What does Credit card mean?
A credit card is a standard-size plastic token, a magnetic stripe can be located on one of its sides, which can be ‘read’ by a machine to obtain a code. These cards have become a convenient replacement for checks and cash, and are an essential part of both internet and electronic commerce. Card holders, who typically pay an annual service fee for upholding such a card, draw on a credit limit, which has been approved by the respective credit card issuer, like a bank, service provider, such as an airline or a hotel chain, or store. A credit card is accepted by almost all merchants, and they can be read at any point of sale. The cards offer revolving lines of credit to clients; this means that they have the option to pay their balances over a period of time.
Owning a credit card gives the holder the ability to borrow funds, typically at point of sale. Every card charges interest, and is normally utilized for short term financing. The start of the interest is usually at the beginning of the month after the item or service was purchased, also borrowing limits are pre determined, and are greatly affected by the person’s credit rating. Credit card holders generally have to pay for card purchases within a month of the acquisition, in order to avoid paying interest and other penalties.
Cards normally have higher interest rates, than credit lines or consumer loans, they are around 19 percent per year. Today almost all stores enable buyers to pay for their acquisitions through credit cards. Over the years cards have gained a wide spread acceptance. This is why credit cards are one of the most popular forms of payment for services and consumer goods in the United States.