Every day, banks offer their customers a wide selection of banking services. The most popular among them is a credit card. What is it, why do I need a credit card and how does it work?

Credit cards are payment cards that allow the client to pay for goods and services at the expense of the bank. In the classical sense, credit cards do not provide for the presence of customer’s own money on them. When applying, the bank determines the credit limit – that is, the amount it credits to the card user.

This modern banking product makes it possible to always have additional funds in the account. You can use a credit card in various ways, for example:

do not use a loan, but keep it with you as insurance against unforeseen expenses; withdraw cash loan; make payments by credit card.

This is convenient in case of unplanned purchases. For example, you can use unexpected discounts or advantageous special offers without waiting for your salary to be transferred to a debit card. You can make purchases at any time at the expense of borrowed funds, and subsequently pay the bank – a credit card allows this.

Also, there is a very convenient option – the so-called grace period. If you pay off the debt during this period, then interest on the use of the bank’s money is not charged (this must be done before a certain date specified in the contract).

Credit card payments are the same as with other credit cards. All payments can be divided into two categories:

with the direct participation of a plastic credit card; without her participation – remote payments via the Internet.

In the first case, the card is inserted into a special reader or is located at a certain distance from it. At this time, the device:

reads from the card the necessary information; contact the bank; sends a request to write off the payment amount from the client’s credit account; receives confirmation of this operation; closes the payment procedure.

Payment by credit card via the Internet is based only on the transfer of certain information about the card to the payee. Its owner confirms its consent to the transfer by entering certain codes. The payee also makes a request to the bank to write off the funds.

We hope that this article will prove helpful when it comes to understanding how credit cards work and what they are most used for.