What is a "credit card" and how does it work?

What is a "credit card" and how does it work?

Mitchell Freedman, CPA/PFS (CEO, MFAC Financial Advisors) gives expert video advice on: How should I choose a credit card? and more...

People are often confused as to what a credit card is. It's a piece of plastic. But in fact, when you get a credit card, you have signed an agreement, which is called a retail credit installment agreement. That agreement obligates you to handle the obligations with respect to the items that you charge in a businesslike manner. Your Visa card or your MasterCard and other department store cards, gas company cards - these are generally credit cards that are retail credit installment agreements.