{"id":4801,"date":"2018-05-29T22:41:37","date_gmt":"2018-05-29T17:11:37","guid":{"rendered":"https:\/\/www.antworksmoney.com\/blog\/?page_id=4801"},"modified":"2019-09-25T18:27:22","modified_gmt":"2019-09-25T12:57:22","slug":"how-does-a-credit-card-work","status":"publish","type":"post","link":"https:\/\/www.antworksmoney.com\/blog\/how-does-a-credit-card-work\/","title":{"rendered":"How Does a Credit Card Work?"},"content":{"rendered":"

When you\u00a0apply for a credit card, the card provider will check if you are financially eligible to own it or not. If you are eligible, then based on the amount you earn, the bank or Credit Card<\/a> Company will set a credit limit for you.<\/p>\n

Once you receive your credit card, you can use it to make payments on credit. By using this card, you are borrowing money from your card provider (Credit Card Company or bank). Every billing cycle you can use either the full credit limit or a portion of it. If you exceed your credit limit, you will have to pay a penalty.<\/p>\n

At the end of every billing cycle, the lender expects you to repay the amount you have borrowed. There is a fixed interest-free credit period, within which the cardholder is supposed to pay either the full amount due or a part of it. Credit card providers generally specify the minimum amount that cardholders have to pay every billing cycle, to avoid being considered a defaulter.<\/p>\n

If the cardholders pay the full amount due, they do not have to pay any interest on their card. In case they pay only the minimum amount due or do not repay any money, then they will have to pay an interest on the outstanding balance and on the new purchases. The card provider will keep charging the interest until they pay the full outstanding balance.<\/p>\n

For the other parties:<\/h2>\n

The other parties involved in the credit card system are:<\/p>\n