You know that credit cards are essential. You don’t want to be without one, and you’ve heard all the stories about how they can help or hurt your finances. But do you understand how these little pieces of plastic work? This article will give you a basic understanding of what makes a credit card tick, including some tips on using them wisely.
They are a popular way to pay for things. For example, you can use them to buy clothes and food, or they can be used as a payment method when buying tickets online or booking travel. But did you know that credit cards can also be used as loans? That’s right—credit cards are loans! So if you have good credit, you might get approved for one of these loans.
The credit card industry is worth $2 trillion
The credit card industry is worth $2 trillion. That’s right! The credit card industry is growing, with the number of cards being issued increasing by 6% last year and spending on all those cards up 3.1%. This means that U.S. consumers are spending more than they have ever spent on their credit cards and paying more interest too!
The hotel, airline, and utility industries combined have a market cap of less than half of the credit card industry.
Credit cards come in different varieties
You don’t have to be a credit card master at understanding how they work. Credit cards are simple but can be confusing if you don’t know what you’re looking at. You’ll want to look out for the following:
- Credit limit — The amount of money your card will allow you to spend on it at any given time.
- Interest rate — The percentage of interest charged on outstanding balances from month to month.
- Annual fee — A flat fee is charged yearly for having the card in your wallet, even if you don’t use it at all!
For example, “The SoFi Credit Card now lets you redeem points straight into crypto. You’ll earn up to 3% cash back on all purchases and can redeem it* directly into crypto with your SoFi active invest account.”
Many retailers and online stores accept credit and debit cards
There are many types of credit cards, but the most common ones are Visa, MasterCard and American Express. Both debit and credit cards have their pros and cons. The main difference between them is that debit cards draw money directly from your bank account, while credit cards do not draw from your bank account until you pay off the balance at the end of each billing cycle.
Visa®, MasterCard® and American Express® can be used in almost any store (including grocery stores) or online store where you see the logo displayed – wherever there’s a name on every card reader! If you’re paying with either type of card, your purchase should go through as long as there isn’t anything blocking access to it.
Credit cards offer many benefits, but they also have drawbacks. It would be best to consider these before deciding whether to get one. If you decide it’s the right choice for your situation, hopefully, this article did well to help you understand credit cards.