Types Of Credit Cards

A credit card emerges as the replacement for money. It certainly is employed constantly for the transaction of the goods or the services or to ensure the legality of the control, which was provided to the card acceptors or the retailers. It guarantees the legality of the checks granted to such retailers who do not deter in accepting credit cards. 

Therefore, the credit card was the instrument of the payment in the form of card which was made initially from a kind of plastic, the surface of which contained the name, the number of adhesion and supported by the signature of the credit card holder which could rather give alternative arrangements for the payment than the legal medium like paper money or coins and commercial paper like checks.

Before the credit card was employed as the instrument of payment for carrying out the transaction, Edward Bellamy wrote a book in 1887 and released it one year afterwards with the title behind which incidentally emerged as the best-sellers during that time.

Based on the methods of the payment, the credit card was classified as credit card, charge card and debit card.

Credit cards

The credit card refers to the card, which could be employed like instrument in the payment of the goods or of the services of the transaction, which compensated by making the payment immediately, or allowing the holder to do the payment by installments rising with a certain minimum amount quoted.

The number of installments was basically decided by taking into account the total invoice amount added with the monthly interest rate. The total bill of the previous month along with the interest will become the subject of the loan the next month.

The typical characteristics of the credit card are defined with the credit limit which was applicable to all the member depended on the kind of payment (gold, regular or classic), i.e. the minimal amount 10% - 20% of the pay of the invoice was being pain on the due date. Delay in the payment by the credit card (after it was due) was penalized with a great percentage of the minimum payable amount.

Charge cards

The charge card implies that the customer can employed it like a medium to pay a product of transaction but he will have to pay the whole invoice amount at the end of the month or within the next month with or without the additional costs.

Generally, the credit card did not have the provisions for any limits for usage, the payment was integral on all the transactions (the invoice) before the next invoice and employed the interest of percentage, but when the payment was not entirely done immediately, a penal rate was inducted.

Debit cards

In theory, the transaction using debit cards was just like using cash. But in this case, cash was not actually presented. Taking the cash directly from the balance of the cardholder carried out the payment. The trader is also benefited thereby because the amount is immediately paid to him.

The only criterion for this is that the debit card holder must have a debit account at the bank, because this transaction can be processed only if the debit card has enough balance to cover the cost of the transaction. Thus debiting the holder’s account and crediting the trader’s account with the amount taken carried out the payment.

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