Credit Cards: Common Information

By: Barbara Camie

The credit card is much different than that of a debit card, because the money is not removed from the account of the user. The money is lent from the issuer to buyer for payment to the merchant. A credit card also differs from charge card (eventhough the public uses the term for referring to a credit card) that requires the payment of balance in full every month. In comparison the user of a credit card get to revolve the balance at the expense of charging the interest. The size and shape of credit cards are mostly the same, which is specified by an ISO standard, ISO 7810.

Working of a credit card

The credit provider after approving an account issues credit to the user and provides a credit card by which purchases can be made by user from the merchants who accepts the credit card, with a credit limit that is pre-established. Usually a general bank is the issuer
Of the credit, even though sometimes a captive bank will issue the credit. There is an agreement between the user of a credit card and the card issuer. The payment consent is indicated by the card holder with the signing of a receipt with a card detail record that
Indicates the required amount or by the entry of Personal Identification (PIN).

Verbal authorizations over telephones are also accepted by most of the merchants and electronic Internet authorization also called a Card Not Present (CNP) transaction. The merchants may verify the validity of the card by use of electronic verification systems, that also checks whether sufficient credit is present in the credit card of a customer in a jiffy as the purchasing will be going on. A payment terminal of credit card or a communication link attached to the merchant's bank is used for performing the verification. The card may contain a chip or magnetic card, which stores the data. Some variations may be found with verification systems that eCommerce merchants will be using for determination of user account validity and acceptability of charge.

A statement is sent every month, to the user of a credit card that indicates the purchases he has made using the card, any fees that may be outstanding and the full amount to be paid. Any incorrect charges may be disputed by the cardholder, which they think is incorrect. Else, a small amount of the bill must be paid by the due date. To avoid late payment by the cardholder provided there are adequate funds automatic payments maybe arranged by certain financial corporations. Issuers of credit cards waive interest charges provided each month's balance is paid fully. A revolving credit form can simply be served by a credit card or it can form a complicated instrument of finance. With segments balanced multiply and having a variety of interest rates having single or multiple credit limits.

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