How To Learn All About Credit Cards
A credit card is a compressed form of plastic cash issued by companies in the financial industry granting consumers the ability to instantly borrow money from them for purchases at merchants worldwide.
The credit card company requires that you fill out an application form that once approved becomes an agreement between the applicant and the credit card company. Once approved, the credit card company mails you a plastic credit card and a pin number (separately mailed to prevent fraudulent usage). You have to activate the card usually by calling a phone number then you are authorized to use the card at any merchant or business that accepts the credit card you are carrying (such as MasterCard, Discover, VISA, American Express, etc.).
The card has a magnetic strip on the back that has your credit card info and number encrypted in the strip and it is transmitted electronically to the credit card supplier for authorization of your purchase from the merchant.
Your card can also be used on the Internet for shopping and bill paying. The pin number you received lets you take cash withdrawals (advances) from ATM’s (automatic cash machines).
There are eight major credit lending organizations, most of which operate worldwide. MasterCard and VISA are the most popular credit cards, with Discover and American Express following close behind.
Many businesses have tie-ups with credit card suppliers and issue credit cards to their merchants. Some of these businesses offer extra rewards or cash back for purchases made at their locations with their merchant issued card.
Purchases are made with the credit card either by swiping it with the merchant or entering the details on a bill form or Internet payment processing form.
All purchases and ATM cash withdrawals are summed together and compiled on a bill. The bill is sent to the consumer for either the full payment due or the additional option of making a partial, minimum payment. Interest will be charged on any amount not paid in full and late fees are charged for late and missed payments. Interest and fees can drastically shoot your ‘owed balance’ up and eventually can negatively impact your credit score rating if you don’t proactively begin to pay your balance down on time and in full every month.