what is a credit card and how does it work

A credit card is a physical card issued by a bank or financial institution that allows cardholders to borrow funds up to a predetermined credit limit to pay for goods and services or withdraw cash. When a purchase is made using a credit card, the card issuer pays the merchant on the cardholder's behalf, and the cardholder is billed later to repay the amount borrowed, either in full by the due date or over time with interest. Using the card involves borrowing money with the obligation to repay it, making it a form of short-term loan. Credit cards work by enabling purchases without cash, processing transactions through a network (such as Visa or Mastercard). Each transaction reduces the available credit until the cardholder pays back the borrowed amount. Cardholders receive monthly statements listing all transactions, the total balance owed, minimum payment due, and payment deadlines. Interest is charged on unpaid balances, and failure to repay on time can incur fees and impact credit scores. Credit cards often offer rewards, cashback, or discounts as incentives for use.