What You Need to Know About Credit Cards

A bank may fund someone else’s purchase through a credit card. Credit cards are plastic cards that has a magnetic strip or chip that contains the credit card holder’s information. This information is being used by the credit card issuer that grants the holder a maximum credit which he can use to purchase and pay for products or services.

Credit cards are effective tools that have been around for decades. It is being used by individual people and by corporations to purchase the goods and services they need.

Credit Cards and Their History

The first formal credit card was introduced by Bank of America as Bank Americard in 1958. Bank Americard was introduced in Fresno, California where 45% of its population used the bank. Bank of America sent out the cards to thousands of its clients which allowed the bank to convince merchants to take part into the program as accepting the cards as payments. With its success, the bank licensed the use of the credit card to other banks where licensees united to form a common brand in 1976 known as Visa.

In 1966, a group of banks who challenged to compete with Bank Americard established Master Charge which eventually grew to be a brand of its own, now known as Mastercard.

Credit Cards and Their Variety

Visa and Mastercard, the two largest credit card companies have licenses all over the world for the use of their network with other banks. Each bank has then came up with a way to market their cards through promotional offers and features that come with each card. As there are a lot of different types of cards to choose from, it is very important that reviewing what the card and the bank can offer.

Most credit cards are unsecured. This means that credit line is often based on your credit history, credit score, and capacity to pay. Other credit cards can be in the form of secured credit where the credit line is backed up by funds that you put in a savings or checking account that the creditor may claim upon failure to pay the outstanding balance due.