In layman's terms, credit card is a small piece of plastic that easily suits in your wallet and Acts as a replacement for cash. However, that's really a layman's definition. A credit card is actually an understanding of credit between you (the individual who utilizes the credit card) and the financial establishment (who supplies you credit or that you will pay back the borrowed money (the outgo you do using your credit card) to the financial establishment in conformity with the terms and statuses defined in the agreement. In apparent words, it's an understanding 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 understanding and have all the terms and statuses that uses to your credit card. You should always read these terms and statuses carefully, especially the 1s related to fees, interest rates or any sort of pecuniary charges. Generally, the credit card companies charge a small annual fee to supply this service to you.
The general eligibility standard for acquiring a credit card is pretty simple - you must be over 18 old age and have got a regular beginning of income. However, the credit card company will check your credit history and inquire you to supply mentions etc before they measure up you as eligible for getting a credit card from them. Credit history is maintained by all the financial establishments who give credit and you might already be using the services of one or more than financial establishment in the word form of a mortgage or a car loan. Credit history is nil but your payback history of any credit you have got got taken from any financial institution.
Credit cards have undergone a batch of transformation since their advent. Most credit card companies supply a range of merchandises (or credit cards) to provide to the needs of assorted subdivisions of the society and to attract more than than and more customers. These include co-branded cards which are actually coactions between A credit card company and a business organisation (e.g. a departmental store). Such co-branded cards supply price reductions to the consumer whenever he/she pays the business organisation using that peculiar credit card. One such as illustration of a co-branded card is the American Express Delta Sky Miles Card. There are other cards which are in fact floated by large business iron or section supplies themselves e.g. JCPenny or in fact any large business. Such cards offer particular benefits to their customers. Thus there are all kinds of credit cards available in the market and you really need to measure your needs before you get at the card which lawsuits you the best.
However, all the credit cards or credit card merchandises can really be classified into 2 types of credit accounts:
1. Revolving account: As the name suggests, in this type of account the credit goes around every calendar calendar month i.e. you have got the option to do either a full payment every month or a partial one. Of course, if you do no payment then besides the amount you owe, you also have got to pay a punishment fees and interest. Revolving accounts are the most popular 1s and the department-store credit cards or the 1s issued to people initially belong to this category. When one mentions to a credit card in general, one is referring to a rotating credit type of account.
2. Charge type: Here, the understanding 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 just thought about what we intend by a credit card. Thus gets your journeying on the absorbing human race of credit cards.