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1.1. Credit cards as a type of loan

Credit cards let you borrow money and pay it off on an ongoing basis. Like other loans, they charge interest on what is owed but unlike most loans, the amount of credit or money loaned to you is rolled over from month to month. So you continue to have access to credit as you pay it off.

This structure is known as “revolving credit” and differs from most loans, where you have a deadline for payments and can’t go back and access more money once it is paid off.

Remember: You always have to pay off the money you spend using a credit card.