By: CCN.com
In layman's terms, credit card is a small piece of plastic that
easily fits in your wallet and acts as a substitute for cash.
However, that's really a layman's definition. A credit card is
actually an agreement of credit between you (the person who uses
the credit card) and the financial institution (who provides you
credit or credit card services) that you will pay back the
borrowed money (the expenditure you make using your credit card)
to the financial institution in accordance with the terms and
conditions defined in the agreement. In plain words, it's an
agreement between a lender and borrower where the lender is the
credit card company and the borrower is you.
The application for credit card is actually the service
agreement and has all the terms and conditions that applies to
your credit card. You should always read these terms and
conditions carefully, especially the ones related to fees,
interest rates or any kind of monetary charges. Generally, the
credit card companies charge a small annual fee to provide this
service to you.
The general eligibility criterion for acquiring a credit card is
pretty simple - you must be over 18 years and have a regular
source of income. However, the credit card company will check
your credit history and ask you to provide references etc before
they qualify you as eligible for getting a credit card from
them. Credit history is maintained by all the financial
institutions who give credit and you might already be using the
services of one or more financial institution in the form of a
mortgage or a car loan. Credit history is nothing but your
payback history of any credit you have taken from any financial
institution.
Credit cards have undergone a lot of transformation since their
advent. Most credit card companies provide a range of products
(or credit cards) to cater to the needs of various sections of
the society and to attract more and more customers. These
include co-branded cards which are actually collaborations
between a credit card company and a business organization (e.g.
a departmental store). Such co-branded cards provide discounts
to the consumer whenever he/she pays the business organization
using that particular credit card. One such example of a
co-branded card is the American Express Delta Sky Miles Card.
There are other cards which are in fact floated by big business
chains or department stores themselves e.g. JCPenny or in fact
any big business. Such cards offer special benefits to their
customers. Thus there are all sorts of credit cards available in
the market and you really need to evaluate your needs before you
arrive at the card which suits you the best.
However, all the credit cards or credit card products can really
be classified into 2 types of credit accounts:
Revolving account: As the name suggests, in this type of account
the credit revolves every month i.e. you have the option to make
either a full payment every month or a partial one. Of course,
if you make no payment then besides the amount you owe, you also
have to pay a penalty fees and interest. Revolving accounts are
the most popular ones and the department-store credit cards or
the ones issued to individuals initially belong to this
category. When one refers to a credit card in general, one is
referring to a revolving credit type of account.
Charge type: Here, the agreement is that the consumer will pay
back full amount owed every month. So no interest charges are
involved here unless you default.
This should give you a fair idea about what we mean by a credit
card. Thus begins your journey on the fascinating world of
credit cards.
About the author:
About the Author
Rudy Hadisentosa: CCN.com is a free online
credit cards review and
application website. We offer credit cards selection from
visa,master cards, discover, american express and many others.
We have quite some categories and hundreds of credit cards
selection to fit your need.
Apply
for a credit card at CCN.com.
