Credit card

What is a credit card and how is it used?

A credit card is a payment instrument provided by a financial institution or a credit card issuer if the applicant meets certain requirements.

A credit limit is established based on the individual’s income, within which they may make transactions. Unlike a debit card, the funds do not need to be deposited in advance. Instead, as the card is used to withdraw cash or make payments, a debt is automatically incurred. This debt must generally be repaid on a monthly basis. To that end, the institution issues a statement listing all transactions made, the payment due date, and the amount owed.

This amount may be paid partially or in full. However, interest will be charged on any outstanding amount. One advantage of credit cards is the ability to pay for purchases in installments.