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Learn what a credit card is and why it is important
What is a credit card?
A credit card is a thin plastic rectangle that enables individuals to borrow funds to pay for goods and services. The individuals are expected to pay back the borrowed money with interest at a later date. Many individuals utilize credit cards at various business because of its convenience.
Types of Credit Cards
Most major credit cards are issued by banks or other financial institutions. These include Visa, MasterCard, Discover, and American Express. These credit cards generally have the greatest incentives, airline miles, hotel room rentals, reward points and cash back on purchases. Secured credit cards are a type of credit card where the cardholder secures the card with a security deposit. They offer limited lines of credit that are equal in value to the security deposits. These security deposits are refunded after the individual is deemed responsible for card usage. This type of card is usually sought by people with poor credit.
Credit Cards vs. Debit Cards
Credit cards enable individuals to borrow money from the card issuers up to a certain limit while debit cards allow individuals to spend money by drawing funds from their bank account. Credit cards offer better consumer protection through warranties and fraud protection, but these protections come at a higher cost. Debit cards offer less protection, but they have lower fees. Credit cards give you access to a line of debt issued by a bank while debit cards deduct money directly from your bank account.
Quiz
Sources: https://www.investopedia.com/terms/c/creditcard.asp
https://www.investopedia.com/articles/personal-finance/050214/credit-vs-debit-cards-which-better.asp
https://quizlet.com/28761795
https://youtu.be/0ddgrHehprk
https://youtu.be/SXnWegs2axg
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