Credit card

A credit card is a payment method issued by a bank or financial institution that allows you to make purchases on borrowed money. You receive a monthly statement showing what you spent, and you can choose to pay the full balance or a portion of it. Any balance you do not pay in full carries interest charges until it is cleared.

Credit cards are a way to access short-term borrowing without applying for a formal loan each time. The cost of that access depends on how you use the card. If you clear the full balance every month, you pay nothing beyond the purchase price. If you carry a balance, interest accrues on the unpaid amount, and because interest compounds, a small unpaid balance can grow quickly if left alone for months.Cards marketed as Sharia-compliant still charge a fee on revolving balances, structured as a profit margin or administrative charge rather than interest. This distinction holds only while you pay the balance in full each month. Once you carry a balance, the pricing mechanism costs you the same way interest does, and the Sharia-compliant framing no longer applies to how the card actually works for you.

• The interest rateTermInterest rate×سعر الفائدةThe percentage of principal charged by a lender or paid by a saver, usually stated as an annual rate.Open the term on credit cards is typically higher than on personal loans or mortgagesTermMortgage×الرهن العقاريA loan secured by property, where the lender holds a claim on the house until the debt is repaid.Open the term, and it applies only to the unpaid balance, not the full amount you spent.
• A minimum payment keeps your account in good standing but does not stop interest from accruing on the remaining balance.
• Credit card spending is reported to credit bureaus and affects your credit scoreTermCredit score×التصنيف الائتمانيA numerical rating based on your payment and borrowing history that tells lenders whether you are likely to repay a loan and on what terms.Open the term, so missed payments or high balances relative to your limit can lower it.
• Some cards offer rewards or cashback on purchases, but these benefits are only valuable if you clear the balance monthly; interest charges will exceed any reward.