Credit Cards: Plastic Money in Vogue

By: Smith James

Credit cards are a relatively new phenomenon, but have gained immense popularity within a span of just a few years. It is actually a mode of payment and withdrawing money. Debit cards and credit cards are collectively referred to as 'plastic money', because the credit card is a small rectangular card made of plastic.

Most people get confused between debit cards and credit cards, but actually there is a lot of difference between the two. In case of a debit card, the money is withdrawn from the user's account immediately after a financial transaction is made. On the other hand, a credit card
user is actually lent money by the bank or any other financial institution that has issued him the card. The money is lent only for a stipulated period of time, after which the money will be withdrawn from the user's account.

Almost all the credit cards around the world, are of the same size and shape, which is based on the specifications of the ISO 7810 standard. The user is issued a credit card, after the issuer has certified and approved his account. The user can then use this card to make purchases whenever he desires. But, there is a certain credit limit up to which the user can avail the credit card's facilities.

Merchants can easily verify the authenticity of the credit cards using an electronic verification system. This system also gives information, whether the user has sufficient credit limit to purchase the products. All this authentication is done in a matter of a few seconds. Data from the card is obtained with the help of a magnetic stripe which actually contains a chip and is present on the card.

When the purchase is made, the card-holder gives his consent to pay the amount by signing a receipt issued by the merchant. This receipt has all the details of the card and the amount due. The user is issued a statement from the bank every month which contains details of all the purchases in the month, outstanding amounts and the total amount owed by the user.

Credit cards are the easiest way of purchasing things. You do not need to carry liquid cash all the time, which reduces the chances of theft and pick pocketing. The credit cards can be accessed only by using the Personal Identification Number (PIN), which is known only to the user, hence your money is safe even if you lose the card or it is stolen. In such a scenario you can also ask the bank to block your card to avoid misuse.

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