When used responsibly, credit cards can be very valuable tools for managing your spending, earning rewards and handling unexpected expenses or emergencies.  Credit cards:

• Help you build credit – cardholders who pay their balances on time can build a credit history which will allow access to additional credit in the future. This is important if applying for any type of loan/financing or mortgage.
• Earn rewards – by selecting a card that offers rewards such as cash back, miles, reward points for your everyday spending that can be used towards travel, gift cards or merchandise – why pay cash or debit when you can earn free travel or cashback for that same spend?
• Save on insurances – many credit cards now offer insurances such as trip cancellation, trip interruption, car rental collision, emergency medical.
• Convenience & Security – cardholders do not need to worry about carrying cash for everyday purchases. Credit cards allow you to buy big ticket items such as electronics, travel packages & jewelry even if the funds are not immediately at your disposal. They also allow you to make online purchases or purchase over the phone.

Credit cards let you carry a balance from month to month.  You need to pay the balance in full by the statement due date in order to avoid paying interest on the charges you have put on the credit card. If you do not pay the full balance, you must at least pay the minimum due balance in order to avoid damaging your credit score.  Charge cards do not allow you to carry a balance from month to month. If you do not pay the full balance by the statement due date, you will be charged a very high interest rate (apx 30% annually). Charge cards should only be carried by individuals who can and will pay their balances in full by the statement due date.

A credit card allows you to borrow money from the provider.  A debit card takes the money charged to it directly from an associated bank account (you are not borrowing money but simply using the debit card to access money that is already in your bank account).

The annual fee on a credit card is the amount you pay on a yearly basis for the credit card. Not all credit cards have annual fees.  Annual fees are usually associated with credit cards that offer bonuses, rewards, perks, insurances etc.

The credit card issuer will charge interest whenever you carry a balance on your credit card (whenever you do not pay your full balance by the statement due date).  The monthly interest fee starts from the date each individual purchase was charged to the credit card. This is not a one time charge, every month that you carry a balance over from the previous month you will have an interest charge added to your balance.  The interest fee will continue to be charged until the balance if paid in full.

In addition to the interest rate for carrying a balance past the statement due date, credit cards also have cash advance interest rates (if you opt to withdraw cash from your credit card) and balance transfer interest rates.  These two rates can often be much higher and you should confirm these rates before you withdraw cash or transfer any balances.

A Welcome Bonus is a one time extra reward you receive when you apply and are approved for a credit card.  Welcome Bonuses are not offered with every credit card and may have requirements such as minimum spends in order to receive the bonus

Credit card rewards are rewards (points, miles, cash back) you earn for charging your purchases to the credit card.

Cash back is when the provider gives you a percentage of what you charge onto the credit card back as a reward (cash back reward).  Different cards have different redemption options for their cash back rewards.  You may be able to use the reward (cash back) towards your statement balance, to purchase gift cards or simply have it deposited into your bank account.

No.  While some people think that if they pay their credit card statement in full each month the provider will not report anything to the credit bureau this is not true. Payments made (including full payment of statements) are noted to the credit bureau.  Regular payments help in increasing your credit score much more than carrying a balance every month.

There are four major credit card networks, Visa, Mastercard, American Express and Discover. They work behind the scenes to make credit card transactions possible. Basically they facilitate transactions between merchants and credit card providers.

Credit card providers are financial institutions that issue credit cards to consumers. Visa and Mastercard do not issue credit cards, instead they use banks or credit unions to issue them. American Express and Discover are both credit card networks and providers, eliminating the need for a middleman to issue the card for them. The credit card provider is responsible for issuing credit cards, settings limits, collecting payments, settings fees such as interest rates and more.