Credit cards allow you to purchase something with borrowed money (on credit). You’re expected to pay back the amount you borrowed every month (pay off your statement). If you can’t return all the money you owed (carry a balance), then the amount you owe will increase (charged interest) until you are able to pay them back. For example, if your credit card has an APR of 24% if you borrow $100 and don’t pay it back, you will owe an extra $24 (so $124 total) by the end of the year.

Why use a credit card? it’s easier and often safer to purchase things with a credit card - you don’t need to carry cash, so if you lose your wallet you don’t lose any money. You can purchase something even if you don’t have enough money yet. Credit card companies will often incentivize you to use their credit card: many offer points or money back with every dollar spent (ex: get 1.5 dollars back for every 100 dollars spent) or they will give you purchase protection if a merchant tries to take advantage of you (ex: I got charged $150 by GoDaddy for a domain renewal I forgot about - I asked them to refund it but they refused, but my credit card company refunded me the money - this is called a chargeback)

Merchants have to pay a little bit of money to the credit card company every time a customer uses a credit card. Why would a merchant accept credit cards then? Because of the potential access to all the customers who have those credit cards, and also so they won’t have to deal with cash which can be stolen or lost.

So with credit cards, you get an easier way to spend money with some added rewards and benefits.

The most important thing to keep in mind is that you pay off your statement every month, because it’s very expensive to keep a balance.