A credit card is a payment card, usually issued by a bank or financial institution, that allows users to borrow money to purchase goods or services or withdraw cash on credit, up to a preset limit known as the credit limit
. When you use a credit card, the card issuer pays the merchant on your behalf, and you later repay the issuer, either in full or over time with interest charged on any unpaid balance
. Credit cards differ from debit cards in that debit cards use your own deposited funds, while credit cards involve borrowing money that must be repaid
. Unlike charge cards, which require full repayment each month, credit cards allow a revolving balance, meaning you can carry debt forward with interest applied
. Credit cards often come with perks such as reward points, cashback, discounts, or travel miles to incentivize usage
. They can be unsecured, requiring no deposit, or secured, where a deposit acts as collateral and credit limits match the deposit amount, useful for people with limited or poor credit history
. In summary, credit cards are widely used financial tools that provide a revolving line of credit for purchases and cash advances, with repayment obligations and potential fees and interest if balances are not paid on time
