What are Credit Cards?
Any card that may be used repeatedly to borrow money or buy products and services on credit. Issued by banks, savings and loans, retail stores, and other businesses. A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual’s credit rating.
Credit cards are very convenient, but therein lies the problem. It can be too tempting to use a credit card to make a purchase when you cannot actually afford it. Also, since only a minimum monthly payment is usually required, it can be too easy to take your time paying off the credit card. The problem with that is that your interest will be building up. Its extremely easy to go into debt with credit cards, but rather difficult getting out. In fact, some folks have found themselves taking advantage of cash advance sources to pay off the difference. You pay interest on the outstanding balance, but since credit cards usually don’t have very low interest rates, delaying paying off a balance can really add up in wasted interest payments. Also, if you maintain a large balance on credit cards, it can be very detrimental to your credit scores.