A credit card offers just that -credit, the right to borrow funds from a lending institution. When you make a purchase or withdraw cash (usually called a cash advance), funds are drawn from your "line of credit." You pay back the amount you borrowed or "charged" each month, or carry over to the next month (revolve) a certain amount that was borrowed and you are assessed an interest charge.

You are then responsible to pay the interest charge as well. Credit cards carry a brand logo (e.g., Visa, MasterCard, American Express, etc.) and are accepted by participating merchants. When you use your credit card, the transaction requires a signature.

By contrast, ATM cards let you withdraw money from your account when you make a purchase. Secured credit cards are essentially a combination of the two. They look like a credit card, but you must first deposit money with the card company. The amount of money you deposit becomes your credit limit.

Choosing the right credit card for you can be too easy. Unless you live in a cave without mail, Internet or phone service, you are probably on the receiving end of dozens of credit card offers every year. Some of these offers may look like good deals but have attributes hidden in the fine print that make them a bad choice. That is why it is always important to research the best credit card offers available for your situation.

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