How Do Credit Cards Work
What is?
A credit card is a form of plastic, metal, or digital purchasing power that offers a revolving line of credit.
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Rewards system
Credit cards also offer rewards and benefits, such as redeemable points, cashback, or miles.
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Credit limit
Credit cards have a credit limit and require at least a minimum payment on the balance each billing cycle.
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Purchase option
The process of using a credit card involves the customer, issuer, merchant, acquiring bank, payment processor, and payment network.
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Different type
Different types of credit cards include traditional, secured, cashback, co-branded, and travel credit cards.
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Secured credit
Secured credit cards are for those building or improving their credit and require a security deposit as collateral.
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Cashback credit
Cashback credit cards provide cashback on eligible purchases with potential annual caps on bonus cashback.
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Co-branded credit
Co-branded credit cards offer additional perks at specific merchants, while travel credit cards offer points or miles for travel-related expenses.
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Travel credit
Frequent travelers may benefit from premium travel credit cards with perks such as no foreign transaction fees and travel insurance.
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Premium travel
Understanding the different types of credit cards and how they work can help individuals become responsible consumers.
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