You may have heard the term credit before. Credit means a loan of some sort that is to be paid at a later date with interest. A credit card is a card that allows the holder to borrow money from the issuer (within his or her credit limit) with an assurance that he or she will pay back before they can borrow more money. This form of discipline is bound to help improve the user’s credit score. 

Some of the primary industry players in the credit card arena are American Express, Master Card, Visa, Bank of America, and Equifax. They primarily benefit from the interest they charge when a credit cardholder repays their loan. 

How It Works:

A user goes to a bank and creates an account. Most banks usually partner with credit card companies to facilitate the issuing of credit cards to their clients. Once you have an account, you can deposit money and prove to the bank that you have a sustainable source of income. 

To apply for the credit card, you have to meet different minimum requirements for them to consider you as a successful candidate. Some of the requirements are that you should not be listed on any default loan lists, you need to ensure that you have a good credit score, and you need to have constant flow of cash into your bank.

What you need to know:

1. Credit Limit 

This is the maximum amount of money you can spend on your card at any given time. It is directly proportional to the credit score and your monthly income. Therefore, the higher your income and credit score, the higher your credit limit. Keep in mind that with a good credit score, you can easily make more money from renting tradelines. You can find numerous agencies offering tradelines wholesale to their clients.

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2. Balance

A credit balance is the amount of money that you owe the bank. So, say you spend $3,000 USD in purchasing the latest Gucci sneakers. Your balance reflects $3,000 USD. If you want to be good at maintaining your credit score, you should tame such spending habits. Only use the card when it is necessary!

3. Available Credit 

The available credit is the number of funds you have left to spend before you hit your credit limit. For instance, you have spent $500 USD and your credit limit is $1,000 USD, then this makes your available credit $500 USD. 

4. Billing Cycle 

The billing cycle is a predetermined fixed period in which you are sent the credit bill you need to pay. For example, every 30 days, the bank sends your bill for clearance. 

5. Statement Due Date

This is a date on your bill indicating when you need to pay up to maintain a good impression on the credit card issuer. 

6. Credit Card Interest Rates

Credit card issuers usually charge exorbitant interest rates. Thus, it’s advised that people who can’t flex their financial muscles should avoid taking up credit cards.


There is good debt and bad debt. Be sure to use your money responsibly regarding spending with the mindset of paying it back to the banks and credit card issuers. By doing so, you maintain a good credit score.