Credit cards are issued by most banks and they enable you to borrow money to use as payment for goods and services up to a pre agreed limit. The bank will expect the customer to pay back the amount borrowed plus additional charges such as interest and fees. Generally the fees and interest rate of credit cards are high.
There are many types of credit cards but the major affiliated companies include Visa, Mastercard and American Express. Credit cards are prevalent and almost all retailers, food and entertainment venues will accept them as a form of payment.
Often credit cards will carry incentives to encourage customers to use them such as reward points for spending that can be redeemed for travel, gift vouchers or even cash back.
The costs of a credit card include an annual fee, interest on amounts borrowed (though some credit cards have an interest free period) and late payment fees. Also the retailer or supplier may add a surcharge to the price of goods or services when paying via credit card as they are also charged a fee by credit card companies when they accept a payment.
You will be required to make minimum repayments on a credit card each month covering interest charged as well as repaying a proportion of the amount borrowed, however so long as you do not exceed the agreed credit limit and continue to make the minimum repayment there is no set time by which you need to pay off the loan.
Pros: Accepted as payment almost anywhere including online, relatively easy to apply for, can have interest free period, some good incentive/reward plans
Cons: High annual fees and interest rates, can make it too easy to spend more than you need