Site Navigation

 What is a credit card?

cred - it card
noun

A credit card is a thin plastic rectangle with a magnetic strip that's issued to individuals for making purchases. It allows people to buy goods and services on credit, essentially borrowing money from a credit card company.

How does a credit card work?

Credit cards have various features for information and security. Typically, the front of a credit card displays a 16-digit code, an expiration date, and sometimes holograms. On the back, there's a magnetic strip, a signature panel and a three-digit card verification value (CVV). Some payment methods, like key fobs and miniature cards, use different, nonstandard options.

Unlike directly withdrawing money from a bank account, credit cards are connected to a line of credit. When you use a credit card, you're essentially agreeing to repay the credit card company. If you don't pay off the balance within a month, you may be charged interest on the outstanding amount you owe.