What is a credit card?

Where should we start? Of course, we start with the foundation – and the basis of this site is the credit card.

A credit card is a type of card used for payments. It allows its owner to pay for goods and services based on the holder’s promise to actually pay for them on a later stage. In fact, the credit cards creates a legal opportunity for delayed payments.

Apart of the card owner (also called cardholder) there is the figure of the issuer of the credit card. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card. A credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers payment by the buyer until a later date.