The Main Function of a Credit Card

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A credit card is a card issued by a financial company. One of the main functions of a credit card is to enable the cardholder to borrow funds from the card issuer up to a certain limit. The funds may be used as payment for goods and services in order to purchase items or withdraw cash. Issuance of credit cards has the condition that the cardholder will pay back the original, borrowed amount plus any additional agreed-upon charges.  

Credit cards have received a bad rep due to that if not wary of making payments you could wind up in debt. As the cards can cost you a great deal in transaction costs, annual fees and interest charges. But contrary to popular belief, if you can use the plastic responsibly, by keeping cash transactions to a minimum. You’re actually much better off paying with a credit card than with a debit card.  

Because there are goodies on offer by credit card companies like racking up some serious bonus reward points when using a credit card. These points can be redeemed for rewards like gift cards or air travel to cashing in points to go on a vacation at no cost.  

Also credit cards when used responsibly improve your credit score. As credit card companies report your payment activity to the credit bureaus. And a high credit score can also mean you pay an interest rate several points lower on insurance or loans of home or car than the rate someone with a poor credit history would pay; saving you money over the life of the loan.

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