A credit card is a card issued by a bank or other financial institution who are referred to as the issuer, to a user or holder. This card is used by the holder by swiping (or with modern microchip, tapping) the card to a Point of Sale (POS) device that has been provided by banks to a merchant. The POS device captures the data of the user and validates with the banks records who then grants the sale. Once this has been completed, the merchant deems the purchase complete. With ease of transacting, the user or the holder no longer needs to pay for the purchase with cash. The banks confirmation is sufficient for the merchant to deem the transaction as paid.
In this case, the bank then credits the users available credit limit and considers the user as a borrower of money to pay for the purchase. The bank will continue to charge interest rates during the time that the credit is outstanding.
The first reconizable credit card was introduced by Bank of America in 1958 as BankAmericard. The success contributed to the licensing to other banks around the United States and eventually around the world. In 1976, all banks licensed with BankAmericard united and eventually formed the now known Visa. During 1966, some group of banks united to form Master Charge to compete with the then known BankAmericard. Master Charge eventually became Mastercard.
The primary benefit that a credit card provides is the ease of transacting. This allows the buyer to purchase goods and services without having to bring cash. This is most convenient for purchases that require large amounts of cash. The buyer no longer needs to issue a check where the merchant needs to wait for their bank to clear it. A credit card transaction that has been approved is cleared soon as the merchant receives slip that the POS prints.
Another benefit that credit cards give is monitoring all your purchases. Charging your purchases to your credit card automatically logs each transaction and can be used by the holder to audit his or her expenditures.