As its name suggests, it’s a card that gives you credit. Literally.
Let’s take an example: you are going to Chicago on a business trip and have to buy a plane ticket, book a hotel room and pay for your meals.
With a credit card, each purchase you make is not debited from your bank account. In reality, they are all paid for by your bank, up to the limit you have set together.
It sounds like a great idea, don’t you think?
Except that at the end of the month, a few days after you get back from your trip, you receive a bill from your bank. It’s for everything you spent in Chicago as well as every other purchase you made with your credit card that month.
You now have to pay all that credit back.
So if your bank lends you money, it’s expecting you to pay the bill. And because this credit is renewable, the same thing happens the next month. And the next month. And the next. You get the picture.