credit card

Related Terms
Standard-size plastic token, with a magnetic stripe that holds a machine readable code. Credit cards are a convenient substitute for cash or check, and an essential component of electronic commerce and internet commerce. Credit card holders (who may pay annual service charges) draw on a credit limit approved by the card-issuer such as a bank, store, or service provider (an airline, for example). Cardholders normally must pay for credit card purchases within 30 days of purchase to avoid interest and/or penalties.

How to Use a Credit Card

It couldn't be easier to use a credit card -- just one swipe and anything you want to buy is yours.
But there are a few best practices if you're going to use your credit card responsibly.

Don't Spend Beyond Your Means

It can be tempting to see a credit card as unlimited, but you really shouldn't spend beyond your means. If you haven't done so already, make a budget. Make sure that your credit card spending doesn't exceed the budgeted amount.

Transfer Balances When Necessary

If you have a lot of debt piled up on one card with a high interest rate, try to transfer it to another card with lower rates. Sometimes just shifting the balance around can be enough to save hundreds of dollars in interest payments.

Use It For Emergencies

One of the benefits of having a credit card is that you're always covered in case of emergency. Some people keep a card around for everyday use, but if you aren't sure that you can be responsible enough to pay off your bill on time, use your card only for emergencies.

Pay It Off Every Month

Smart credit card holders know that they should pay their debts off every month. The APR -- or annual percentage rate -- only serves to pile on debt and take cash out of your pocket.

Use 'credit card' in a Sentence

Almost every store or bank has some sort of credit card, you can either get a generic one from your bank or you could get one from your favorite store and get rewards from that store when you use it.
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I forgot both my cash and checkbook at home so I decided to pay the waiter with a credit card instead.
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The responsibility of having a credit card proved to be too much for young Adam, he quickly overused what seemed like a magic piece of plastic and found himself in a lot of credit card debt.
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Notable Quotable

Avoid Paying on Credit
"Not financing your purchases doesn't mean you can't pay with a credit card - you just have to pay your bill in full within a month. The convenience, protection and cash-back rewards offered by credit cards make them a handy tool if you use them wisely. The truth is if you can't really afford it, you may be giving yourself a gift in the short term, but you'll be giving yourself an expensive headache in the long run."
- Amy Fontinelle