Credit Cards General
How does a credit card work?
When you make a purchase using a credit card (for example, a Visa card), the clerk swipes your card through a machine that “reads” the magnetic stripe on the back of the card, then enters the purchase amount on the machine’s keypad. The machine calls the Visa computers which in turn call the bank that gave you the card. The bank makes sure the account is active and that the card has not been reported as stolen, and that the transaction is not over your credit limit. You then sign the credit slip and leave the store with your purchase.
Every month (or billing cycle) the credit card company sends you a bill (called a statement) that shows the total amount of purchases you have made using your credit card. It is your responsibility to pay them back, either in full or in increments over time. If you choose to make only the minimum payment, or only a portion of the bill, you will be charged interest on the balance (amount you don’t pay).
See also:
What is an APR?
What are the finance charges? How are they calculated?
Last update: 2006-09-27 10:28
Author: BKO
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