By sunnyhassan60@gmail.com
A credit card is a small, rectangular piece of plastic or metal that is issued by a bank or other financial institution and enables its holder to borrow money to pay for products and services at businesses that accept credit cards. Credit cards impose the need that cardholders repay the borrowed funds, plus any applicable interest and any other agreed-upon charges, in full or over time, either by the billing date or at a later date.
The credit card issuer may additionally provide cardholders with a separate cash line of credit (LOC) in addition to the usual credit limit, allowing them to borrow money in the form of cash advances that can be accessed through bank teller machines, ATMs, or credit card convenience checks. Compared to transactions that access the primary credit line, such cash advances often have different terms, such as no grace period and higher interest rates.
Borrowing caps are typically set by issuers depending on a person’s credit score. Credit cards continue to be one of the most widely used payment methods for purchasing goods and services for consumers today, and the vast majority of businesses allow customers to use them to make transactions.
Compared to other consumer loan types, credit cards often have a higher annual percentage rate (APR). Unless there is a 0% APR introductory offer in place for a specific period of time after account opening, interest charges on any unpaid balances charged to the card are typically assessed approximately one month after a purchase is made. If prior unpaid balances had been carried forwards from a previous month, however, there is no grace period given for new charges.
Credit Card Types
Visa, Mastercard, Discover, and American Express are just a few of the popular credit cards that are often provided by banks, credit unions, or other financial institutions. Many credit cards entice users with rewards like airline miles, hotel stays, gift cards to popular stores, and cash back on purchases. Credit cards of this kind are typically referred to as rewards cards.
Numerous national retailers issue branded credit cards with the name of the business prominently displayed on the front to foster client loyalty. Store cards can only be used to make purchases from the issuing merchants, who may provide cardholders with benefits like exclusive discounts, promotional notices, or exclusive deals. Store credit cards are often easier for consumers to qualify for than big credit cards. Large retailers may also provide co-branded credit cards with the major Visa or Mastercard logos that may be used outside of retailer locations.
Credit cards that require a security deposit from the cardholder are known as secured cards. These cards provide constrained credit lines with limits equivalent to the security deposits, which are frequently repaid when cardholders use their cards responsibly and repeatedly over time. Those with weak or restricted credit histories typically apply for these cards.
Prepaid debit cards are a form of protected payment card, much as secured credit cards, where the available funds are identical to the monies that the cardholder has previously parked in a linked bank account. Unsecured credit cards, in contrast, do not call for collateral or security deposits. Compared to secured cards, these cards typically have bigger credit limits and cheaper interest rates.