Tips And Ideas For Deals Credit Card

Introduction

A credit card is a financial instrument offered by banks or other merchants to individuals or companies in order to cover their cash needs in exchange for a signed promise to pay the loan back together with an interest and a fee for the services provided.

Step 1

The business of credit cards deals increases every day because it offers a secure method of payment to its clients and it is a good source of liquidity for small business entrepreneurs who are often limited by their customer’s payments. From a bank’s point of view, the business of credit card deals are a reliable source of income because there are a lot of management fees, interest rates and other charges they receive in exchange for the services offered. Moreover, short term loans which the holders of the credit card deals access when they apply for a financial instrument like this, are charged with bigger interest rates than those loans made for the long term.

Step 2

Business of credit card deals work through a series of modern technologies which ensure communication between the participants in the transaction. The participants are: the customer who owes the credit card, the bank who issued the credit card and which assumes the risk of the loan, the seller who accepts this method of payment, the acquiring bank of the seller, the customer’s account and the credit card deals network (Visa, MasterCard, American Express etc.) Through which the information passes.

Step 3

Credit card deals seem a little bit complicated to understand, your job as a cardholder is easy because all you have to do is to apply and the rest of the work is done by the other parties involved. The credit card deals provider gives you a small plastic equipped with a magnetic stripe or chip which is inscribed with information concerning your credit line, the balance and the transactions effectuated within a certain period of time. For security reasons, credit cards are also ensured by a signature strip and a security code.

Step 4

When you choose to pay with this credit card deals, the seller introduces this instrument into a magnetic stripe or chip reader connected to a communication system which performs an electronic verification by dialing the number of the merchant’s acquiring bank.

Step 5

After you authorize the payment by inserting your PIN code (personal identification number) in the POS machine, the acquiring bank of the point of sale verifies the validity of the PIN code and, within a few seconds, sends back information about the approval of the transaction. By the end of the month the credit card owner will receive an invoice containing the transaction realized, the amount of money which has to give back to the bank, the credit cards’ management fees and, of course, the interest established as a percentage of the amount of money borrowed.

Tips

All this said, the credit card deals works through complicated communication systems which connect all the parties involved in a payment. Even so, due to the evolution of modern technology, it only takes a few seconds for a transaction to be finalized.

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