Creditcards

Credit cards are payment cards issued by financial institutions that allow cardholders to borrow funds to pay for goods and services at merchants that accept the card. They establish a revolving line of credit with a credit limit, and balances may be carried forward from month to month, subject to interest charges.

How they work: Cardholders receive a monthly statement listing purchases, current balance, minimum payment, and due date. If the full balance is paid by the due date, many cards offer a grace period on new purchases, avoiding interest. If only a portion is paid, interest accrues on the remaining balance at the card’s annual percentage rate (APR). Additional fees may apply, such as annual fees, late payment fees, cash advance fees, balance transfer fees, and foreign transaction fees.

Types: Cards can be standard, rewards cards that earn points, miles, or cash back; secured cards that require a security deposit and are used to build or rebuild credit; student cards; and business cards. Some cards feature balance transfers, introductory APR offers, or specialized benefits for travel, shopping, or rental protections.

Credit implications: Responsible use helps build credit by contributing to a payment history and a favorable credit utilization ratio. Missed payments or high balances relative to the credit limit can lower credit scores and increase borrowing costs. Regular monitoring of statements can help detect fraud.

Security and regulation: Cards include security features such as EMV chips, CVV codes, and transaction alerts. Consumers are protected by laws and network rules that address billing disputes, fraud liability, and disclosure of terms. Regulatory frameworks vary by country and jurisdiction.