As the name suggests “credit card” is a basically a way which allows a person to get a line of credit for payment to a merchant or cash advance to the user. A credit card is been recognize as a small plastic card issued to the user, through which the holder can buy goods and services based oh his promise to pay back. Some of the credit card information which a card holder should always keep in mind is that while making payment from your credit card, sign the receipt with a record of the card details and indicated amount by entering your personal identification number (PIN). In UK ne of the new system used which is electronic authorization using internet known as ‘card/cardholder not present’ (CNP) transaction. The verification in here is made by credit card payment terminal or point of sale (POS) system with a communication link with the merchant. It is implemented as an EMV card. For additional verification, merchant can also ask for security code, date of expiry and billing address.
If your payment on a credit card is due then, the company will charges you with some interest at the time of due payment. Credit card issuers usually ignore interest charges if the balance is paid in full each month.
The general calculation formula used by many financial institutions to determine the amount of interest charged is APR/100 x ADB/365 x number of days revolved. The interest rate can vary from card to card, and it’s the same with the interest rate which can jump if the card user makes a late payment or any other credit instrument or even if the bank decides to raise its revenue.
While dealing in credit cards you should have the full knowledge of credit card knowledge and the parties which are been involved in it such as the card-issuing bank, the merchant who is accepting credit card payment, the acquiring bank who is accepting the payment, independent sales organization, merchant account, credit card association, transaction network and finally the affinity partner. The flow of information and money between them is known as interchange, and consist of the following steps:
- Authorization: An authorization will generate, after your payment, an approval code that the merchant stores with the transaction.
- Batching: after authorization, the transactions are stored in “batches” and typically done once per day.
- Clearing and Settlement: The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credits the acquirer. Essentially, the issuer pays the acquirer for the transaction.
- Funding: once the amount is been paid to the acquirer than he pays to the merchant.
- Chargebacks: it’s an event when merchants amount is been held due to disputes related to transactions.
A credit card helps its customer in many ways. They come in many forms which makes it easy for the holder to use. Some of the credit cards are as follows
- Standard Credit Cards: this credit card helps you to have a revolving balance up to a certain credit limit. A finance charge is applied t outstanding balance.
- Premium Credit Cards: this credit card offers incentives and benefits beyond that of a regular credit card. These cards can have higher fees and minimum income and credit score requirements.
- Charge cards: they don’t have a credit limit. The balance on this card must be paid in full at the end of each month.
- Limited Purpose Cards: limited credit cards help us to make payments in some specific locations.
- Secured Credit Cards: these are an option for those with no credit history or with unstable credit. It has a revolving balance depending on the purchase made.
- Prepaid Credit Cards: they require the holder to load money as soon the amount in it is been used. The credit limit does not renew until the owner load more money. They are
- Business Credit Cards: business credit cards help especially in business purposes.
This will defiantly help you improve your credit card information and will give you a picture to opt for the right credit card.