Most Commented

Resources

Subscribe

  • Subscribe

Credit Cards - What Are They?

Posted by Admin | October 24, 2008 .

credit cardCredit cards are just a piece of small plastic that will fit snuggly in your wallet. But be careful, these pieces of plastic are very powerful. They can be regarded as a compressed form of money. Credit cards could be worth thousands of dollars or even a hundred thousand.

Simply put, a credit card is a system that allows people to borrow money from a bank or a financial institution on the fly and use it to pay for any merchandise or service.

How to apply for a credit card?

  • You fill out an application form. It will serve as the legal and binding agreement (once approved) between the credit card issuer and you (the consumer).
  • The Credit card issuer will then review your application, determine how much credit they will give you, and send you a small piece of plastic (the credit card), which you can then use to buy stuff or pay for services.

How Credit cards work?

Photobucket
Credit cards contain an electronically coded magnetic strip, found at the back of the card, which is used for authorizing payments whenever a person uses his credit card. The card will swiped in a machine, or the card number entered on a merchant’s website, which will communicate with your bank and determine if you still have credit available.

Credit cards are great for it allows you to go shopping even without carrying cash. But be careful, remember that you will still have to pay for the amount you borrowed whenever it is due. You are in essence borrowing money whenever you use a credit card, only in a cool way.

Major Credit Card Organizations

  • Diners Club
  • JCB
  • American Express
  • Citi
  • Discover
  • Mastercard
  • Visa

Mastercard and Visa is probably the most popular ones. They usually tie-up with banks that’s why you apply for a credit card in banks. And the name now becomes, HSBS Visa, Hsbs Mastercard, etc…

Paying your Credit card dues

You will be recieving a credit card bill every month and you can either pay them in full or just pay the minimum amount due. There are certain interest charges though whenever you pay in parts, so pay the full amount so you can avoid paying extra. If you fail to pay, you will end paying for late fees as well.

Photobucket

Again, credit cards are a great resource and they can help you a lot especially during emergencies. But you have to be wise in using them to avoid the fate of many who succumbed to a lot of debt due to credit card mismanagement.

Posted under All About Credit Cards | Like this article? Subscribe to our RSS feed

Leave a Comment

If you would like to make a comment, please fill out the form below.

You must be logged in to post a comment.