Whether you’re new to the world of credit card rewards or you have several credit cards<\/a>, you’re likely visiting The Points Guy because you want to know more about how credit cards work.<\/p>\n In this article, we’ll start at the beginning and walk through some credit card basics<\/a>.<\/p>\n A credit card<\/a> is a physical card made of plastic or metal that allows you to make purchases using borrowed funds. A credit card is different from a debit card,<\/a> which draws from the existing funds in your bank account. Credit cards also accrue interest on the amount of money you borrow, which kicks in if you don’t repay the full balance on your card before the monthly due date.<\/p>\n Credit cards are closely connected to your credit score<\/a>, an indicator of how well you manage your credit obligations. The better your payment history (among other factors), the higher your credit score.<\/p>\n Depending on your overall financial situation, with a strong credit history, you may be eligible for more premium credit cards, which allow you to earn reward points<\/a> as a percentage of your spending. Premium credit cards also come with higher limits and other valuable perks.<\/p>\n Credit cards allow users to borrow any amount of money, up to their credit limit, repeatedly over an indefinite period. As long as your account remains in “good standing” with a good payment history, it will stay open.<\/p>\nWhat is a credit card?<\/h2>\n
How do credit cards work?<\/h2>\n
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