What is a Credit Card?
The name credit card was coined as it denotes the small card made of plastic that is used by the customers of credit card. Unlike debit cards, it does not allow the users to use the money from their own account but in contrast it lets the users to borrow money from the specific credit card company which could be repaid in form of interests or in other ways every month. The dimensions and shape of all credit cards would be the same as it is specified by ISO. There are numerous credit card companies in today’s market at customer’s disposal according to their needs.
History of Credit Cards
The history of credit cards dates back to 1920. It was used in United States in automobile business to sell fuel. However the idea was originally invented by author Bellamy. He has used this system in his novels “looking backward” and “equality”.
In the year 1938 number of firms started adopting the method of using credit cards for their transactions and purchases. This way the credit card system became quite popular.
During the early 90’s controversies have developed regarding usage of credit cards by youngsters soars their debt level.
Apart from all these issues because of its functionality and other features credit card system remains unaffected.
How does it Work?
The credit card service provider issues the user a card and each card has a particular cash limit till which the user can make purchases. By signing a receipt while making a purchase, the card holder gives his approval to pay back the service provider. These days a lot of merchants agree to continue business by means of verbal authorization, either through telephone or internet. This method is termed as no credit card present system.
Concept of Grace Periods
It is the time limit within which the card holder has to pay the balance to prevent interest being charged to the balance. For each company the grace period varies, it might also vary according to the type of credit card the customer possesses.
Advantages of Credit Card
The user does not have to carry a huge amount of cash every where he travels. Credit cards also come handy in case of emergencies. In today’s busy world where people have no time even to have their breakfast patiently, such systems are very useful as they keep in pace with technological innovations.