 TITLE: How Credit Cards Work CONTENT: What Is a Credit Card?\n----------------------\nA credit card is what's called revolving credit, which means you can borrow and repay using the same card repeatedly. When you make a purchase with a credit card, you're not agreeing to pay it off on any set timeline or term. Your credit card payments can vary as long as you're meeting a certain minimum monthly payment amount set by the company that issued your credit card.\nRevolving credit works very differently from installment loans, such as student, auto and home loans. With installment loans, you borrow a certain amount and repay it in fixed monthly installments. Once the term ends and the money is repaid, the loan is done—you can't borrow any more on the same loan.\nBecause credit cards let you borrow on an ongoing basis, they provide more flexibility than installment loans. But because credit card repayment is less rigid, it's possible to get in over your head.\nBeyond using credit as a means to borrow money, there are plenty of reasons to carry a credit card:\n*   **Build credit**: Establishing a responsible repayment history with a credit card is one of the easiest ways to build and improve your credit score. A higher credit score can help you secure better terms on future borrowing, such as a mortgage.\n*   **Earn rewards**: You can use a credit card to earn rewards on the purchases you're already making. Many cards provide cash back on purchases or discounts on travel.\n*   **Additional protections**: Credit cards offer better fraud protection than debit cards. Many credit cards also come with benefits such as purchase protection, price protection and extended warranties.\n*   **Track spending**: If you like to budget or just keep a close eye on your purchases, using a credit card for all your spending can make it easier to see all your transactions in one place. Some issuers let you sort spending by categories.\nCredit cards have numerous benefits, but won't improve your financial health if they're not used properly. Make sure you're familiar with credit card basics before you apply. END