Definition

• A traditional credit card falls into the category of a revolving credit account. The card lets you access a credit line extended to you by the issuer. You can continue spending until you reach the preset limit. Traditional cards require you to pay a minimum amount each month, and you are free to add more if you wish to pay the balance off more rapidly. Each payment frees up money on your credit limit for future spending. You are charged interest on your unpaid balance every month.
  
  

Use

• Most traditional credit cards are branded to Visa, MasterCard, American Express or Discover and are accepted by a wide variety of stores and service providers. Your card is usable for any goods or services provided by a merchant who accepts that brand. Some retailers and gas station chains have their own cards, usable only at their stores or stations, and according to MSN Money website columnist Liz Pulliam Weston, they typically are easier to get than general-purpose credit cards.
  
  

Purpose

• Credit cards are useful for buying things without carrying large amounts cash, and they are easily used online. You can buy expensive items or bay off large obligations like medical bills, then break repayment down over a long time period.
  
  

Drawbacks

• Traditional credit cards take months or years to repay if you only send the lowest required payment, and your interest adds up in the meantime. The Board of Governors of the Federal Reserve System website explains that the Credit CARD law makes banks include a payment schedule that tells you how long it will take to pay off your balance if you only make the minimum payment and how much interest you will pay in that time. You can get into financial trouble if you have numerous credit cards and max out their limits. Your credit score drops when you use all your available credit, and it goes down even more if you cannot make the payments.
  
  

Alternative

• Banks often turn down credit card applications from people who have a poor credit history because they are less likely to pay back the borrowed money. You can still get a card, even if you do not meet the financial qualifications, if you opt for a different account type called a secured credit card, according to Bankrate website writer Pat Curry. The lender has less to risk because you provide a security deposit equal to your credit limit, so you qualify even with a bad financial record. Secured cards work the same way as traditional accounts for purchases, and your activity appears on your credit reports.