A physical charge card that is used to purchase merchandise at a point-of-sale terminal in a bricks and mortar store as well as to make purchases online using the assigned account number. The card issuer loans the money to the card holder by paying the merchant for the product or service.
In order to not incur an interest charge, credit card customers must pay the full balance due every month, and the interest is typically much higher than on mortgages and other types of loans. If only the minimum amount is paid or if less than the full amount is paid each month, customers wind up paying interest on the previous interest.
The major general-purpose credit cards are MasterCard, Visa, Discover and American Express. There are also retail cards issued by individual retailers; for example, a Target credit card is used only at Target stores; however, a Walmart card from Capital One can be used anywhere MasterCard is accepted. Contrast with
cash-to-card machine and
debit card. See
stored value card,
point of sale,
chip card and
EMV.