What is a Credit Card?

A credit card is a financial tool that allows you to borrow funds from a credit limit to make purchases, transfer balances, or withdraw cash. Unlike debit cards, which directly use funds from a checking account, a credit card provides the convenience of buying now and paying later while potentially earning rewards and building your credit history.

How Do Credit Cards Work?

When you make a purchase with a credit card, you are borrowing money from the credit card issuer up to a certain limit. Each month, you'll receive a statement listing all your transactions, the total balance, and the minimum payment due. Paying the balance in full each month allows you to avoid interest charges, while making minimum payments will accrue interest on the remaining balance.

Types of Credit Cards

• Rewards Credit Cards: Earn points, miles, or cash back on your purchases.
• Balance Transfer Credit Cards: Offer low or no interest for a set period, allowing you to transfer and pay off other credit card balances.
• Secured Credit Cards: Require a security deposit and are a good option for building or repairing credit.
• Student Credit Cards: Designed for college students, often with rewards or special offers.
• Travel Credit Cards: Provide travel-related rewards and benefits, such as miles or travel insurance.
• Business Credit Cards: Tailored for business expenses, offering rewards and benefits that align with business needs.

Choosing the Right Credit Card

Consider your spending habits, financial goals, and potential benefits. Look for a card that aligns with your lifestyle, whether you're seeking rewards, low interest rates, or building credit. Always read the terms and conditions to understand fees, interest rates, and reward structures.