We here on the Loan Portal blog understand that you need to know everything about credit card and last week in an article we talked about “security when using credit card” which helped us to conquer a good amount of new visitors who learned about basic care and essential with your credit cards. This week’s special covers everything you need to know about how credit cards work that starts with this article.
We will gradually learn about the purpose of having and using a credit card as a powerful financial tool – which, while offering great room for financial maneuvering, should be domesticated to avoid over-reliance on its use and debt following use unnoticed of this wonderful plastic.
All About Credit Card?
Credit cards play an integral part in every lifestyle of people in the last few decades after they invented it. It provides financial convenience and, at times, is also an emblem of social status because of its various types of classifications.
However, you need to intelligently use any credit card line you have access to. There is no room for any exaggerated consumption patterns, because every time you slide, your score and credit history will report you of your error, the SPC and Serasa are ready waiting for the administrator’s notification to deny it.
A bad credit score, or bad name on the square (CPF negative) will prevent you from getting credit approval in the future, not just with credit cards, personal loans, financing and loans as well. For those who can not live without the credit of a card, we think we could mention different facets of the world’s most popular plastic money. Let’s start?
More details about credit card
Just like online personal credit, a credit card is an instrument of an unsecured loan. They fall into the category of unsecured credit or (unsecured loan) because of not requiring any collateral or mortgage to approve them. You can have a credit card based on your monthly income and good or excellent credit score, meaning your income and your good credit history play an important role at the time of your credit card application for it to be approved.
Physically, a credit card is a rectangular piece of plastic that is equipped with a magnetic strip. This magnetic strip, on the back of the card, holds account information registered with the company issuing the card. Your name and credit card number, on the front, act as an identifier.
Digital credit card recognition system
A digital system on the card allows the magnetic strip to identify your credit account and process the payment at the authorized terminals. Card details also help you pay for purchases online at national and international websites. As mentioned earlier, a credit card is a type of credit that does not require collateral from the cardholder.
Your history, credit score and monthly income determine whether you are worthy to avail a new credit card or not. Upon approval of a revolving account is created by the company issuing the card, granting you a line of credit.
What is protection on your card from theft or fraud?
When you receive this line of credit, a credit card limit is created, which is the limit set by the card management company to be used as you want and at any time you want. Subsequently, you can pay the invoice with the amount spent in the previous month, during a fixed period does not pay interest, after, paid the invoice plus interest, arrears, charges and fines. More about credit card: It contains an RFID chip that protects your card against identity theft.
When you use your credit card to make payments, the merchant’s bank validates your credit account and asks the bank that issued your card to have the payment processed. If all goes well, your purchase is added to your credit account.
How the administrators make money with a card
Merchants generally pay a fee to credit card companies to be able to accept the various types of credit cards; and the credit issuing companies (or banks and financiers, etc.) receive a merchant fee as revenue. All such expenses and purchases are recorded by the issuing authority of the card and sent to you in the form of an invoice or ticket to be paid each month on its due date.
What is the payment cycle or grace period?
A billing cycle is a set period, within which all purchases and payments are accounted for and charged. It is usually set for 30 days. A grace period of 15-25 days is added to the total number of days in the billing cycle.
If payment of the balance of the previous month is made before the end of the grace period, no interest has accrued to the cardholder. In case the cardholder does not pay the full balance until the due date, a minimum balance must be paid to the credit card company. This debit balance is generally plus additional interest.