Saturday, October 9, 2010

What is a Credit Card?

A credit card is a plastic card with a magnetic strip, that establishes that the person to whom it was issued may charge bills for which the person undertakes to pay at a later time, including interest, depending on when the payment is made. Credit card are laws that set out the responsibilities of consumers and the obligations of those who offer credit.

Different types of Credit Cards:
  • Secured Credit Card
  • Unsecured Credit Card

Secured Credit card: Individual banking and finance institutions have their own policies when it comes to credit card applications. Customers may seek either a secured credit card, depending on the individual repayment histories(credit score). A secured credit card requires the applicant to deposit an amount of cash equivalent to the credit limit desired. A deposit of 400 USD for example, should be enough to be issued a credit card with a 400 USD spending limit.

Unsecured Credit Card: An unsecured credit card, on the other hand, is generally issued to those who have a good credit history and have demostrated an ability to repay the accrued debt on time. Credit limits are determined on an individual basis, and may be raised or lowered based on performance.

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