What is a Credit Card and How Does it Work

 

What is Credit card 

Credit cards are one of the most common ways people borrow money. 

They can be helpful for people who need money for a short period of time, or for people who want to get a loan. 

Some people think that credit cards are a bad idea, because they can help you build up your credit score. But, credit cards can also help you get a loan faster, and can help you get a higher interest rate on a loan.

Types of Credit Cards

Most major credit cards—which include Visa, Mastercard, Discover, and American Express—are issued by banks, credit unions, or other financial institutions. Many credit cards attract customers by offering incentives such as airline miles, hotel room rentals, gift certificates to major retailers, and cash back on purchases. These types of credit cards are generally referred to as rewards credit cards.

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One-Time Bonuses

There's nothing like an initial bonus opportunity when getting a new credit card. Often times, applicants with good credit or excellent credit can get approved for credit cards that offer bonuses worth $150 or more 

Cash Back

The cash-back credit card was first popularized in the United States by Discover, and the idea was simple: Use the card and get 1% of your purchases rebated in the form of cash back. Today, the concept has grown and matured.

Rewards Points

Credit cards are set up to allow cardholders to earn one or more points per dollar in spending. Many reward credit cards provide bonus points for certain categories of spending like restaurants, groceries or gasoline. 

Insurance

Most credit cards automatically come with a number of consumer protections that people don't even realize they have, such as rental car insurance (though often secondary to your personal auto insurance), travel insurance, and product warranties that may exceed the manufacturer's warranty.

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How use Credit Cards

Credit cards are easy to use. If you go into a store, for instance, you may be prompted to insert your card in a chip reader or swipe it at the checkout. You can also add your card to digital wallet apps for contactless payments in stores. When shopping online, using your credit card is a matter of entering your card information, including:

Your card number; Example 0000 0000 0000 0000

The expiration date example 09/23

Your card's CVV security code example 000

How Credit Card Works

Credit cards can be used to make purchases online or in stores and pay bills. When you use a credit card for either one, your card details are sent to the merchant's bank. The bank then gets authorization from the credit card network to process the transaction. Your card issuer then has to verify your information and either approve or decline the transaction. 

If the transaction is approved, the payment is made to the merchant and your card's available credit is reduced by the transaction amount. At the end of your billing cycle, your card issuer will send you a statement showing all the transactions for that month, your previous balance and new balance, your minimum payment due and your due date. 

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Where Credit Card Can Be Used

Credit card u can use to pay bill online to buy somethings on online store Credit cards is secure 100.

Most of  people using credit card to make purchases online and other services  whithout any problem 

Which Credit Card is Best

1. HDFC's MoneyBack credit card - best for beginners

2.HDFC Diners Club Black card - best premium credit card

3. IndusInd Bank Pioneer Legacy card - best zero annual fee credit card

4. SBI Card PRIME - best lifestyle credit card

5. American Express Platinum Travel credit card - best credit card for travel

6. Standard Chartered DigiSmart - best credit card for online shopping

7. SBI Student Plus Advantage credit card - best for students

Which Credit Card is Best for Students

Discover it® Student Cash Back

5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.

1% cash back on all other purchases - automatically

Discover it® Student chrome

2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter.

1% cash back on all other purchases - automatically.

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Capital One SavorOne Student Cash Rewards Credit Card

3% Cash Back on dining and entertainment.

3% Cash Back on popular streaming services.

3% Cash Back at grocery stores.

1% Cash Back on all other purchases.

8% cash back on Capital One Entertainment purchases and tickets at Vivid Seats.

Bank of America® Travel Rewards Credit Card for Students

1.5X Points per dollar spent on all purchases