Creditcards

Here is an interesting question for you- what is a credit card? What is a credit card really all about? To learn that, keep reading …

A credit card is a plastic card that is similar in nature to a bank debit card or a charge card. It has a magnetic strip on it that contains all of the important information regarding the card, such as the limit on the card and the balance on it. Most people carry their credit card or cards in their wallet with other important documents such as their driver’s license and other forms of identification.

Most credit cards are issued by major banks or department stores. To become credit cards they must go through an elaborate and sophisticated process. Being granted the privilege of owning a credit card comes with its benefits but also its share of responsibilities. In answer to what is a credit card one can also explore what it is not. Having a credit card is not a right but as previously mentioned, it is a privilege. Credit is something that must be handled with care. Once you destroy your use of credit, whether through improper management or abuse, the road to improve it is a frustrating and time consuming one.

The holder of the credit card has the authorization to buy goods and services, both online and off, up to their credit limit. This is a predetermined amount of money that is the cut off amount for how much the valid card holder is allowed to spend. The credit card issuer (which is to say the company or bank) will decide what your credit limit is to be based on information you provide on the application such as your income, other debts you have, your credit rating, and how secure your employment is.

Banking institutions do not all share the same criteria regarding their policies on credit card applications. Your credit history and credit rating will help determine which type of card you will be approved for. As an example, a regular credit card is known as an unsecured card and is issued to those with good credit. On the other hand, for those with poor or damaged credit or those who have recently come out of a bankruptcy, a secured credit card might be their best (and often, only) option. A secured credit card is one where the individual must put down their own money as collateral and they then borrow against the credit limit that is determined by that amount.

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