A credit card gives you a revolving line of credit up to an agreed limit, which you can use and repay repeatedly rather than as a one-off loan. Used well, they can offer purchase protection and rewards; used carelessly, the interest charged on a carried balance can be significantly higher than most other forms of borrowing.
The main types of card
Standard credit cards charge interest on any balance not paid off in full each month. Balance transfer cards let you move debt from another card, usually with a 0% introductory period, to help pay it down without accruing more interest. Money transfer cards let you move funds into your bank account at a promotional rate. Reward and cashback cards offer points or cashback on spending, but usually only make financial sense if you clear the balance in full every month.
How interest is actually charged
If you pay your statement balance in full by the due date each month, you typically pay no interest at all — this is the single biggest lever most cardholders have. If you carry a balance, interest is usually charged daily on the outstanding amount, and cash withdrawals on a credit card almost always attract interest immediately with no interest-free period, plus a separate cash advance fee.
Minimum payments are a trap, not a plan
Paying only the minimum each month can mean a balance takes many years to clear and costs far more in interest than the original purchase — credit card statements are required to show an example of how long this would take, and it's worth actually reading that figure rather than skipping past it.
What affects approval and your credit limit
Lenders look at your credit history, income, existing debt levels, and how you've managed credit previously. Applying for several cards in a short period can itself lower your score temporarily, so it's generally worth being selective about applications rather than applying broadly.