When consumers use credit cards, they are essentially taking out a loan with the understanding that it will be repaid at some later date. Credit cards are a particularly attractive source of funds for individuals (and companies) because they are accepted by many - if not most - merchants as a form of payment.
In addition, to obtain a card (and, by extension, $5,000 or $10,000 worth of credit), all that's required is a one-page application. The credit review process is also rather quick. Written applications are typically approved (or denied) within a week or two. Online / telephone applications are often reviewed within minutes. Also in terms of their use, credit cards are extremely flexible. The money can be used for virtually anything these days from paying college tuition to buying a drink at the local watering hole. (To find out more about this process, see The Importance of Your Credit Rating and How Credit Cards Affect Your Credit Rating.)
There are definitely pitfalls, however. The interest rates that most credit-card companies charge range as high as 20% per year. In addition, a consumer is more likely to rack up debt using a credit card (as opposed to other loans) because they are widely accepted as currency and because it's psychologically easier to hand someone a credit card than to fork over the same amount of cash.
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