Fri 2 May 2008
Credit cards are cards issued by banks and other financial institutions to make payments. The one who issues the card is the card issuer and the one who receives the card is the cardholder
A credit looks pretty simple - it’s just a small plastic card with a black magnetic strip at the back. You use it to make payments while shopping and in emergency situations. They can be used both within the country and also outside the country.
When you make a payment you sign a purchase receipt and your signature is a proof of your consent to repay that money to the creditor i.e., the card issuer.
You need to apply to the card issuer (banks or financial institutions) for the credit card. A credit rating check is then done by the issuer to ensure that the individual makes monthly payments and so will not end up as a default cardholder. All credit cards have a credit limit, which is a predetermined amount by the lender.
A credit card is different from a debit card because when you use a debit card to make payment you use your own money, whereas when you use credit card to make payment you are using the lender’s money to pay.
You will then have to pay the total credit amount to the lender through regular monthly payments. If you fail to make your monthly payment then an interest fee is charged on the balance amount.