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Credit Cards
Whoever isn’t already familiar with the small plastic card that has replaced the delight of the contemporary human being to count his or her banknotes which at times might not be enough to purchase expensive items to their heart’s desire – The credit card is a card that enables the consumer to buy products and services when they don’t have their own money to use. Instead, the card holder will be granted a line of credit to borrow money from (aka a credit card) to either pay off for whatever was purchased or to withdraw as cash and use for other purposes.
A credit card is different from a charge card, which requires the balance to be fully paid each month. A credit card, issued either by a local bank or credit union, or a credit card provider, allows the consumer to delay payment but having to pay interest on top. Interest charges depend on the bank or credit union that has issued the card; such details will be stipulated in the contract you sign with the provider of the card. The manner in which interest is charged usually summarised in your monthly statement.
In order to obtain a credit card, you will have to open an account with the credit provider. As soon as you have received your credit card, you will be able to use it to make payment to merchants who accept that very type of card. When you do that, you will be asked to enter the personal identification number for the transaction to be made and you will sign a receipt. If you pay online, you will also be asked for the 3 digit security code on the back of the card with certain types of credit card.
There is no need to underline the advantages of the credit card. One of the main reasons why people acquire this type of card is convenience and that ‘must have’ item.
Small short-term loans can be made more quickly than with debit cards or cheques and they are also very easy to handle.
A credit card comes with a certain ‘grace period’ which is the time that the customer will have to pay the balance before interest is charged. The grace period depends on the rules of the card issuer and ranges from 20 to 40 days. What is really convenient is the fact that certain card issuers apply finance charge on old/previous balance, not on new transactions before the grace period for the latter ends.
There are also some benefits for the merchants. A credit card is a safer method than cheques because it is the card issuer that commits to pay for what was purchased, not the card holder. The holder may default on the credit card payment without the merchant feeling the effects of that. In spite of the small commission that the merchants sometimes have to pay to the bank (which is percentage from what was purchased), many merchants are much more willing to deal with credit card holders than accept cheques that later might prove to be non covered.
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