With modernity and global innovation, many payment methods have been created that have come to change the lives of customers and users. When a person needs to make a purchase or pay an invoice, the credit card has become one of the favorite payment methods because it can offer you a lot of comfort and also the possibility of saving money , when it returns part of what you spend in rewards.
A credit is a document plastic which is issued by a bank with which you can make on behalf of a specific person payments and make purchases without having to carry money in cash to then make future payments .
- Credit card features
- What is it for
- How a credit card works
- What technologies do you use
- What is the cvv2 code of a credit card
- Requirements to get a credit card
- How it differs from a debit card
Credit card features
Among the main characteristics of credit cards we can find the following:
- They are made of resistant plastic material .
- They have a limit of money that can be used by the creditor of the card.
- It can be seen as a type of monetary loan that must then be paid in installments or in full if the client so wishes.
- All cards have a cost , interest rate , insurance, and fees .
- The annual effective interest rate is the amount or percentage of interest to be charged to the customer by the bank.
- To obtain one, you must meet certain minimum requirements .
- The cards can work nationally and internationally .
- The fees to cancel the cards can be monthly, every three months or in a single charge per year.
- Many cards offer a series of promotions to their customers that include discounts and points to be used in stores.
Credit cards originated in the twentieth century when the company known as Western Union , in 1914 , developed a card for its most important customers through which they had a type of credit line that did not generate charges.
After its invention, at the end of the 1940s, a large part of the banks and financial institutions began to develop their credit cards. At that time, they only worked to make purchases within the same institutions and to make purchases easier. With the passage of time, the first credit card that has been maintained until today was created. A card that offered the payment of products and services in different types of establishments.
In 1949 , thanks to Frank X. McNamara , Ralph Sneider and Alfred Bloomingdale , who were dining in a restaurant, they thought of how to create a card that was based on the use of a secure and personal system that would allow the customers being able to use it as a means of payment in different places with the same card, this is how a credit card as such was born for the first time, the Dinnner’s Club .
Initially, not many businesses joined the idea and by 1950 , there were already around 200 people as clients but by the end of the same year, the number of users increased to 20,000 users and with it, the number of businesses who decided to participate in the idea increased considerably. Seeing the success of the business, banks then decided to issue credit cards and in 1958 , the system was raised even more, when the American Express card was created.
What is it for
The credit card is used to make payments in different commercial establishments , as it is a means of financing that can be used at the precise moment of acquiring a specific product. With it, it is possible to make payments in all the establishments that are affiliated with it, for example, pharmacies, supermarkets, private hospitals, department stores, fuel and even to make payments or purchases online .
How a credit card works
Credit cards start working when you make a purchase online or in stores or when you stop paying bills . As soon as the card is passed through the device that reads the data , it is sent to the merchant’s bank . The bank receives authorization from the credit card network to later process the transaction. It is important that the card issuer verify the details so that they can later approve or reject the transaction.
When the transaction is approved , the payment will be made to the merchant and the credit that is available on your card is reduced based on the amount of the transaction. When the client reaches the end of their billing cycle , which is established by the card issuing entity , the issuer will send a statement or account statement that includes all the transactions made during the month, their previous balance. and the new one , the minimum payment to be made and the . due date
What technologies do you use
Over time, credit cards have been equipped with various types of technologies with the main objective of increasing security for customers. These types of technologies include the following:
- Magnetic bands : it is a type of magnetized metal band in which the necessary information can be found so that a payment transaction can be carried out which is encoded within the band.
- Chip cards : the chip has been implemented with the main objective of avoiding fraud and are known as smart cards . They have several microchips which contain account information and identification data . To use it, consumers must insert the card into a terminal which can read all the data on the card and then enter a PIN to unlock the chip.
- Contactless : these cards are more technological and to use them you only have to swipe the card over a reader which is connected to the cash register . They have a micro radio transmitter with which the exchange of information can be carried out.
There are several types of credit card which are:
- Points card : these offer additional benefits through a points program.
- Virtual credit card : they must be loaded with money to later make purchases. They do not have a physical card but the purchase process is done online.
- Classic card : it is the most used and its main brands are VISA, MasterCard and American Express. They give the option of returning the money used in two months and if not, the client must start paying interest on the credit.
- Gold and platinum : they work the same way as classic cards but have a much larger line of credit.
- Revolving : these credit cards cause payments to be deferred automatically, with this, the holder can pay a fixed monthly amount without having to pay everything in a single moment.
- Commercial : they are issued by specific commercial establishments and not by banking entities. They are known as customer or purchase cards and with them can be purchased at the establishment and charged to the customer’s bank account using a predetermined term, generally on a monthly basis.
- Business cards : they are used to be able to face and cover expenses related to companies such as travel, means of transport and representation of the firm.
What is the cvv2 code of a credit card
The cvv2 code or Card Verification Value 2 is a type of security measure that gives the customer greater confidence as it is an effective means of preventing fraud. It is a number that is used when a transaction must be made but the card is not physically present, for example, when a purchase needs to be made online . It is printed on the back of the card and has the advantage of never being stored in the places where purchases are made.
Requirements to get a credit card
In order to obtain a credit card, several steps must be followed and a series of important requirements must be met. Among them we find the following:
- The person must be of legal age .
- All the corresponding information must be collected and delivered, including identification document, salary receipts or photocopies of income statements.
- It is necessary to deliver an income certification in case you do not work for the State, in this case you must present a proof of work .
- Have an excellent credit history .
How it differs from a debit card
The main difference is based on the fact that the debit card is conditional on the amount of money that the client has in his account , in case these are not enough , the purchases cannot be made and, when a transaction is made with the card, the amount is deducted so immediate account. On the other hand, the credit card is a type of monetary loan and the client does not need to have money saved on the card, in this case, the amount that has been spent must be canceled, through installments which generates a certain degree ofinterest .
Credit cards are important as they represent a means of payment for many bank customers. It is a means by which cardholders do not need to go to the bank to request a credit , which in general tends to be more tedious, and they have the option of a card that works in the same way. In addition, thanks to it, users can purchase products and even important medical services which they can pay with or without interest while giving them the possibility of receiving what they need at the right time.