Credit card - Financial definition
Concise definition of the term credit card
A credit card is a financial product issued by banks or financial institutions that allows cardholders to borrow funds for purchases up to a pre-approved limit. The borrowed amount must be repaid, often with interest, if not paid in full by the due date.
Comprehensive definition of the term credit card
Credit cards are widely used for personal and business transactions, offering a convenient method for financing purchases and managing cash flow. They provide cardholders with a revolving line of credit, meaning the credit limit is replenished as debts are repaid. Credit cards often come with various features such as rewards programs, cashback offers, travel benefits, and fraud protection.
They play a crucial role in the economy by facilitating consumer spending and enabling merchants to receive payments electronically. Proper use of credit cards can help build a positive credit history, while misuse can lead to high-interest debt and negative credit scores. Examples of major credit card networks include Visa, MasterCard, American Express, and Discover, each offering a range of products tailored to different consumer needs and spending habits.