What are Credit Cards?

A credit card can be your best friend or can put you in debt that can take years to work off. The first fact to understand is that a credit card is not free money. A credit card balance is a balance that must be repaid at the end of each billing cycle, usually 30 days. If the balance is not paid, a hefty interest rate is usually levied upon the amount of the balance, sometimes ranging as high as 20% APR.

Credit cards allow people to pay for big ticketed items without having to carry a checkbox or carry a lot of cash around. The card also offers consumers protection under federal law. For example, if your card gets stolen and you report it to your credit card company within a time frame, you will not be responsible for the charges on the card that were frequently charged.