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All About Credit Cards

02 November 2018 by National Bank
about credit card

A credit card refers to a card issued to consumers by banks, businesses and others as an optional method of payment, allowing cardholders to pay for goods and services, plus interest, based on a promise to pay at a later date. The issuer of a credit card essentially provides a line of credit to a consumer, which the consumer can then use to make purchases, or to borrow money from the issuer in what is known as a “cash advance”.

Most stores in developed countries now accept credit cards as a common form of payment for goods and services. In Canada, credit cards are one of the most common forms of payment for consumer goods and services.

Usage and Repayment

Credit card borrowing limits are established by the issuer, according to each individual’s credit rating. Credit cards charge interest and are intended to be used for short-term financing, although Canadian consumers have shown a propensity to carry credit card debt for long periods of time. Interest rates are usually applied to a credit card account one month after a purchase is made and typically have higher interest rates than consumer loans or lines of credit.

Charge cards / Debit cards

A credit card differs from a charge card in that charge cards require payment in full at the end of a full month period, interest-free. Credit cards also differ from debit cards, with the latter using funds owned by the cardholder to make point-of-sale purchases, as opposed to the latter’s use of borrowed funds.

Types of credit cards

Some credit cards are issued free of charge by lenders, while others charge annual fees for added benefits and services that can include car rental insurance coverage, air miles and other travel rewards.

For more information on selecting and using a credit card, visit

For a comparison of credit cards available to Canadian consumers, visit

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