A credit card is a small plastic card which is issued by banks or credit unions. It enables the card holder to buy products or services with the promise to pay back. The issuer of the card grants credit limit to the user depending upon the type of card applied. The credit limit depends upon one’s income.

How credit cards work
A credit card is issued by the credit provider after approving an account. This account contains all transaction history. The cardholder can make any purchase within the credit limit. In this advanced world almost all merchants now accept credit cards. The purchase is now possible through card swapping, on the telephone and also on the internet by giving your Card Security Code (CVV) which is printed on the card. Internet transaction is called Card/Cardholder Not Present transaction. The card swapping is done on Credit Card Payment Terminal or Point of Sale system. There is a magnetic strip on the back of the card which contains all the data.

You can also find the card number at the back with a security code. This three digit security code is mostly used when you need to pay for some services or products on the internet. For additional security features, the card must also be signed by the holder. It is necessary when you are paying through card at Point of Sale (POS).

Interest charges
One good thing about credit card issuers is that they don’t charge interest if you pay your balance in full each month. On the other hand if you will be unable to pay the dues in full, you will be charged interest on the entire outstanding balance. Just for example, you had $500 transactions and you paid the amount in full within the grace period, there will be no interest on it. However, if a single dollar is unpaid, you will be charged interest on $500 from the date of purchase.

Benefits to customers
Almost all banks now offer credit card so there is intense competition in the industry. The issuer offers points on each purchase for which you can demanded products of your choice (based on the points you have) by calling at their customer center. The issuer also offers gift certificates and product promotions at cheap cost.

A great thing about credit card is the auto debit feature. If you are subscribed to this, your utility bills will automatically be paid three days before the due date. Now you don’t have to stand in the long queue to deposit your utility bills; be at home, relax and free your mind.

Grace period
Grace period is the time within which a cardholder can pay his/her bill without any interest charges. Different card issuers offer different grace period usually ranges from 20 to 50 days.

Security
Security is a big concern for cardholders. If your card is stolen or lost, immediately call the issuer and block your card to safe yourself from any disaster. Internet is a place where most credit card frauds occur daily. The hackers usually break into any information provided online, so providing your credit card information on email or instant messaging is strongly prohibited.