A credit card is one of the most common types of loans. A lending firm extends you a line of credit that you can access using a plastic card, usually 3-1/8 inches by 2-1/8 inches in size. That card is your credit card. It comes with a number on the front and a magnetic band on the back. Merchants can charge debts to your account either by passing the numeric strip through a card reader or by manually typing in the number on the front. You can also charge debts over the Internet or by phone by giving the number on the front of the card along with the expiration date.
Credit card companies make money in many ways. First, they charge the merchant that processes your card. That merchant pays for the privilege of being able to access your money through a third party. The credit card company may also charge you in a variety of ways:
- Annual fees
- Interest on your debt
- Late fees
- Cash advance fees
You will generally receive a monthly bill that allows you to pay of the balance or pay them any amount equaling at leas their minimum finance charge. The minimum finance charge generally covers slightly more than whatever the interest on the debt for that month would be. If you pay only the minimum amount, it will take many years to pay off your debt.