Final answer:
Trade credit terms often range from 30 to 90 days, allowing a buyer time to pay the seller. This system differs from credit card usage, where the card company pays immediately and the cardholder owes the credit company, usually at month-end.
Step-by-step explanation:
Under trade credit, a seller typically gives a buyer a certain number of days to pay an invoice. This period can vary, but it is often 30, 60, or 90 days. This type of credit arrangement differs from a credit card transaction, where the credit card company immediately transfers funds to the seller and the cardholder then owes that amount to the credit card company, typically at the end of the month, making a credit card a form of short-term loan.
It's important to remember that using credit means entering into debt, as goods and services are obtained before payment is made with the agreement that payment will be made in the future. For example, with a credit card, if a payment is late, the company might charge penalties; for instance, a company may charge a $10 late fee, plus an additional $5 each day the payment remains unpaid.