Credit & Debt
How credit cards work, what interest really costs, and how to build a strong credit score early.
Borrowing is a tool — and a trap
Debt lets you buy things before you can afford them: a car, a house, an education. Used well, it’s a tool. Used badly, it’s a trap that quietly drains your money through interest.
How credit cards work
A credit card lets you borrow money up to a limit. If you pay the full balance each month, you usually pay no interest. If you only pay the minimum, the remaining balance accrues interest — often 20%+ a year. That’s how a small purchase becomes a big debt.
Minimum payments are designed to keep you in debt for years. Paying the full balance each month is the single best credit-card habit.
Your credit score
Your credit score is a number lenders use to judge how reliably you repay. It’s built from:
- Paying bills on time.
- Keeping credit utilisation low (using little of your available limit).
- Having a history of managing credit responsibly.
- Not applying for too much credit at once.
A good score means cheaper loans later — a bad one means you pay more for everything.
Good debt vs. bad debt
- Good debt builds something of value (education, a home).
- Bad debt buys things that lose value while charging you interest (unnecessary luxury items).
Key takeaways
- Pay your credit card balance in full every month.
- Interest compounds against you on unpaid balances.
- Your credit score is built slowly and broken quickly.
- Borrow for things that grow in value, not things that shrink.