A credit transaction occurs when a buyer purchases goods or services and agrees to pay for them later, rather than paying upfront. This type of transaction often involves a credit card or a loan, allowing consumers to make purchases even if they do not have the full amount available at the time of the transaction. In a credit transaction, the seller provides the buyer with a credit limit, which is the maximum amount they can borrow. The buyer is then responsible for repaying the borrowed amount, usually with interest, over a specified period. This system helps facilitate purchases and manage cash flow for both consumers and businesses.