A credit card is typically a bank card that lets one borrow money and pay it back with interest. They work as a type of loan which gives one credit that they spend via the card instead of getting money in an account.

When using a credit card, one needs to make at least the minimum payment every month by the due date on the balance.


  • A credit card is safer as it offers a paperless money. A credit card can quickly be canceled in case one accidentally loses it. 
  • The card can build your credit rating. Your credit card account details and payment history make up a key part of your credit profile. If you keep your account in good standing, this information will help you build up a good credit score, which could increase your chances of approval for other products such as car loans or a mortgage.
  • Credit cards enable one to make purchases even in foreign currencies hence increasing its efficiency.
  • Credit cards can be a financial safety net if you don’t have enough cash or savings to cover any unexpected costs that arise.


  • High rates of interest in case one fails to pay their monthly balances.
  • Credit damage. Missed credit card repayments and ongoing debts are recorded on your credit file and can impact your chances of getting a loan down the track.
  • Credit cards usually attract annual fees, which means an increase in the money pent.
  • Limited usage: you might be restricted in how and where you can use your credit card.

In a nutshell, credit cards work perfectly when one has a stable source of income, which means chances of them defaulting on the monthly repayments are minimal hence no extra interest rates will be charged.


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