The term credit card actually refers to a financial service that allows users to make purchases without actually paying the hard cash. If used in a planned manner, the credit cards are financial instruments that can help you borrow money for a zero or low interest rates.

Today, a large number of services providers are available in credit card markets that offer various types of credit card facilities designed for different purposes. According to marketing strategies of credit card industry, every service provider at his beginning periods provide an interest free credit facility that means customers need not pay interest charges for borrowed money. But these types of facilities are offered for limited periods and after expiry of the interest free periods companies charge regular interest rates.

Increases in the numbers of service providers have made credit card industry a highly competitive sector of financial world. To reach their set targets, every credit card company offers rewards and incentive systems, which encourage cardholders to use the cards at their maximum.

The purpose of these reward and incentive schemes is just to encourage the habits of credit card use. So the credit card companies can make more and more profits. The facilities available through credit cards usually are beneficial if we pay back the credited amounts in time. But if the payments are not made within prescribed time they may damage your financial status.

The interest rate charged for credit facilities is the key term that makes profits for credit cards companies. Generally, twenty to thirty percent of interest rates are charged for credit card services. Annual subscription fees, balance transfer charges late fees and penalties are other aspects that the credit card companies charge from their cardholders.