Are credit cards backed by real money?

[black_citi]

I've tried searching here as well as google but couldn't find much info.

I heard CC companies/banks, when they issue new credit, won't have the actual amount of funds available until a later date. Example would be someone (me) has a CC with a limit of 1000. The bank doesn't have $1000 in their reserves set aside for me (yet) so when I pay them money when the bill is due I am essentially contributing to their reserve fund I think. Hopefully someone could shed some light on this topic because I am VERY much interested in how banks work. Thanks for any input.

[user5387]

You might wish to look at this link:

http://en.wikipedia.org/wiki/Fractional_reserve_banking

When a bank issues a CC, they are potentially obligated to loan a certain amount of money.  I imagine that the actual reserves they have to hold for this purpose are pretty low.

The same is true when you deposit money -- $100 in a savings account doesn't mean that there are five $20 bills sitting a vault somewhere.