Understanding Credit Cards

Credit cards function like loans, offering both borrowing power and various benefits, such as rewards and discounts. Issuers profit mainly through fees charged to merchants and interest from customers, which opens an opportunity for users to leverage credit cards for their benefit. To maximize this, individuals need to grasp the core features and terms of their credit card, including the annual percentage rate (APR), which can significantly affect what they owe if payments aren't managed properly. Acknowledging terms such as fixed versus variable APR, and understanding penalties for missed payments can lead to more informed usage and potentially saving on costs.