What is a credit card?
A credit card is a payment card with a linked loan that allows you to purchase items without the use of physical paper money (cash) in the form of a short term loan. The main features of a credit card are:
- Credit Limit : Credit limit is typically between 2 to 3 times your net take-home income, that might differ depending on the bank that issued the card and on if you have other financial products
- Payment Network : A payment network is where your credit card can be accepted for payment. The two largest payment networks are VISA & MasterCard, with most credit cards being issued in those two networks.
- Rewards System : Most rewards systems attached to credit cards fall into three main categories (i) cashback, (ii) shopping vouchers, and (iii) airline miles.
Do I get charged interest immediately after I purchase something?
The short answer is no, you are not charged interest from the day you make a transaction. Most banks allow for an interest-free grace period of between 55 – 58 days. But that period is not from the date you make a purchase, it is from your last billing date (most banks billing date is the 1st of every month).