What are credit cards and how do they work.
Credit Cards are plastic cards. You get five types of financial plastic cards. The credit card is probably the most famous as it allows the owner to buy things on credit and either pay the balance left on the card at the end of the month, pay the minimum payment at the end of the month or some amount in between.
If the user does not pay the entire balance off at the end of the month it is carried onto the next month and the owner is charged interest by the card issuer.
Credit cards have 3 main groups of people involved the consumer, the bank and the system. The system is Mastercard, Visa or American Express. These systems make it possible for shops and companies to accept the card as there are only a handful of them a company may except all the major credit cards through half a dozen or less systems. The system process the credit card number and what has been purchased, when, from what shop and for how much. They then pass this information onto the bank for a small charge per transaction.
The user will need to sign a credit card receipt or type in a pin number to confirm that they agree to the transaction and that they are the authorised user of that card.
A magnetic strip on the back of the card holds the relevant information regarding this credit card account and when swiped through a PDQ machine this read this information.
The bank is the people who actually lend you the money. Debit Cards and Charge Cards work in similar way regarding the actual technicalities of it. The difference being is that debit cards take the money straight from your account and charge cards have to be paid at the end of the month.
Credit cards usually have an agreed limit on how much you can owe.