What is a credit card ? – We mean to help you make sense of some of the jargon you’ll come across, as we came to learn quickly how ignorance can cost one a lifetime’s savings when all it required was for some one to write about what a credit card is all about.
It’s unwise to discuss what a credit card is before we talk about what a credit line is.
Because a credit card, in a nutshell is a form of credit issued to a section of individuals or businesses, on an agreement that it would be paid back every calendar month.
Now that you are knowledgeable with what credit is, lets have a look at the different options you have to access credit lines.
What is a credit card is one of the most asked question, and this article intends to explain to you exact what is a credit card all about. To understand a credit card, you need to know that it is just one of many forms of credit which comes in many different conformations and proportions which includes mortgages, loans, overdrafts and credit cards.
Splendidly put, credit solely means any contract where a pre-agreement is put in place for you to buy goods or services now but that agreement affords you the luxury of paying later for those goods or services. When you need a helping hand financially, this article is intently put together for your introduction to the many different types and options of credit at your disposal readily available for your use.
What Is A Credit Card
A Credit card is simply another form of loan instrument,on an allocated spending ceiling mostly represented in a form of a palm sized plastic with a micro chip similar to that of your ordinary debit bank card.
The main difference between a debit card and a credit card is that, the later allows you to spend or purchase goods and services on the agreement that you pay later.
How Can One Get A Credit Card
The lender will look at what is contained in a credit history on your credit report and comparing current obligation or commitment pipeline before your credit card application is accepted– and this step will also determine what your credit line will cost you. Two crucial things happen here, if you have a low credit score recorded on your credit report you could be refused credit, or perhaps given a less attractive deal.
A credit card is provided by a credit card provider in many cases it’s usually your credit union, bank or a building society, and these credit cards have a credit ceiling allocated to each account holder, designed to allow the credit card bearer to pay for things in shops or online even when he has no money.
The second you apply for a credit card, it simply means you apply to take on loan money from the card issuer, who like i said earlier is usually a bank. Before any line of credit is approved by a panel of risk assessment managers, part of your application process gives the credit card issuer permission for them to look into your spending habits over time. This step though its fairly quick in practice, it is the most crucial assessment level where so many factors in your financial activities play a role.
You can also use credit cards for balance transfers and taking out cash which is commonly known as cash advance or cash withdrawal from any auto teller Machines where a Master Card or Visa symbol is displayed.
what is in a credit report
A credit report is a summarized synopsis of your economic activity and commitment over your life or selected time frame which forms a centerpiece of your lender’s decision to allow you have access to extra borrowing on a credit card or Mortgage.
What Is A Credit Score
A credit score is every lender’s best friend, this particular report is numerical in nature expressively detailed than a standard credit report, predominantly put together based on a level analysis of an individual’s collective credit files from numerous sources in many cases.
Take that a credit score will represent the creditworthiness of the person or business to lenders, such as banks and credit card companies who use metrics scooped from credit scores to price out or determine your interest rate while evaluating the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.
Now that you are in the know of what a credit card is (in essence a type of credit line or loan), where the credit card bearer has an authorized amount of money to spend on that particular card, borrowed from a lender, such as a credit union, building society or a bank. Lets look at other key points to is possible with a credit card in your hands.
Interest is then added to the amount you spend if you do not clear your balance at the end of each month.
Accept A Credit Card- How A Credit Card Processing Works
To accept a credit card payment used to be a tedious job back in the day, as the process of capturing the payment and details used to be done manually. Today there are four main ways to accept a credit card:
a -Accept A Credit Card On The Phone
b -Accept A Credit Card Online
c -Accept A Credit Card With A Virtual Terminal
What’s a good credit score?
Because competition is rife one lender’s “good” score may fall into another lender’s “fair” credit category. There are expansive rules of thumb that can help someone figure out whether their credit is good or not.
When servicing your loan, you would have to pay a little more than what a good credit score bearer would.
As a rule of thumb, a good credit score that falls anywhere between 700 and 850 is considered to be an excellent place to be for anyone hoping to get a good deal on a credit card or Auto loan How ever if your Credit score falls below the 700 mark, don’t panic! It is possible to still get your Credit card approved save for the interest rate.
While the industry has universal metrics for assessing and measuring risk, banks themselves have their own tools that can be deployed to interpret data differently. When trying to decide whether to grant you a loan, this means there are lots of different credit scores that lenders use.