issued by a financial institution – typically a bank – that allows you to borrow money up to an approved limit. It’s a card with a set limit to make purchases, pay bills, or withdraw cash.
Many credit card providers, like Westpac, issue credit cards supported by Mastercard® or Visa schemes. These credit card schemes provide a global payment network that processes card payment globally, which makes credit cards a convenient option to pay for things at participating merchants in most places around the world.
Debit cards vs. credit cards
A debit card lets you directly access your own funds from your bank account while, as the term suggests, credit cards allow you to borrow money by giving you access to a line of credit that needs to be paid back every month.
Credit cards may offer rewards but can also carry interest charges. Debits cards carry no interest charges but don’t build credit history.