credit card

noun

Updated on: 18 Apr 2018

Definition of credit card

: a card authorizing purchases on credit

See credit card defined for English-language learners

Recent Examples of credit card from the Web

Branches at its existing employment centers would enable the bank to serve its nearly 10,000 staff in the region, while offering more products to the bank’s existing mortgage, credit card, student loan and investment clients here.

— joseph n. distefano, Philly.com, "JPMorgan Chase plans new branches in Philly and beyond," 11 Apr. 2018
The lost and found revealed some typical finds, such as credit cards, IDs and wallets.

— kellie hwang, azcentral, "Country Thunder Arizona 2018: Our 5 favorite moments," 9 Apr. 2018
Delta Delta and Sears said today that a data breach may have leaked the credit card information of hundreds of thousands of customers, as first reported by Reuters.

— shannon liao, The Verge, "Delta and Sears say data breach exposed hundreds of thousands of credit cards," 5 Apr. 2018
Both Sears and Delta Air Lines are facing the exposure of some of their customers’ credit card information, following a data breach at a mutual contractor.

— david meyer, Fortune, "What to Know About the Latest Data Breach Hitting Sears and Delta Customers," 5 Apr. 2018
The increased supply of Treasuries puts upward pressure on market interest rates that raise borrowing costs on a wide range of borrowing, such as credit cards, auto loans and variable mortgages.

— anna edgerton, Bloomberg.com, "Republicans Promised to Cut the Deficit. It’s Only Getting Worse," 29 Mar. 2018
As the Fed raises rates on banks, banks in turn increase interest rates on credit cards, car loans, small business loans, and mortgages.

— emily stewart, Vox, "The Fed just took away the punch bowl," 21 Mar. 2018
Amazon Pay enables people to pay for products on third-party sites without reloading their credit card information.

— bloomberg, latimes.com, "Amazon is considering offering something like checking accounts, report says," 5 Mar. 2018
Fifty-seven million customers’ and drivers’ names, email addresses, and phone numbers were compromised—but no trip location info, credit card information, or Social Security numbers were taken.

— cyrus farivar, Ars Technica, "Uber: We had “no justification” for covering up data breach," 6 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'credit card.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of credit card

1888

Financial Definition of CREDIT CARD

credit card

noun

What It Is

A credit card is a plastic card issued by a financial institution that allows its user to borrow pre-approved funds at the point of sale in order to complete a purchase.

How It Works

Credit cards have a maximum amount -- or credit limit -- the user can borrow during a given period. The credit limit is pre-determined by the card issuer based on the cardholder's credit rating and credit history.

When an individual uses a credit card to make a purchase, he or she is authorizing the credit card issuer to pay the merchant on their behalf. Merchants are required by law to verify that the individual using the card is its rightful owner by obtaining proper identification via a Personal Identification Number (PIN), and/or a driver's license or state-issued ID card.

Merchants generally prefer payment by credit card because they are immediately paid by the card issuer – despite the fee the merchant must pay to the card processing company for each transaction.

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Credit card issuers require the cardholder to pay his or her balance in full, usually on a monthly basis. If the user does not pay the balance in full, the issuer adds interest to the balance, and this interest compounds for as long as the balance is outstanding.

As with credit limits, the cardholder's credit rating and credit history can influence the interest rate on the card. In some cases, the issuer can raise the interest rate. There is no federal limit on the interest rates credit card issuers can charge, although many states impose different caps. Many card issuers offer "teaser rates" that start out very low and increase over time.

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Issuers use several methods to calculate interest, and it is important for the cardholder to read and understand the issuer's disclosure statement in order to avoid unpleasant surprises. Many credit cards also charge an annual fee, late payment fees, fees for going over the credit limit, cash-advance fees and foreign-currency conversion fees.

Why It Matters

Credit card interest rates are higher than personal loans or lines of credit. Many credit cardholders underestimate the time and money it takes to pay off outstanding balances -- especially when interest rates are high and minimum payments are low.

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It is important that cardholders not only use credit cards in moderation, but also take preventative action against identity thieves in order to protect their privacy and identity.

Credit cards allow cardholders to avoid carrying cash, earn frequent-flier miles, or accumulate other "rewards" that can be used almost anywhere around the world. With many credit card types, the cardholder can also get cash advances through ATMs.

Source: Investing Answers