credit card ,every thing about credit card here
A credit card is a new paying method to buy through internet and
there is more types like master card, visa card and debit card the credit card
may simply serve as a form of revolving credit, or it may become a complicated
financial instrument with multiple balance segments each at a different interest
rate, possibly with a single umbrella credit limit, or possibly with separate
credit limits applicable to the various balance segments. Usually this
compartmentalization is the result of special incentive offers from the issuing
bank, either to incent balance transfers from cards of other issuers, or to
incent more spending on the part of the customer. In the event that several
interest rates apply to various balance segments, payment allocation is
generally at the discretion of the issuing bank, and payments will therefore
usually be allocated towards the lowest rate balances until paid in full before
any money is paid towards higher rate balances. Interest rates can vary
considerably from card to card, and the interest rate on a particular card may
jump dramatically if the card user is late with a payment on that card or any
other credit instrument. As the rates and terms vary, services have been set up
allowing users to calculate savings available by switching cards, which can be
considerable if there is a large outstanding balance
A user is issued a credit card after an account has been
approved by the credit provider (often a general bank, but sometimes a captive
bank created to issue a particular brand of credit card, such as Wells Fargo or
American Express Centurion Bank), with which the user will be able to make
purchases from merchants accepting that credit card up to a preestablished
credit limit.
When a purchase is made, the credit card user agrees to pay the card issuer.
Originally the user would indicate their consent to pay, by signing a receipt
with a record of the card details and indicating the amount to be paid, but many
merchants now accept verbal authorizations via telephone and electronic
authorization using the Internet.
Electronic verification systems allow merchants (using a strip of magnetized
material on the card holding information in a similar manner to magnetic tape or
a floppy disk) to verify that the card is valid and the credit card customer has
sufficient credit to cover the purchase in a few seconds, allowing the
verification to happen at time of purchase. Other variations of verification
systems are used by eCommerce merchants to determine if the user's account is
valid and able to accept the charge.
Each month, the credit card user is sent a statement indicating the purchases
undertaken with the card, and the total amount owed. After receiving the
statement, the cardholder may dispute any charges that he or she thinks are
incorrect (see Fair Credit Billing Act). Otherwise, the cardholder must pay a
defined minimum proportion of the bill by a due date, or may choose to pay a
higher amount up to the entire amount owed. The credit provider charges interest
on the amount owed (typically at a much higher rate than most other forms of
debt). Some financial institutions can arrange for automatic payments to be
deducted from the user's accounts.
Credit card issuers usually waive interest charges if the balance is paid in
full each month, but typically will charge full interest on the entire
outstanding balance from the date of each purchase if the total balance is not
paid.
For example, if a user had a $1,000 outstanding balance and pays it in full,
there would be no interest charged. If, however, even $1.00 of the total balance
remained unpaid, interest would be charged on the full $1,000 from the date of
purchase until the payment is received. The precise manner in which interest is
charged is usually detailed in a cardholder agreement which may be summarized on
the back of the monthly statement. (See The TD Gold Travel Visa Cardholder
Agreement Retrieved January 3, 2006)
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Because of intense competition in the credit card industry, credit providers
often offer incentives such as frequent flier points, gift certificates, or cash
back (typically 1 percent) to try to attract customers to their program.
Low interest credit cards or even 0% interest credit cards are available. The
only downside to consumers is that the period of low interest credit cards is
limited to a fixed term, usually between 6 and 12 months after which a higher
rate is charged. However, services are available which alert credit card holders
when their low interest period is due to expire. Most such services charge a
monthly or annual fee.
Grace period
A credit card's grace period is the time the customer has to pay the balance,
before interest is charged to the balance. Grace periods vary, but usually range
from 10 - 25 days depending on the type of credit card and the issuing bank.
