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Credit Cards

Credit cards are cards that are provided by banks or financial institutions and such cards permit respective cardholders to borrow money. Such burrowed funds can be used to pay for different goods and services. The issuance of a credit card comes with the agreement that the original amount of burrowed funds plus any pre-determined charges will be repaid by the cardholder. The credit card issuing company may also offer the cardholder an LOC (line of credit), which permits the cardholder to borrow funds in the form of a “cash” advance. The limits of borrowing are pre-set by the credit card provider and it is based on the credit rating of the person (cardholder).

Credit Cards in detail

Credit cards come with higher APRs (annual percentage rates) as opposed to other types of lines of credit or consumer loans. The issuer will charge the interest on any borrowed amount, if it remains unpaid, generally one month after the funds have been burrowed. Credit cards remain one of the most popular methods of payment for different services and goods, and almost all businesses permit the payment for services and goods via credit cards.

Most of the major, well-known credit cards are issued by credit unions, banks, or other financial companies. The main affiliated companies are MasterCard, Visa, American Express, and Discover. Several credit cards offer incentives which differentiate one card from another and thus attract new customers. Most of them come with rewards that are aimed towards particular interests like hotel rooms, airline miles, cash back, and gift certificates of popular retailers.

A store may also provide its own branded form of the main credit cards. Such cards are intended for the sole purpose of promoting customer loyalty. It is generally easier to meet the criteria for a store-branded credit card as opposed to a major credit card. It may however be noted that several store credit cards restrict the credit limit available for purchases from the retailer that issues the card. Additionally, retailers may also provide holders of their store credit cards with special discounts, special sales, or notifications of different promotions.

Secured credit cards are credit cards that a cardholder can avail of after posting a security deposit. The line of credit on such cards is limited and there may also be an annual membership fee. Often, the security deposit is equal to the total LOC available on the card. Such cards are often used by those with poor or limited credit history. After the card has been used responsibly and repeatedly by the holder, the deposit may be refunded by the issuer. Such cards are also referred to as semi-secured credit cards and prepaid credit cards.

A prepaid debit card is also like a secured credit card. The main difference is that the money that is available for use with a prepaid debit card is limited to the funds present in the linked bank account or to the amount of money deposited by you or some other individual into the debit card account.