A credit card is a plastic card with a magnetic stripe that holds a machine readable code issued by bank allowing the card holder to purchase goods or services on credit. The card issuer (usually a bank) creates a revolving account and grants a line of credit to the cardholder, from which the card holder can borrow money for payment to a merchant or as a cash advance. As long as you pay back the money you borrowed within the “grace period”, you don’t have to pay extra. If you don’t pay it back in that time period, you’ll have to pay interest — a percentage of the money you owe the bank — on top of what you borrowed. Credit cards are a convenient substitute for cash and an essential component of electronic commerce and internet commerce.
Benefits of Credit Card:
1.Convenience - Credit cards can save you time and trouble--no searching for an ATM or keeping cash on-hand. If you are making a large purchase, it can be convenient to use a credit card.
2.Universal Acceptance - If you are travelling overseas, then having a credit card can be a safer way to travel & make purchases. Not all debit cards are universally accepted, whereas credit cards have near-universal acceptance around the world.
3.Building Credit - If you have no credit or are trying to improve your credit score, using a credit card responsibly will help your credit score because credit card companies will report your payment activity to the credit bureaus.