Credit cards are a financial tool that should be used judiciously. They serve two main functions for the person who posses a credit card. One, it is a convenient mode of paying for goods and services and second, it is the best way of getting unsecured loans to purchase goods and services. Understanding its concepts and functions of credit card usage is helpful. There are a number of banks and creditors that are ready to lend money. People need money to fulfill their needs but many consumers may not have sufficient cash to take care of their immediate needs. So, a credit card is used to fill in the gap between your cash flow and times when you want or need to purchase goods and services that you need.

A credit card is issued to the customer that enables him or her to pay for any goods or services. At that moment of purchase the bank or financial institution pays on behalf of the customer and then he or she has to pay back the amount within a certain period of time, which is fixed by the company. The bank guarantees the payment for its costumers in almost all cases unless there is some type of fraudulent activity on a credit card.

The repayment amount includes a rate of interest for