How do credit cards work?

A credit card provides a revolving line of credit that allows you to make purchases up to a pre-approved limit. When you use the card, the bank pays the merchant, and you agree to repay that amount later. Each month, you receive a statement showing your total balance and a minimum payment due. If you pay the full balance by the due date, no interest is charged on purchases. However, carrying a balance or making late payments attracts interest and fees as per RBI guidelines.