Introducing the Credit Card

What is a credit card?

By now, you have probably seen hundreds of credit cards in your life. They have changed the way people spend money online and in stores, and chances are you’ll get one when you’re on your own. Before you do that though, you need to know what a credit card is and how you should use it. This guide will help you out.

A credit card is a plastic card that represents a line of credit. A line of credit is an account with money that you can borrow repeatedly. In most cases, this is not going to be your money. It is going to come from a credit card issuer, like Chase or CitiBank. You will usually have more than one issuer for a single card. Your account will be assigned a certain limit based on the information from your application. Then you can swipe your card as needed to spend money out of it.

The money you spend on a credit card has to be paid back. If you do not make your payments by a certain day of the month, you will have to pay interest, and potentially a late fee. We’ll go over all of this in a little bit, but you have to understand one thing…

A credit card is not a source of free money.

This is not a scholarship, donation, gift, or anything along those lines. It’s something you can use when you need money, assuming you will pay it back.

Parts of a Credit Card

front of a credit card breakdown
  • Hologram: This is a 3D image, usually in gold, that verifies a real card from a counterfeit.
  • Issuing Bank: This is the bank that sponsors the card. If there is no issuing bank, this part will have the card name or a blank spot.
  • Card Number: This is a 16-19 digit number that represents the line of credit on the card. Every card number is unique, and it acts as the ID for the credit card. (Think about your driver’s license number for reference.)
  • Issue Date: This is the date that the card was created. Not all credit cards have this.
  • Expiration Date: This is the date that the card will no longer be valid. You must get a new card before this day, or you will not be able to access your account until a new card comes in.
  • Card Brand: This is similar to the issuing bank, but it represents the credit card company that manages the card. Examples include Visa, MasterCard, Discover, and American Express.
  • Cardholder: This is the full name of the person or business that owns the card. If the card is for a specific person in a business, it may include both the first and last name of the person and the business name.