How do credit cards work?

Ever wondered how credit cards work and whether you should get one? You’re not alone. Credit cards can be a fantastic financial tool when used wisely, offering rewards, convenience, and even protection on purchases. But they can also lead to debt if not handled properly. In this guide, we’ll break it all down in simple terms.

What Is a Credit Card and How Does It Work?

A credit card is essentially a short-term loan from your bank or credit card issuer. When you make a purchase, you're borrowing money instead of using your own cash. You then have a set period (usually about a month) to pay it back.

If you pay off the full balance by the due date, you won’t pay any interest. But if you carry a balance (meaning you don’t pay the full amount), you’ll be charged interest (APR - Annual Percentage Rate), which can add up quickly.

Each month, you’ll receive a statement showing:

• Your total balance (how much you owe)

• Your minimum payment (the least you must pay to avoid penalties)

• The due date (when payment is due)

Pay on time, and you’re golden. Miss payments, and you could face late fees, high interest, and even damage to your credit score.

When Should You Get a Credit Card?

Not everyone needs a credit card right away. Here are some good times to consider getting one:

• When you can handle money responsibly – If you’re already good at budgeting and paying bills on time, a credit card can be a smart next step.

• To build credit history – Having a credit card and using it wisely helps you build a credit score, which you’ll need for things like renting an apartment or getting a loan or mortgage.

• If you want rewards and perks – Many credit cards offer cashback, travel rewards, and purchase protection.

• For emergencies – A credit card can be useful for unexpected expenses, but only if you can pay it off.

Avoid getting a credit card if you struggle with spending control or already have existing debt.

Benefits of Getting a Credit Card

A credit card isn’t just for making purchases—it comes with several perks. Here’s why people love them:

1. Builds Your Credit Score

Using a credit card responsibly (paying on time and keeping balances low) can help you build a strong credit history, which is crucial for future financial needs.

2. Earns Rewards and Cashback

Some credit cards offer cashback, airline miles, or points for your everyday spending, which means you get rewarded for purchases you’d make anyway. Compare the best credit cards for rewards here

If you link your credit cards to a Curve Wallet, you can actually double up on rewards, earning cashback on top of whatever rewards you get with your credit card. Curve offers cashback every time you spend at select brands like Primark, Argos, IKEA, Waterstones and loads more. And if you opt for a premium plan, you can get an additional 1% cashback at up to 12 of your favourite retailers and 1% cashback on all your foreign spending outside Euro and GBP. 

3. Section 75 purchase Protection

Section 75 under the UK’s Consumer Credit Act 1974 protects consumers when they make purchases with a credit card. It can help you get your money back if something goes wrong with your order, like it shows up faulty, doesn't show up at all, or the business goes bust before they can even complete your order. If you link your debit and credit cards to the Curve Wallet, you can get Section 75 protection on purchases made with debit cards as well as your credit cards - full legal purchase protection across your whole wallet. 

4. Helps in Emergencies

Unexpected expense? A credit card can give you financial breathing room if you need to pay for something urgent before your next paycheck.

5. No Need to Carry Cash

Credit cards are widely accepted and safer than carrying large amounts of cash.

How to Maximize Credit Card Rewards with Curve Wallet

If you want to supercharge your credit card rewards, linking your cards to Curve Wallet is a game-changer. Here’s why:

1. Earn Extra Cashback

With Curve Wallet, you can stack cashback rewards on top of your existing credit card perks. If your credit card offers 1% cashback and Curve offers another 1%, that’s double the rewards on the same purchase!

2. Eliminate Foreign Transaction Fees

Traveling abroad? Many credit cards charge a foreign transaction fee (around 3%), but when you use Curve Wallet, you can avoid these extra costs.

3. Move Money Between Credit Cards

Made a purchase but want to switch it to another card? With Curve’s Go Back in Time feature, you can move transactions from one credit card to another, helping you manage your spending and optimize rewards.

4. Simplify Your Wallet

Instead of carrying multiple credit cards, just link them all to Curve Wallet and use one single card to access them all. No more bulky wallets!

Final Thoughts

So, how do credit cards work? They’re a convenient way to make purchases and build credit, but they come with responsibility. Pay on time, keep balances low, and take advantage of rewards programs—especially by linking your credit cards to Curve Wallet to maximize cashback, avoid fees, and gain extra flexibility.

Thinking of getting a credit card? Choose one that suits your spending habits, and always spend within your means. Used wisely, a credit card can be one of your best financial tools!