When approved for a regular, unsecured credit card, you are given a credit line from which you can borrow funds and then repay them. Because you borrow money as you spend, rather than borrowing a set amount of money at one time like you would with a loan, credit cards are considered “revolving credit.”
When it comes to paying off your debt, you have the option of paying off what you charge to the card in full each month, making just the required minimum payment (which is a portion of your balance plus interest and any fees) or paying an amount somewhere in between. If you pay less than the full balance, you’ll owe interest on the debt that’s carried over to the next month, as well on any new charges you make to the card.
When you handle credit cards responsibly — by paying on time every time and not racking up or revolving a large balance — that account activity is reporting to the credit bureaus (Equifax, Experian and TransUnion), which then feeds that information into an algorithm that becomes your credit score. Harmful practices, such as paying late, maxing out your card or even not using a card at all, will also be reported to the credit bureaus and could end up damaging your credit score.