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
, or service provider
(an airline, for example). Cardholders normally must pay for credit card purchases within 30 days of purchase
to avoid interest
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.