As the world continues to trend toward cashless transactions, credit cards have become a household necessity. Managing a credit card responsibly is crucial to establishing credit history, which directly impacts your approval and interest rate for future lending, understanding credit cards—and how to use them!—is a must.

Here’s a run-down of all you need to know about credit cards.

How Credit Cards Work

When you use a credit card to pay for a purchase, you’re borrowing money from the financial institution that issues the credit card. You will be approved for a credit limit that you can charge, that is typically based on credit history, credit score, and relationship. Once approved, each month, you will then be sent a bill to repay the money you’ve borrowed on your credit card. 

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