{"id":26887,"date":"2026-04-24T00:42:47","date_gmt":"2026-04-24T00:42:47","guid":{"rendered":"https:\/\/didebta.com\/?p=26887"},"modified":"2026-04-24T00:42:48","modified_gmt":"2026-04-24T00:42:48","slug":"how-do-credit-cards-work","status":"publish","type":"post","link":"https:\/\/didebta.com\/?p=26887","title":{"rendered":"How Do Credit Cards Work?"},"content":{"rendered":"<div>\n<p>It seems to be an unwritten rule in life that once you turn 18, you\u00a0<em>have<\/em>\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone hands you a piece of plastic. (And let\u2019s be real, most adults I know struggle with plastic.)\n    <\/p>\n<div class=\"BlogInsert-copy\">\n<p>Pay off debt fast and save more money with <em>Financial Peace University<\/em>.<\/p>\n<\/p><\/div>\n<p>Now, to my dad\u2019s credit, he always told me to stay away from credit cards. But the people I saw on TV sure didn\u2019t. Everyone in those American Express commercials looked so successful. So by the time I was in college, I started to buy the idea that I needed a credit card to be smart with money. And as any normal 21-year-old would do, I did the exact opposite of what my parents taught me, and I got a credit card.\n    <\/p>\n<p>But the only thing credit cards helped me do was get into debt . . . and lots of it. If I knew then what I know now about credit cards, it would\u2019ve been a <em>whole<\/em> different story.\n    <\/p>\n<p>I\u2019m pulling back the curtain to show you exactly how credit cards work\u2014the bad, the worse and the straight-up ugly. And trust me, it\u2019s pretty scary. Once you see the nitty-gritty details, you\u2019ll realize just how dangerous and nasty the credit card industry really is.\n    <\/p>\n<p>What Is a Credit Card?<br \/>How Do Credit Cards Work?<br \/>How Does Credit Card Interest Work?<br \/>Types of Credit Cards<br \/>What\u2019s the Best Kind of Credit Card?<br \/>How Do Credit Cards Affect Your Credit?<br \/>Credit Card Fees<br \/>Pros and Cons of Credit Cards<br \/>Credit Card Rewards<br \/>What If I Pay Off My Credit Card Balance Every Month?<br \/>Credit Cards vs. Debit Cards: What\u2019s the Difference?<br \/>Should I Get a Credit Card?\n    <\/p>\n<p><h2>What Is a Credit Card?<\/h2>\n<\/p>\n<p>A credit card is a piece of plastic or metal issued by a bank or credit card company that lets you buy things now and pay for them later. That\u2019s the <em>technical <\/em>definition. But the Jade Warshaw definition is this: A credit card is dangerous debt that\u2019s masquerading as harmless, helpful money (aka a trap).\n    <\/p>\n<p>When you use a credit card to make a purchase, you\u2019re not using your own money\u2014you\u2019re borrowing from the bank or credit card company who gave you the card. It\u2019s basically a modern-day IOU . . . with strings attached.\n    <\/p>\n<p>Credit cards are a type of revolving debt\u2014which means the more you charge to your card, the more you owe. And the more you pay back, the more you can spend. But trust and believe there are consequences if you don\u2019t pay that money back <em>on time<\/em> and <em>in full<\/em>.\n    <\/p>\n<p><h2>How Do Credit Cards Work?<\/h2>\n<\/p>\n<p>Credit cards have become a \u201cnormal\u201d part of our culture. But so many people don\u2019t actually know how they work. And that comes back to bite them in the you-know-what. In fact, Americans are $1.23 <em>trillion<\/em>\u00a0deep in credit card debt!<sup>1\u00a0<\/sup>But no one falls into this trap on purpose. I know I sure didn\u2019t.\n    <\/p>\n<p>Unlike the credit card companies, I don\u2019t want you to end up buried under a pile of debt. Let me walk you through how credit cards work\u2014so you can avoid being part of that trillion-dollar statistic.\n    <\/p>\n<h3>1. You apply for a credit card.<\/h3>\n<p>Before you can even think about using a credit card, you have to prove that you\u2019re \u201cworthy\u201d of one. Credit card companies want to know how likely you are to pay them back once you rack up a balance. So, the first thing they do is check your credit score, your borrowing history and your income.\n    <\/p>\n<p>If you seem like a good candidate (to be honest, the bar is\u00a0<em>very<\/em>\u00a0low\u2014just take the 18-year-old college student, for example), then they\u2019ll issue you a shiny new card with a credit limit based off your credit score. The \u201cbetter\u201d your credit, the higher your credit limit. Your credit limit is the total amount the credit card company will allow you to borrow. (When people say they\u2019ve maxed out their credit card, they mean they\u2019ve spent all the way up to their credit limit.)\n    <\/p>\n<p>Back in college, I remember my soon-to-be husband, Sam, had an American Express credit card with a $30,000 credit limit. Y\u2019all, I was shook! I didn\u2019t know that was even possible since my credit limits were closer to $500.\n    <\/p>\n<h3>2. You activate your card and start using it.<\/h3>\n<p>After you get your new plastic, you have to call or text the number on the back of the card (or go to their website) and give them your card details before your new line of credit is active. Then you\u2019ll be able to start swiping\u2014and buying things you probably can\u2019t afford.\n    <\/p>\n<h3>3. You pay off your balance . . . or not.<\/h3>\n<p>At the end of each billing cycle (usually every 30 days), you\u2019ll get a credit card statement. This will list your statement balance (whatever you\u2019ve charged in the last month, plus whatever carried over from previous months). You\u2019ll also see how much available credit you have left. If you\u2019ve already hit your credit limit, you won\u2019t be able to use your card until you pay back at least some of that balance.\n    <\/p>\n<p>Then there\u2019s your minimum payment (which depends on your statement balance and your interest rate) and your due date\u2014when you need to pay the minimum payment by. There\u2019s also a grace period in the time between the end of your billing cycle and when your payment is due. (Hopefully you\u2019re tracking with me because this can all get real confusing real fast.)\n    <\/p>\n<h3>How do credit card payments work?<\/h3>\n<p>Two things people tend to mix up are paying your minimum payment and paying off your entire statement balance. They\u2019re <em>not<\/em> the same thing, people! And not knowing the difference will cost you.\n    <\/p>\n<p>If you pay the minimum payment by the due date each month, you can keep charging money to your card (up to your credit limit, of course). If you don\u2019t make the minimum payment, you\u2019ll get hit with late fees and other penalties. Miss enough payments and your account will go into collections (been there, done that, got the \u201cI am now officially broke\u201d T-shirt).\n    <\/p>\n<p>But here\u2019s where most people get tripped up: If you don\u2019t pay off\u00a0<em>all\u00a0<\/em>your credit card balance by the end of the grace period (not just your minimum payment), you\u2019ll get smacked with interest.\n    <\/p>\n<p>Next thing you know, you\u2019ve got credit card debt. And do you really want to spend your hard-earned paycheck on a steak dinner you ate <em>last month<\/em>? To put it delicately, you\u2019re basically flushing money down the toilet. Dang!\n    <\/p>\n<p><h2>How Does Credit Card Interest Work?<\/h2>\n<\/p>\n<p>Credit card interest is like a fee you\u2019re charged if you don\u2019t pay off your entire credit card balance each month.\n    <\/p>\n<p>Interest is how credit card companies make <em>a lot<\/em> of their money. They want you to pay only the minimum payment so they can charge you <em>more<\/em> interest. So, the bigger your unpaid credit card balance, the more you\u2019ll fork over in interest each month.\n    <\/p>\n<p>Interest may show up on your credit card statement as a finance charge (it\u2019s the same thing). And that finance charge depends on something called the annual percentage rate<em>\u00a0<\/em>(APR).\n    <\/p>\n<h3>What is APR?<\/h3>\n<p>An APR (aka added pain and regret\u2014I mean, annual percentage rate) is the rate credit card companies charge you for borrowing money from them (they aren\u2019t doing this for free!). And each kind of credit card (I\u2019ll get into those in a moment) comes with its own APR.\n    <\/p>\n<p>Right now, the average APR on credit cards is 22.83%!<sup>2<\/sup>\n    <\/p>\n<p>There are two main kinds of APR: variable and fixed. With variable APR, your interest rate can change because it\u2019s based on\u00a0the national average. A fixed APR means your rate tends to stay the same. But depending on the kind of credit card you have, there are some reasons why your fixed rate could change (like if you\u2019re more than 60 days late on a payment).\n    <\/p>\n<p>And watch out for introductory rates too! Credit card companies like to use low interest rates to hook you into signing up for a card\u2014but it doesn\u2019t take long before the trial period is over and your rate skyrockets. (Yeah, they\u2019re real sneaky like that.)\n    <\/p>\n<p><h2>Types of Credit Cards<\/h2>\n<\/p>\n<p>There are many types of credit cards out there, but they all pretty much operate the same way. Some just have a few extra features to lure you in.\n    <\/p>\n<p>Credit card companies may offer you all sorts of \u201cperks\u201d to sign up for one of their cards\u2014like putting your pet\u2019s face or your favorite team\u2019s logo on the front of your card. But it doesn\u2019t change the fact that their number one goal is to make money. (Taking advantage of my weakness for golden doodle puppies? Diabolical.)\n    <\/p>\n<p>Let\u2019s look at some of the most common types of credit cards:\n    <\/p>\n<ul>\n<li><strong>Unsecured credit cards:<\/strong>\u00a0These are your basic, run-of-the-mill credit cards made for people with \u201cdecent\u201d credit. They don\u2019t come with a lot of perks, so the interest rate is usually lower. But don\u2019t be fooled\u2014the average credit card still has the power to put you in debt.<\/li>\n<\/ul>\n<ul>\n<li><strong>Rewards credit cards:<\/strong>\u00a0Just like the name says, rewards cards offer rewards like cash back, points or travel perks. (And I need you to know when I say \u201crewards,\u201d I\u2019m going heavy on the sarcasm.) These cards may seem like a sweet deal, but that makes them even more dangerous. How? Most of the time, credit cards with rewards also have higher interest rates or annual fees. And honestly, credit card rewards aren\u2019t worth it.<\/li>\n<\/ul>\n<ul>\n<li><strong>Student credit cards:\u00a0<\/strong>Since most college students have little to no credit history, credit card companies created special cards just for them. (I\u2019m choosing to hold back several expletives right now and just focus on the facts.) These cards usually have low credit limits and don\u2019t charge annual fees. But an 18-year-old with the ability to rack up debt is pretty dangerous. Thankfully, the Credit CARD Act of 2009 keeps credit card companies from going onto college campuses or bribing students with free T-shirts to sign up for a credit card. But that doesn\u2019t mean students aren\u2019t still getting targeted\u2014so watch out!<\/li>\n<\/ul>\n<ul>\n<li><strong>Charge credit cards:\u00a0<\/strong>These are cards without credit limits so you can charge as much as you want. But here\u2019s the catch: You have to pay off your entire balance in full at the end of the month. There\u2019s no finance charge with this kind of card, but if you miss a payment, you can get hit with late fees and purchase limits\u2014or you might even have your card canceled and suddenly deactivated while you\u2019re trying to pay for your date\u2019s creme brulee (talk about embarrassing).<\/li>\n<\/ul>\n<ul>\n<li><strong>Retail credit cards:\u00a0<\/strong>Retail credit cards can only be used at certain stores. Cashiers often hit you with this temptation at the checkout with promises of a percentage off your purchase. You think,\u00a0<em>Well, I do shop here a lot. I mean, who doesn\u2019t want a discount?<\/em>\u00a0But pretty soon, you\u2019re spending your whole paycheck at Express (oh, just me?).<\/li>\n<\/ul>\n<ul>\n<li><strong>Secured credit cards:\u00a0<\/strong>If someone has no credit history or bad credit (like if they went through a bankruptcy), the bank or credit card company may recommend a secured credit card. With these, you first have to put down a security deposit, which acts as your credit limit. But intervention moment: If you\u2019ve already been burned by credit this much, the\u00a0<em>last<\/em>\u00a0thing you need is another credit card. It just ain\u2019t working for you, boo.<\/li>\n<\/ul>\n<ul>\n<li><strong>Subprime credit cards:<\/strong>\u00a0Subprime cards are the\u00a0<em>worst<\/em>\u00a0of the worst, y\u2019all! They\u2019re usually marketed toward people with terrible credit history, so they have super high interest rates and crazy fees. If someone has already tried to play the credit game and lost, this is typically the only kind of credit card they would be approved for. And let me just put my former self on blast for a second\u2014yes, I tried this nonsense, and I can tell you subprime credit cards are a quick way to turn a bad situation into a nightmare.<\/li>\n<\/ul>\n<p><h2>What\u2019s the Best Kind of Credit Card?<\/h2>\n<\/p>\n<p>I\u2019ll be honest with you: The best credit card is no credit card. It\u2019s called Capital None, and it\u2019s amazing. But seriously, there isn\u2019t one.\n    <\/p>\n<p>You\u2019ve probably heard a lot of credit card \u201cgurus\u201d talk about which kind of card will help you the most and how to play the credit card game to your advantage. But that is 1) super exhausting to keep track of and 2) a quick way to get into some serious credit card debt.\n    <\/p>\n<p>You can drag around a binder full of credit cards or try to master some complicated strategy, but messing around with debt isn\u2019t worth the risk.\n    <\/p>\n<p>Plus, the cards that seem like they\u2019ll reward you the most are usually the ones that will put you in debt the fastest. You\u2019ll think you\u2019re playing the game\u2014when really, you\u2019re just getting played.\n    <\/p>\n<p><h2>How Do Credit Cards Affect Your Credit?<\/h2>\n<\/p>\n<p>Most people get a credit card because they want to build up their credit score. But just having a credit card in your wallet won\u2019t magically make you have better credit. You have to actually use it (and not abuse it) before you see a difference on your credit report.\n    <\/p>\n<p>So, charging to a credit card and paying the balance off every month will (over time) make your credit score go up. And racking up a huge balance and not making payments will cause your score to go down. But if you haven\u2019t guessed by now, I am <em>not<\/em> worried about credit scores, people!\n    <\/p>\n<p>No, I\u2019m not saying you should borrow a bunch of money without any intention of paying it off. (There\u2019s a difference between no credit and bad credit.) But chasing after a FICO score like it\u2019s your identity is no way to live. A FICO score is just an \u201cI love debt\u201d score. And all a \u201cgood\u201d number does is let you borrow more money. Sounds like a trap to me!\n    <\/p>\n<p>So, I\u2019m going to let you in on something: If you don\u2019t borrow money, you don\u2019t need a credit score. Like, at all. As a matter of fact, I let my credit score drop to zero (as in, no score), and I don\u2019t miss the credit score hustle one bit!\n    <\/p>\n<p>You don\u2019t need a credit score to live your life or reach your goals\u2014actually, it\u2019s a lot easier <em>without <\/em>credit slowing you down.\n    <\/p>\n<p><h2>Credit Card Fees<\/h2>\n<\/p>\n<p>Credit card lenders love to nickel-and-dime you. Here are some of the most common fees they can add to your monthly balance:\n    <\/p>\n<ul>\n<li><strong>Annual fee:<\/strong>\u00a0Did you know you can get charged just for the \u201cprivilege\u201d of having a credit card? Yeah. Ridiculous, but true. Not all credit cards have an annual fee, and sometimes the credit card company will waive the fee for the first year. But once it kicks in, the annual fee can be anywhere from $5 to $500, depending on the card.\u00a0<em>Um, hard pass!<\/em><\/li>\n<\/ul>\n<ul>\n<li><strong>Late fee:<\/strong>\u00a0This is a charge you get for being (you guessed it) late. More specifically, it\u2019s when you\u2019re late sending your minimum monthly payment. If your payment is late more than once in a six-month period, your late fee amount can go up, but it can never be more than the minimum payment itself.<sup>3<\/sup>\u00a0Still, a fee is a fee.<\/li>\n<\/ul>\n<ul>\n<li><strong>Balance transfer fee:<\/strong>\u00a0If you have an unpaid balance on a credit card with a high interest rate, you might try to transfer that balance to another card through what\u2019s called a credit card balance transfer. But it\u2019s going to cost you. With balance transfers, you get charged a percentage of the amount you\u2019re transferring, and that 0% introductory APR doesn\u2019t last long. Plus, moving your debt around doesn\u2019t make it go away.<\/li>\n<\/ul>\n<ul>\n<li><strong>Cash advance fee:\u00a0<\/strong>Because credit card companies don\u2019t want you to discover the power of cash, they charge you for cash advances. This is any time you use your credit card to take out cash from a bank or an ATM. You get charged a percentage of the amount you took out, and most credit cards have a super high APR for cash advances.<\/li>\n<\/ul>\n<p>But unlike other purchases, cash advances don\u2019t have a monthly grace period. That means they\u2019ll start tacking on interest the moment the cash is in your hand, not just when the billing cycle is up. Wow, that\u2019s just rude.\n    <\/p>\n<ul>\n<li><strong>Over-the-limit fee:<\/strong>\u00a0Not every credit card user has to deal with this. If you want this option, you have to sign up for it before purchases over your credit limit can be approved. If you do agree to let those purchases go through, you\u2019ll face a fee of up to $25 the first time you go over your limit, and up to $35 if you go over more than once in six months.<sup>4<\/sup>\u00a0You can\u2019t be charged more than the amount you overspent.<\/li>\n<\/ul>\n<p>But why would you pay for the option to spend over your limit when you can just not overspend in the first place? That\u2019s ridiculous!\n    <\/p>\n<ul>\n<li><strong>Expedited payment fee:<\/strong>\u00a0If you\u2019re afraid you won\u2019t get your minimum payment in before the due date, you can always pay an expedite fee to make sure your payment goes through that day (rather than the typical 1\u20135 business days). Yes, it\u2019s less money than a late fee, but do you really want to be charged extra just to pay a bill on time?<\/li>\n<\/ul>\n<ul>\n<li><strong>Foreign transaction fee:<\/strong>\u00a0If you\u2019re traveling or even if you\u2019re just buying something online with anything other than U.S. dollars, you may have to pay extra for a foreign transaction fee.<\/li>\n<\/ul>\n<ul>\n<li><strong>Returned payment fee:<\/strong>\u00a0You get charged this fee if the credit card company has to send your payment back to you because they can\u2019t process it\u2014like if it wasn\u2019t the right amount or if you don\u2019t have enough money in your bank account to cover it. Yeah, credit card companies don\u2019t let any mistake slide.<\/li>\n<\/ul>\n<ul>\n<li><strong>Card replacement fee:<\/strong>\u00a0If you lose your credit card, you may be charged a fee to get a new one\u2014and it\u2019s even higher if you need it in a hurry.<\/li>\n<\/ul>\n<p><h2>Pros and Cons of Credit Cards<\/h2>\n<\/p>\n<p>I\u2019ve given you the rundown of the different types of credit cards and fees. But is having a credit card worth it? Let\u2019s take a look at the pros and cons, shall we? I\u2019ll start with the cons.\n    <\/p>\n<h3>Fees<\/h3>\n<p>Remember all those fees I just listed? Yeah, that can add up to\u00a0<em>a lot<\/em>\u00a0of money you have to pay\u2014just for the \u201cconvenience\u201d of using a credit card. In fact, banks made $165 billion off credit card interest and fees alone in 2024!<sup>5\u00a0<\/sup>That\u2019s messed up.\n    <\/p>\n<p>But you know what doesn\u2019t come with fees?\n    <\/p>\n<p>Cash.\n    <\/p>\n<p>I said what I said.\n    <\/p>\n<h3>High Interest Rates<\/h3>\n<p>Like I said before, the average credit card interest rate is at an insane 20.4%. You don\u2019t even have to carry over a big balance every month for that to hit you hard. Instead of paying possibly hundreds of dollars more for that new couch, you could just pay for it outright and save yourself the money and the trouble.\n    <\/p>\n<h3>Overspending<\/h3>\n<p>People tend to spend more when using credit cards than cash.<sup>6<\/sup> In fact, a study by MIT found credit cards \u201cmotivate spending by exploiting reward networks in the brain.\u201d<sup>7<\/sup> It doesn\u2019t feel like you\u2019re spending real money when you use a credit card\u2014because you\u2019re not seeing that amount come out of your bank account. And that, my friend, will cause you to buy lots of things you can\u2019t afford.\n    <\/p>\n<h3>Credit Card Debt<\/h3>\n<p>Did you know 100% of people with credit card debt have had a credit card? You can fact-check me on that! It\u2019s easier than you think to spend your way into debt. And by the time you realize it\u2019s a problem, that interest rate and those fees have made the situation 10 times worse. Not to mention, credit card debt can also affect your loved ones, even after you&#8217;re gone. But the best way to avoid credit card debt is to avoid credit cards! Like I told you before, Capital None is your best bet. <em>What\u2019s in your wallet?<\/em> Cash!\n    <\/p>\n<h3>Stress<\/h3>\n<p>Ramsey Solutions research found that more than half (54%) of people worry daily about their financial situation. And let me tell you, credit cards only add to that stress! Between keeping up with monthly payments and trying to pay off debt, credit cards can take a huge toll on your mental health, as well as your finances. And I know you don\u2019t want credit card stress keeping you up at night.\n    <\/p>\n<p>Okay, now let\u2019s talk about the pros of credit cards . . . oh wait, there are none.\n    <\/p>\n<p>The so-called \u201cexperts\u201d out there will list all the reasons why a credit card helps you better manage your money. But the cons I just mentioned speak for themselves. You <em>don\u2019t<\/em> need a credit card to build wealth. In fact, credit cards are often what keep people from building wealth.\n    <\/p>\n<p><h2>Credit Card Rewards<\/h2>\n<\/p>\n<p>Sure, there are plenty of shiny credit card rewards out there. But you usually have to use your credit card a lot and spend a lot to earn them. And high rewards cards tend to have higher interest rates and higher annual fees. So, by the time you get that free flight to New York, you\u2019ve already handed over more than the cost of a plane ticket to the credit card company. Yeah, those freebies aren\u2019t really free when you do the math.\n    <\/p>\n<p>Plus, the only reason credit card companies can promise rewards is because they\u2019re making a ton of money off people already. Any cash back they give you is chump change compared to how much they\u2019re squeezing out of that single mother struggling to pay the bills or that college student trapped in debt. The system is jacked!\n    <\/p>\n<p>Personally, I refuse to be a part of any system that preys on people like that. And no amount of credit card points, cash back or other fancy rewards will make up for the harm credit cards cause.\n    <\/p>\n<p><h2>What If I Pay Off My Credit Card Balance Every Month?<\/h2>\n<\/p>\n<p>I get it. You think if you can just use your credit card responsibly, you can avoid the whole interest and debt situation. That\u2019s a nice thought, but there\u2019s just one problem: the facts. Most people don\u2019t use their credit card responsibly.\n    <\/p>\n<p>About half (46%) of those who have a credit card carry a balance from month to month\u2014which means they\u2019re having to pay interest.<sup>8<\/sup>\u00a0And\u00a01 in 5 cardholders were using at least 90% of their credit limit, meaning they were dangerously close to maxing out.<sup>9<\/sup>\n    <\/p>\n<p>You may think you can use a credit card wisely. But you\u2019re more likely to overspend. And it only takes one emergency to send you over the edge and into debt. Take it from somebody who\u2019s been there and done that\u2014you\u2019re better off steering clear of credit cards altogether. You\u2019ll actually\u00a0enjoy your life more without credit cards.\n    <\/p>\n<p><h2>Credit Cards vs. Debit Cards: What\u2019s the Difference?<\/h2>\n<\/p>\n<p>They look the same. They feel the same. But they definitely don\u2019t\u00a0<em>work<\/em>\u00a0the same. It\u2019s time to settle the great debit vs. credit debate. Here\u2019s how credit cards stack up against debit cards.\n    <\/p>\n<h3>Spending<\/h3>\n<p>While there\u2019s nothing as satisfying as paying with cash,\u00a0a debit card is the next best option. Debit cards take\u00a0<em>your own money<\/em>\u00a0directly out of your bank account (wow, what a concept).\n    <\/p>\n<p>So, instead of owing someone else, you actually own what you spent your money on. You\u2019re also more accountable to yourself (and your income) when you\u2019re spending the money straight out of your bank account, rather than racking up debt on a credit card bill you won\u2019t have to pay back until later.\n    <\/p>\n<h3>Convenience<\/h3>\n<p>Debit cards offer you the convenience of cash without having to carry around a bunch of Benjamins. Just about anywhere that takes a credit card (retail stores, gas pumps, online, etc.) will also take a debit card. You can even buy airline tickets or\u00a0rent a car\u00a0with a debit card. A debit card can get you anywhere a credit card can\u2014except into debt.\n    <\/p>\n<h3>Security<\/h3>\n<p>I hear this one all the time, but a debit card is\u00a0<em>just as safe<\/em>\u00a0as a credit card. If your\u00a0debit card\u00a0is backed by a company like Visa or Mastercard, you have the exact same protections as a credit card.<sup>10,11<\/sup> Just make sure you\u2019re checking your bank account often (which you should do anyway) so you can catch any suspicious charges.\n    <\/p>\n<p><h2>Should I Get a Credit Card?<\/h2>\n<\/p>\n<p><em>Absolutely not.\u00a0<\/em>Let me repeat:\u00a0You do\u00a0<em>not<\/em>\u00a0need a credit card.\u00a0Not one, not two, not three. Nope, not even for emergencies.\n    <\/p>\n<p>With credit cards, there\u2019s always a cost\u2014whether it\u2019s fees, interest, debt or stress. Meanwhile, credit card companies are getting rich off people like you (and me there for a while) falling behind on payments. It\u2019s a toxic industry. But you don\u2019t have to be a part of it any longer, even if you\u2019ve used a credit card your whole life. It\u2019s time to\u00a0cut up those cards\u00a0for good!\n    <\/p>\n<p>And if you\u2019re\u00a0sick and tired of credit card debt\u00a0weighing you down, I know how you feel. But there\u2019s a way out: Start budgeting the right way with EveryDollar. This awesome app is based on a zero-based budgeting plan so you can put your money to work before the month even begins. And that includes putting dollars toward paying off any credit cards you have.\n    <\/p>\n<p>EveryDollar is also the only budgeting app based in the Ramsey Baby Steps for building real wealth. The Baby Steps helped my husband and me pay off over $460,000 in consumer debt, including over $20,000 in credit card debt. We cut up and paid off almost a dozen credit cards. And we\u2019ll never go back!\n    <\/p>\n<p>A credit card won\u2019t fix your problems\u2014only you will. Get on that EveryDollar budget today!\n    <\/p>\n<\/p><\/div>\n<p>Read the full article <a href=\"https:\/\/www.ramseysolutions.com\/debt\/how-credit-cards-work\" target=\"_blank\" rel=\"noopener\" rel=\"nofollow\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone hands you a piece of plastic. (And let\u2019s be real, most adults I know struggle with plastic.) Pay off debt fast and save more money with<\/p>\n","protected":false},"author":1,"featured_media":26888,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[],"class_list":{"0":"post-26887","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Do Credit Cards Work? | Didebta<\/title>\n<meta name=\"description\" content=\"It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/didebta.com\/?p=26887\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Do Credit Cards Work? | Didebta\" \/>\n<meta property=\"og:description\" content=\"It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone\" \/>\n<meta property=\"og:url\" content=\"https:\/\/didebta.com\/?p=26887\" \/>\n<meta property=\"og:site_name\" content=\"Didebta\" \/>\n<meta property=\"article:published_time\" content=\"2026-04-24T00:42:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-04-24T00:42:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"23 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/didebta.com\/?p=26887#article\",\"isPartOf\":{\"@id\":\"https:\/\/didebta.com\/?p=26887\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/didebta.com\/#\/schema\/person\/1d68332532577889b0f653a8233c8e1d\"},\"headline\":\"How Do Credit Cards Work?\",\"datePublished\":\"2026-04-24T00:42:47+00:00\",\"dateModified\":\"2026-04-24T00:42:48+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/didebta.com\/?p=26887\"},\"wordCount\":4516,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/didebta.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/didebta.com\/?p=26887#primaryimage\"},\"thumbnailUrl\":\"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg\",\"articleSection\":[\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/didebta.com\/?p=26887#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/didebta.com\/?p=26887\",\"url\":\"https:\/\/didebta.com\/?p=26887\",\"name\":\"How Do Credit Cards Work? | Didebta\",\"isPartOf\":{\"@id\":\"https:\/\/didebta.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/didebta.com\/?p=26887#primaryimage\"},\"image\":{\"@id\":\"https:\/\/didebta.com\/?p=26887#primaryimage\"},\"thumbnailUrl\":\"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg\",\"datePublished\":\"2026-04-24T00:42:47+00:00\",\"dateModified\":\"2026-04-24T00:42:48+00:00\",\"description\":\"It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone\",\"breadcrumb\":{\"@id\":\"https:\/\/didebta.com\/?p=26887#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/didebta.com\/?p=26887\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/didebta.com\/?p=26887#primaryimage\",\"url\":\"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg\",\"contentUrl\":\"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg\",\"width\":1200,\"height\":630},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/didebta.com\/?p=26887#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/didebta.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"How Do Credit Cards Work?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/didebta.com\/#website\",\"url\":\"https:\/\/didebta.com\/\",\"name\":\"Didebta\",\"description\":\"Latest Personal Finance News and Updates\",\"publisher\":{\"@id\":\"https:\/\/didebta.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/didebta.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/didebta.com\/#organization\",\"name\":\"Didebta\",\"url\":\"https:\/\/didebta.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/didebta.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/d-icon.png\",\"contentUrl\":\"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/d-icon.png\",\"width\":512,\"height\":512,\"caption\":\"Didebta\"},\"image\":{\"@id\":\"https:\/\/didebta.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/didebta.com\/#\/schema\/person\/1d68332532577889b0f653a8233c8e1d\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/didebta.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/avatar_user_1_1710355201-96x96.png\",\"contentUrl\":\"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/avatar_user_1_1710355201-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/didebta.com\"],\"url\":\"https:\/\/didebta.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"How Do Credit Cards Work? | Didebta","description":"It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/didebta.com\/?p=26887","og_locale":"en_US","og_type":"article","og_title":"How Do Credit Cards Work? | Didebta","og_description":"It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone","og_url":"https:\/\/didebta.com\/?p=26887","og_site_name":"Didebta","article_published_time":"2026-04-24T00:42:47+00:00","article_modified_time":"2026-04-24T00:42:48+00:00","og_image":[{"width":1200,"height":630,"url":"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"23 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/didebta.com\/?p=26887#article","isPartOf":{"@id":"https:\/\/didebta.com\/?p=26887"},"author":{"name":"News Room","@id":"https:\/\/didebta.com\/#\/schema\/person\/1d68332532577889b0f653a8233c8e1d"},"headline":"How Do Credit Cards Work?","datePublished":"2026-04-24T00:42:47+00:00","dateModified":"2026-04-24T00:42:48+00:00","mainEntityOfPage":{"@id":"https:\/\/didebta.com\/?p=26887"},"wordCount":4516,"commentCount":0,"publisher":{"@id":"https:\/\/didebta.com\/#organization"},"image":{"@id":"https:\/\/didebta.com\/?p=26887#primaryimage"},"thumbnailUrl":"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg","articleSection":["News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/didebta.com\/?p=26887#respond"]}]},{"@type":"WebPage","@id":"https:\/\/didebta.com\/?p=26887","url":"https:\/\/didebta.com\/?p=26887","name":"How Do Credit Cards Work? | Didebta","isPartOf":{"@id":"https:\/\/didebta.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/didebta.com\/?p=26887#primaryimage"},"image":{"@id":"https:\/\/didebta.com\/?p=26887#primaryimage"},"thumbnailUrl":"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg","datePublished":"2026-04-24T00:42:47+00:00","dateModified":"2026-04-24T00:42:48+00:00","description":"It seems to be an unwritten rule in life that once you turn 18, you\u00a0have\u00a0to get a credit card\u2014as if you magically become a mature adult the moment someone","breadcrumb":{"@id":"https:\/\/didebta.com\/?p=26887#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/didebta.com\/?p=26887"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/didebta.com\/?p=26887#primaryimage","url":"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg","contentUrl":"https:\/\/didebta.com\/wp-content\/uploads\/2026\/04\/how-do-credit-cards-work.jpg","width":1200,"height":630},{"@type":"BreadcrumbList","@id":"https:\/\/didebta.com\/?p=26887#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/didebta.com\/"},{"@type":"ListItem","position":2,"name":"How Do Credit Cards Work?"}]},{"@type":"WebSite","@id":"https:\/\/didebta.com\/#website","url":"https:\/\/didebta.com\/","name":"Didebta","description":"Latest Personal Finance News and Updates","publisher":{"@id":"https:\/\/didebta.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/didebta.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/didebta.com\/#organization","name":"Didebta","url":"https:\/\/didebta.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/didebta.com\/#\/schema\/logo\/image\/","url":"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/d-icon.png","contentUrl":"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/d-icon.png","width":512,"height":512,"caption":"Didebta"},"image":{"@id":"https:\/\/didebta.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/didebta.com\/#\/schema\/person\/1d68332532577889b0f653a8233c8e1d","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/didebta.com\/#\/schema\/person\/image\/","url":"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/avatar_user_1_1710355201-96x96.png","contentUrl":"https:\/\/didebta.com\/wp-content\/uploads\/2024\/03\/avatar_user_1_1710355201-96x96.png","caption":"News Room"},"sameAs":["https:\/\/didebta.com"],"url":"https:\/\/didebta.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/posts\/26887","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/didebta.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26887"}],"version-history":[{"count":1,"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/posts\/26887\/revisions"}],"predecessor-version":[{"id":26889,"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/posts\/26887\/revisions\/26889"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/didebta.com\/index.php?rest_route=\/wp\/v2\/media\/26888"}],"wp:attachment":[{"href":"https:\/\/didebta.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26887"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/didebta.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26887"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/didebta.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26887"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}