A credit card is a plastic card issued by a financial institution that allows cardholders to borrow money to make purchases with merchants or withdraw cash from ATMs. It works on the basis of a revolving line of credit, where a certain limit is assigned to the cardholder, and they can spend up to that limit. The cardholder is required to repay the borrowed amount, along with any applicable interest charges, within a specified time period. Credit cards offer convenience, enable online transactions, and often provide rewards or benefits to the cardholder.
Additionally, credit cards also provide a level of security as the cardholder is not responsible for fraudulent transactions made with their card, as long as they report it in a timely manner. Credit cards may also come with additional features such as cashback rewards, travel insurance, purchase protection, and extended warranties. They are widely accepted by merchants globally and are a common method of payment for various goods and services.