What is a credit card issuer?

A credit card issuer is a company that extends credit to borrowers by providing them with a credit card, such as Visa(r) or a MasterCard(r). A credit card issuer makes money by charging merchants a fee every time a credit card is used, by charging interest rates on a principal balance carried by a cardholder and sometimes an annual fee.

Most major banks issue credit cards, such as Chase, Citibank, FirstUSA and others. Credit card issuers usually offer a range of credit card products, based on consumer credit history as well as their needs and interests. Some people want a credit card as a way to borrow money, other for ease of use when shopping, and still others to collect rewards points for free travel and entertainment.

Credit card issuers offer different terms in addition to the interest rate and fees. Some things that vary are the grace period from before purchases you make start incurring finance charges and fees for cash advances.

When you carry a balance, there is usually no grace period on purchases - as soon as you buy something you start paying interest on it. Cash advances are usually more expensive than purchases - some credit cards impose a one time fee as well as a higher interest rate than on purchases.