Which of the following statements about a credit card is true?

The statement that a credit card allows purchases on credit to be paid back later is accurate and highlights the fundamental function of a credit card. When you use a credit card, you are essentially borrowing money from the credit card issuer to make purchases. This means that you can buy items immediately without having the cash on hand at that moment. Subsequently, you are obligated to repay this borrowed amount, which is typically expected to be paid back on or before the due date indicated on your billing statement.

Credit cards often come with a grace period during which you can pay off your balance without incurring interest, but if you do not pay off the full balance by that time, interest charges will apply to any remaining amount. This feature of purchasing goods or services now and deferring payment to a later date is what distinguishes a credit card from other financial products such as debit cards, which deduct money directly from a checking account, or savings accounts, which are designed for saving rather than spending.

In summary, the correct choice accurately reflects how credit cards function by allowing consumers to make purchases on credit with the responsibility of repayment later, making it essential for managing personal finances effectively.