system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How do credit cards physically work? How is data stored and taken from it via chip/strip?
gpt
The strip is simply a band of magnetic material which has sections with the magnetic pole flipped one way or another. It is only a way to easily read the number off the front of the card into a machine rather than typing it in manually.

The chip is connected to by electrical contacts touching the large metal pads you see on the front of the card. The tiny breaks between the pads isolate the different connections. Communication with the chip allows an input (in part based on the specific time of the transaction) to be run through an algorithm on the chip and output a unique value which identifies the transaction as valid. Someone without the chip wouldn't be able to calculate the proper output to authorize a transaction, and since it is different for every input and time then simply copying a value from a previous transaction won't work either. It cuts down on fraud since you physically need the chip.

Note that information about transactions or credit allowance isn't stored on the card at all. That stuff is managed by the credit company which is why credit processing requires communication via telephone or internet to clear credit transactions.