DEFINITION

A credit card is a thin rectangular piece of plastic or

metal issued by a bank or financial services company.

Cardholders can borrow funds with which to pay for

goods and credit card issuer may grant a separate cash

line of credit to cardholders. Cash advances typically

have different terms, such as no grace period and

higher interest rates. A vast majority of businesses let

the customer make purchases with credit cards.

TIPS
1. Pay off the balance every month.

2. Use the card for needs.

3. Never skip a payment.

4. Use the credit card as a budgeting tool.

5. Use a rewards card.

6. Stay under 30% of your total credit limit.

PROCESS
1. Cardholder

2. Merchant

3. Acquirer

4. Credit Card Network

5. Issuing Bank

TYPE
1. Standard credit cards.

Example:

Balance transfer credit cards

Low interest credit cards

2.Credit cards with rewards programs.

Examples:

Cash back credit cards

General reward points credit cards

Hotel or travel points credit cards

Retail rewards credit cards

PROS AND CONS

Pros:

Rewards.

Building Credit.

Convenience.

Time Value of Money.

Cons:

Interest.

Frivolous Spending.