What is a Credit Card?

A credit card is a small plastic card, used to make purchases across the world. Unlike a debit card, where the funds are immediately removed from a user's account, in the case of credit cards, the card issuer 'lends' the funds/money to the user. The consumer is then billed for this money on a monthly basis. If they do not pay all of the 'borrowed funds' back, then interest will be charged on the remainder.

Credit card issuers agree a credit limit with a customer before distributing the card. This will be agreed after examining the consumer's credit history and some other factors.

When a purchase is made, the credit card user is agreeing to pay the card issuer that amount. This agreement is confirmed by signing the receipt or entering a PIN number (Personal Identification Number). Many merchants now also accept verbal authorisations via telephone, or electronic authorisation over the Internet. These payments are known as CNP (Card Not Present) CNP transactions.

The majority of credit cards are the size and shape specified by the ISO 7810 standard.