Credit Card
Quick Definition
A revolving credit facility allowing purchases up to a limit, with a standard 19.99% interest rate.
Full Explanation
A credit card is a revolving line of credit issued by a bank or financial institution that allows purchases up to an approved credit limit. In Canada, the standard credit card interest rate is 19.99% on unpaid balances. However, low-rate cards (from 8.99%–12.99%) are available for those who sometimes carry a balance. If you pay the full statement balance by the due date each month, no interest is charged. Credit cards often offer rewards (cash back, points, travel miles), purchase protection, and extended warranty. Responsible use builds credit history and improves your credit score.
Related Terms
Interest Rate
The percentage charged on the principal loan balance per period.
Credit Score
A 3-digit number (300–900) indicating your creditworthiness to lenders.
Credit Limit
The maximum amount a lender allows you to borrow on a credit card or line of credit.
Minimum Payment
The smallest amount you must pay on a credit card each month to avoid penalties.
Ready to put this knowledge to use?
Use our free calculators to model your situation based on what you've just learned.