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What is a credit card?

A credit card is a way to borrow money, up to a pre-approved limit, to pay for goods and services.

Credit cards let you buy things upfront and then pay for them later, so you’re essentially borrowing the money. You’ll have a credit limit set by the provider, which is the maximum amount you can owe on the card at any one time.

You can use either a physical credit card, or add it to your digital wallet and use it via your phone.

If you repay the money you owe in full each month, you won’t be charged interest. But if you carry a balance over from one month to the next, you may have to pay interest on the remaining balance.[@financing-arrears-warning]

Explore: How credit cards work

What is a credit score?

A credit score predicts how reliable you are at managing repayments, based on anything you’ve borrowed in the past. It’s a 3-digit number (between 300 and 900) that’s calculated by the Al Etihad Credit Bureau (AECB).

Lenders will use your credit score when deciding whether or not to accept your application for a credit card.

When used responsibly, a credit card can help build your credit score.

Explore: How to boost your credit score

What are the advantages of a credit card?

A credit card can be useful for several reasons, including:

  • flexibility on purchases
    whether you’re paying your rent for the year or covering school fees, a credit card can help you cover the initial cost and spread the repayments
  • avoid the need to carry cash
    a credit card can help reduce the need to carry cash, as you can use your card to settle purchases conveniently and securely
  • offers and discounts
    some credit cards come with other perks, such as discounts from merchants or cash back, which you can make the most of
  • rewards
    some credit cards let you earn rewards, such as air miles, which you can use to help save money in other areas of your life

What are the disadvantages of a credit card?

There are some downsides to using a credit card, including:

  • credit card fees
    some credit cards come with annual fees for simply having the card. Depending on the credit card, these fees may be waived if there's been a minimum amount spent on the card, or there may be no annual fee for the first year. Always check if there are any fees, and what they are, before applying for a credit card
  • charges on some transactions
    you’ll be charged for certain transactions, such as using your credit card to withdraw cash from an ATM. Check the lender's Schedule of Services and tariffs to see what transactions may incur a fee
  • temptation to spend
    it can be tempting to spend on a credit card without giving much thought to how you’ll pay the money back. It’s important to stay on top of what you owe, and not go over your credit limit
  • credit card interest
    credit cards can have high interest rates compared to other forms of lending. If you’re looking to spread the cost of a large purchase, it may be worth considering another form of lending, such as a personal loan

What is APR on a credit card?

APR stands for Annual Percentage Rate. This is the cost of borrowing money on a credit card – taking into account interest and any other charges – over the course of a year.

Interest is calculated and charged from the date of the transaction, based on your daily outstanding balance. Banks calculate interest on the basis of a 365 day calendar year - it accrues daily unless otherwise specified. 

Interest is applied monthly to the outstanding balance if it's not paid in full by the statement due date.

APR rates may differ from product to product. Refer to the lender's Schedule of Services and Tariffs, also referred to as a "Finance Charge", before applying.

How to pay a credit card bill

You may be able to pay off your credit card bill online, using mobile banking, over the phone, or in branch.

If you’re an HSBC customer, you can use online banking to pay your credit card bill.

Log on to online banking and select ‘Pay or transfer’ from Move Money. Then follow the steps to make a payment.

You can also pay by cheque, or with mobile or phone banking.

If you’re looking for a payment plan, you may want to consider a Cash Instalment Plan or a Flexi Instalment Plan.

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What next?

Explore more

Learn more about the different types of credit card to help find the one that’s right for you.
Learn how credit card charges work and how you can avoid them.
Learn about how to use a balance transfer credit card and what a 0% interest rate means.

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