What is a Credit Card?

Since starting my channel I’ve been getting lots of questions, and I’ve noticed that the one thing that everyone really has in common is that we’re all different. Specifically, we all have a difference in experience levels. Some of you have the basics down and are looking into more advanced topics, while others are only just beginning and still need to learn the fundamentals. So today instead of talking about ways to secure a loan or improve credit, I’ve decided to start with the basics:

What is a credit card?

By now, most of you probably know what a credit card looks like. It actually looks very similar to an ATM card, a debit card, or even a charge card. But it’s not actually any of those. It’s in a category all of its own.

You see, credit cards are actually a descendant of charge cards. Most credit and finance historians agree that the first charge card was the Diners Club card. Created in 1950, The Diners Club card would allow you to charge purchases to your charge card at certain stores or restaurants, instead of paying by cash or check. The catch was that users had to pay back the total balance at the end of every month. No excuses.

Nearly 10 years later the world started seeing revolving credit cards, or what most people would consider the “modern credit card”. This meant that you did not have to pay off your total balance at the end of every month, but instead your balance could be rolled over month-to-month indefinitely — at a cost.

Later over the decades, issuers would actually start to introduce more and more features to improve their cards, and to stay competitive and make their cards more appealing to new and existing customers.

A lot of these features are actually still around today, and some of them are really important, so let’s talk about them.

First, arguably the most important “bonus” to using a credit card to make purchases is the…

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