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  3. credit cards operate as loans with compound intere

Credit cards operate as loans with compound interest, with a grace period where the loan...

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Accounting

Credit cards operate as loans with compound interest, with a grace period where the loan does not accrue interest (usually a month). The benefit is they are a safe way to access money; if your card and/or card number is stolen, you can call the credit card company to cancel the card. Some cards even provide rewards for timely payment of loans. However, if the loan is not payed off, they can accrue interest at an alarming rate.

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