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Business » Finance in India » Credit Cards
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Credit Cards |
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these services and goods. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Usage of the term "credit card" to imply a credit card account is a metonym.
Credit cards or the plastic money has become a substitute for the cash nowadays. Whether you are in need of instant cash during emergency or its online shopping you want to do. Credit cards play an important role in our life. Even most of the business establishments honour the credit cards in lieu of cash. Different shopping malls, petrol pumps, restaurants etc. offer special discounts to different credit card holders.
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A Credit Work:
- Credit Card is an electronic payment system, where users make use of a plastic card with magnetic tape inscribed on it to make a payment for any purchase of products or services.
- By using credit cards, users make a promise to make payment for the products and services that they have bought with.
- Every credit card has its credit limit determined by the issuer of the card.
- Users can borrow money to buy products/services up to the pre-specified limit.
- Users can also withdraw cash using credit cards. However, credit cards have limits on the cash withdrawal amounts as well.
Credit Card Vs Debit Card
Credit cards are one of the most preferred modes of payments currently. Consumers can buy different products and services using these cards. The merchant will swipe your card, enter the amount, and the payment will be made. It's quite an easy method. One can also use these cards to buy products online. In that case, you need to provide the details of your credit cards to the organization that you are buying products from. Credit Cards are quite different from the debit cards, where you make payment through the card from your own savings / current account. There the cash gets transferred from your account to the merchant's account. However, it case of credit cards, cash is not transferred from your account. You get the product on credit and you make payment to the card issuer at a later point of time.
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