Credit Card

Credit cards are physical or digital payment cards that can work in the stead of cash or checks when making purchases. In simple terms, a credit card is a way to borrow money from a bank on a regular basis without needing to apply for credit in each instance.

The bank will send a statement each month, and the cardholder has the option of paying off the entire amount with no additional cost. If full payment is not made by the due date, however, the banker will add a percentage to the bill based on any amounts remaining unpaid. The entire amount will then be rolled over into the next billing cycle.

This is known as revolving credit. As long as the cardholder is making regular payments to the statement total, they are able to continue charging more to the card, up to a predetermined credit card limit. They will continue to be charged interest until the account is cleared.