credit card

noun

|Updated on: 10 Jul 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

Virdell King, 65, of Detroit, who was accused of — among other things — buying designer shoes, clothing, jewelry and luggage using credit cards that were issued through the UAW-Chrysler National Training Center.

— tresa baldas, Detroit Free Press, "Feds: Widow of UAW boss is 'trying to buy her way out of prison'," 7 July 2018
Another person then used the credit cards at a drug store a few blocks away.

— kari barnett, Sun-Sentinel.com, "Boca Raton area crime log: June 19-July 4," 6 July 2018
Only 21 percent of parents talk regularly about money and only 10 percent want to teach their children about investing or how to manage credit cards, according to a BusyKid study.

— sonja haller, USA TODAY, "Gender pay inequality starts at home. Parents pay boys twice as much allowance as girls," 3 July 2018
Log into your Amazon account to make sure your address is correct and credit cards are assigned to your account.

— don reisinger, Fortune, "5 Tips for Getting the Best Deals on Amazon Prime Day 2018," 3 July 2018
Other start-ups include Fair Square Financial LLC, the two-year-old, 50-worker Wilmington company that markets the Ollo credit card.

— joseph n. distefano, Philly.com, "Fintech lenders are tracking and judging your digital trail," 3 July 2018
The pass was paid off in February 2014, but SeaWorld kept charging Herman’s credit card until September 2014.

— gabrielle russon, OrlandoSentinel.com, "130,000-plus SeaWorld customers could get refunds in $11.5 million settlement of lawsuit," 3 July 2018
The use of prepaid, subsidized passes could serve riders who don’t have credit cards, and ride-hailing could be integrated as part of an on-demand service to help people get to and from transit.

— alissa walker, Curbed, "Lyft and Uber serve low-income communities better than taxis, says study," 2 July 2018
Surprise detectives returned to Michigan on June 28, 2016, to conduct a search and interview Shepard again regarding charges to the victims’ credit cards — after their deaths — to a business linked to Shepard.

— perry vandell, azcentral, "Two connected to 2016 Surprise double homicide await trial after multistate manhunt," 2 July 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

in the meaning defined above

See Words from the same year

NEW! Time Traveler

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.

[InvestingAnswers Feature: Credit or Debit? Your Choice Could Cost You 3%]

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.

[InvestingAnswers Feature: How to Choose the Best Credit Card Offers]

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.

[InvestingAnswers Feature: Avoiding the Six Most Common "Black Holes" in your Family Budget]

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