What is meant by Credit card?

World is growing fast with increasing use of digital payment methods, which includes online payments, digital wallets and card payments. This topic is all about Credit Cards, which is one type of card payment method. Credit card simply means a card used to pay money to another party by taking credit from bank. In return, cardholder will repay the principal amount of credit plus interest or any charges included. The credit card companies also grant the Line of credit(LOC) to the cardholders in order to borrow money in the form of cash advance.

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The interest charged on the unpaid amount usually begin one month after making purchase. Usually the rate of interest charged is also higher than any other form of credits taken from banks. In today’s time, mostly business allows their customers for payment of products and services through credit cards.

Types of Credit cards:

Banks, credit unions and institutions issue most major credit cards. The major companies that issue credit cards are Visa, Mastercard, Discover, Rupay, etc. There are basically two types of Credit Cards, i.e., Secured Credit Cards and Unsecured Credit Cards.

Secured Credit Cards are a type of Credit Card where cardholder secures a card with security deposit and have limited credit limit. It usually charge annual membership fees. Those with poor credit history will use secured credit cards. After the careful use, the issuer will refund the security deposit. These cards are also known as prepaid or semi-secured credit cards.

On the other hand, Unsecured Credit Cards do not require any collateral security. These cards have higher line of credit offerings and lower rate of interest on unpaid credit. These cards are most common type of credit cards in the world.

So what are your views about this topic? Which type of Credit card is most suitable as per you? Must comment in the section below and don’t forget to subscribe this site! You should not miss new updates of this site.


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