{"id":18025,"date":"2024-03-27T06:00:05","date_gmt":"2024-03-26T22:00:05","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/how-credit-cards-work-beginners-guide.html"},"modified":"2026-03-27T15:20:05","modified_gmt":"2026-03-27T07:20:05","slug":"how-credit-cards-work-beginners-guide","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/credit-cards\/how-credit-cards-work-beginners-guide.html","title":{"rendered":"Credit Card 101: Everything You Need To Know About Credit Cards"},"content":{"rendered":"\n

Credit cards have an oddly mixed reputation among most people, despite their ubiquity<\/span><\/a>. Having one is often seen as a status symbol simply because it implies you\u2019re well-off enough to finance one. But many of us are also a bit wary over them, due to the horror stories we\u2019ve heard of people going broke over mounting amounts of debt. <\/p>\n

But the credit card is just another financial tool<\/span><\/a>, and it\u2019s only as good or as bad as a user\u2019s knowledge and ability to wield one properly. Like any tool, you can financially injure yourself if you misuse them. But use them properly and you\u2019ll not only benefit from their growing convenience<\/span><\/a>, but you can earn perks and bonuses from them if you know which card to pick and what you\u2019ll be spending on them.  <\/p>\n

So if you\u2019re looking to reap the rewards of using a credit card without encountering some of the more common pitfalls, or if you\u2019re just curious to know how do credit cards work, this article is for you! <\/p>\n

 <\/p>\n

What is a credit card?<\/h2>\n

A credit card<\/span><\/a> is a way to pay for goods and services and is essentially a type of short term loan issued by a bank or a financial institution to the account holder.<\/p>\n

A credit card is often used for short-term financing. This includes using it for daily spending on goods and services, or for expensive purchases when withdrawing a large amount of cash does not make sense. <\/p>\n

A credit card is not a good solution for long-term financing because of its high interest rates. In fact, it can be more expensive as some credit cards charge interest rates of as high as 18%. A personal loan would be a better long-term option as you can find financing with interest from as low as 5%.<\/p>\n

Here are some of the best credit cards out there:<\/p>\n{% module_block module “module_94573651131” %}{% module_attribute “block_id” is_json=”true” %}{% raw %}”104886034888″{% endraw %}{% end_module_attribute %}{% module_attribute “child_css” is_json=”true” %}{% raw %}{}{% endraw %}{% end_module_attribute %}{% module_attribute “css” is_json=”true” %}{% raw %}{}{% endraw %}{% end_module_attribute %}{% module_attribute “definition_id” is_json=”true” %}{% raw %}null{% endraw %}{% end_module_attribute %}{% module_attribute “field_types” is_json=”true” %}{% raw %}{“block_id”:”text”,”market”:”choice”}{% endraw %}{% end_module_attribute %}{% module_attribute “label” is_json=”true” %}{% raw %}null{% endraw %}{% end_module_attribute %}{% module_attribute “market” is_json=”true” %}{% raw %}”ch”{% endraw %}{% end_module_attribute %}{% module_attribute “module_id” is_json=”true” %}{% raw %}104370060783{% endraw %}{% end_module_attribute %}{% module_attribute “path” is_json=”true” %}{% raw %}”\/Website 2022\/Modules\/Common Module\/Reusable Block”{% endraw %}{% end_module_attribute %}{% module_attribute “smart_objects” is_json=”true” %}{% raw %}null{% endraw %}{% end_module_attribute %}{% module_attribute “smart_type” is_json=”true” %}{% raw %}”NOT_SMART”{% endraw %}{% end_module_attribute %}{% module_attribute “tag” is_json=”true” %}{% raw %}”module”{% endraw %}{% end_module_attribute %}{% module_attribute “type” is_json=”true” %}{% raw %}”module”{% endraw %}{% end_module_attribute %}{% module_attribute “wrap_field_tag” is_json=”true” %}{% raw %}”div”{% endraw %}{% end_module_attribute %}{% end_module_block %}\n

What is the difference between a credit card and a debit card?<\/h2>\n

In simple terms, a credit card<\/span> allows you to spend with borrowed money and pay it back later.  It is not linked to your bank account and allows you to spend money up to your credit limit.<\/p>\n

You then have a choice to repay the amount spent within 30-days in full and avoid being charged interest or to repay a minimum amount which will be charged interest.<\/p>\n

A debit card<\/strong> is directly linked to your bank account (current or savings) and only lets you spend money you already have in your account. Each purchase is automatically deducted from your bank account. Therefore, you need to ensure you have sufficient money in your bank account before you make a purchase with your debit card.<\/p>\n

Related: <\/strong>Shopping Tips: When To Use A Debit Card Or Credit Card?<\/a><\/p>\n

 <\/h2>\n

Why do I need a credit card?<\/h2>\n

There are many credit card benefits through its features that can be a great tool to manage your finances. A few reasons it\u2019s worth considering include:<\/p>\n