What is a credit card? What the purpose of having a credit card? Why were credit cards developed? And what are the benefits and problems behind them?.

             A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the user from which the user can borrow money for payment to a merchant or as a cash advance to the user. A credit card is different from a charge card, where a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers to 'revolve' their balance, at the cost of having interest charged. (Wikipedia).

             A credit card is form of electronic money borrowing used by consumer's everyday in the United States and Europe. The credit card system was developed because "governments wanted to establish payment systems that minimized costs and maximized access. The advent of technological advances created such opportunities through electronification (Santomero 2). It has become one of the most popular methods of payment in the United States in the past three decades. According to data collected by the Federal Reserve Board, outstanding credit debt "increased from $119 billion at year-end 1968 to $1,456 billion in June 2000 (Durkin 1). There are many benefits to being a credit card holder, although there are many problems associated with them as well.

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             "The average United States household has eight credit cards, which are used to charge nearly $2 trillion in goods and services annually (Scott 1). The credit system has been around since the 1920's and was initially developed to specifically sell fuel to the growing number of consumers driving automobiles. Since then the credit card itself has been introduced and the industry has changed and evolved immensely.