A credit card is a type of payment card that allows you to borrow money from a lender or financial institution to make purchases. When you use a credit card to make a purchase, you are essentially borrowing money from the issuer of the credit card, and you will be required to repay the borrowed amount with interest if you do not pay it off after the first statement.

Here's how a credit card typically works:

1. Applying for a credit card: To get a credit card, you'll need to apply for one from a lender or financial institution. The application process typically involves providing personal information, such as your name, address, and social security number, as well as information about your income and credit history.

2. Approval process: The lender will review your application and credit history to determine whether you are eligible for a credit card and what your credit limit will be.

3. Using your credit card: Once you are approved for a credit card, you can use it to make purchases at merchants that accept the card. When you make a purchase, the issuer of the credit card will pay the merchant on your behalf, and you will be required to repay the amount you borrowed plus interest.

4. Repaying your balance: Your credit card issuer will send you a monthly statement that details your purchases and the amount you owe. You will be required to make at least the minimum payment on your balance each month, but it's recommended that you pay off your balance in full to avoid paying interest charges.

5. Building credit: Using a credit card responsibly and making your payments on time can help you build a positive credit history, which can be helpful when applying for other types of credit, such as loans or mortgages.

It's important to use your credit card responsibly and only borrow what you can afford to repay. Carrying high balances or missing payments can have a negative impact on your credit score and make it harder to get approved for credit in the future.

Secured Credit Card VS Unsecured Credit Card

The main difference between a secured credit card and an unsecured credit card is that a secured credit card requires a cash deposit as collateral, while an unsecured credit card does not.

Here's how each type of credit card works:

1. Secured credit card: A secured credit card is typically used by people who are new to credit or have a poor credit history. 

To get a secured credit card, you are required to make a cash deposit, which serves as collateral for the credit limit on the card. The deposit amount is typically equal to the credit limit, so if you deposit $500, your credit limit will be $500. 

You can use the card like any other credit card, but if you don't make your payments on time, the issuer will hold your deposit to pay off your balance.  Also if you do not make your payment on time you will get a late payment added to your credit history.

2. Unsecured credit card: An unsecured credit card does not require a cash deposit, but it does require a good credit history to qualify. 

The credit limit on an unsecured credit card is determined by the issuer based on your credit history, income, and other factors. 

Because there is no collateral, unsecured credit cards typically have higher interest rates and fees than secured credit cards.

In general, a secured credit card can be a good option if you're new to credit or trying to rebuild your credit history, as it can help you establish a positive credit history. 

An unsecured credit card is a better option if you have a good credit history and can qualify for a card with better terms and rewards.

What is APR and How does it Affect my Credit Card?

APR stands for Annual Percentage Rate, and it represents the interest rate that you will be charged on your credit card balance over a year. The APR on a credit card can vary depending on the issuer, your credit score, and other factors.

Here's how the APR affects your credit card balance:

1. Balance calculation: The APR is used to calculate the interest charges on your credit card balance each month. If you carry a balance on your credit card, you will be charged interest on the amount you owe.

2. Interest charges: The interest charges are added to your balance, increasing the amount you owe. The higher the APR, the more interest you will be charged on your balance.

3. Minimum payment: Your monthly credit card statement will include a minimum payment, which is typically a percentage of your balance. If you only make the minimum payment, you will not pay off your balance in full, and you will continue to accrue interest charges.

4. Paying off your balance: To avoid paying high interest charges, it's recommended that you pay off your balance in full each month. If you can't pay off your balance in full, it's recommended that you pay more than the minimum payment to reduce the amount of interest you'll be charged.

It's important to pay attention to the APR when choosing a credit card, as a higher APR can result in higher interest charges and make it more difficult to pay off your balance. If you have a high APR on your credit card, you may want to consider transferring your balance to a card with a lower APR or negotiating with your issuer to lower your rate.