credit cardcredit card
A stack of credit cards.
A Mastercard is an example of a credit card.
credit card - Investment & Finance Definition
A plastic card with a magnetic strip on one side. It is used to buy goods and services, and is the means by which consumers take out small loans. The bank or financial institution issuing the credit card pays the merchant and then sends a monthly bill to the holder of the credit card. The issuer charges interest for the amount of time that the money is outstanding, although many credit cards offer a 25-day grace period during which no interest is charged.
Credit card companies often require only a very small monthly payment, which may get the consumer into debt trouble if he or she pays only the minimum monthly payment. In recent years, banks have been aggressive about pushing cash advances to their credit card customers in the form of checks that the customer can use at stores or to pay off other high-interest credit card balances. Consumers who don’t pay their credit card bill on time can incur a variety of different fees. In contrast, the cost of items purchased with a debit card is debited, or deducted, from the account of the debit cardholder at the time of purchase.
- Refinancing of outstanding loan balances may motivate a credit-card issuer or lender to adjust a percentages.