Credit Card Information

Benefits to merchants

2008-10-14T07:57:00.000-07:00

For merchants, a credit card transaction is often more secure than other forms of payment, such as checks, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card payment (except for legitimate disputes, which are discussed below, and can result in charges back to the merchant). In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees and reduce the amount of cash on the premises. Prior to credit cards, each merchant had to evaluate each customer's credit history before extending credit. That task is now performed by the banks which assume the credit risk.
For each purchase, the bank charges the merchant a commission (discount fee) for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee. In addition, a merchant may be penalized or have their ability to receive payment using that credit card restricted if there are too many cancellations or reversals of charges as a result of disputes. Some small merchants require credit purchases to have a minimum amount (usually between $5 and $10) to compensate for the transaction costs, though this is not always allowed by the credit card consortium.
In some countries, for example the Nordic countries, banks guarantee payment on stolen cards only if an ID card is checked and the ID card number/civic registration number is written down on the receipt together with the signature. In these countries merchants therefore usually ask for ID. Non-Nordic citizens, who are unlikely to possess a Nordic ID card or driving license, will instead have to show their passport, and the passport number will be written down on the receipt, sometimes together with other information. Some shops use the card's PIN for identification, and in that case showing an ID card is not necessary.

article by : http://wikipedia.com

Grace period

2008-10-14T07:55:00.002-07:00

A credit card's grace period is the time the customer has to pay the balance before interest is charged to the balance. Grace periods vary, but usually range from 20 to 30 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met.
Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

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Benefits to customers

2008-10-14T07:54:00.000-07:00

Because of intense competition in the credit card industry, credit card providers often offer incentives such as frequent flyer points, gift certificates, or cash back (typically up to 1 percent based on total purchases) to try to attract customers to their programs.
Low interest credit cards or even 0% interest credit cards are available. The only downside to consumers is that the period of low interest credit cards is limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee.

article by:http://wikipedia.com

Interest charges

2008-10-14T07:50:00.000-07:00

Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.
For example, if a user had a $1,000 transaction and repaid it in full within this grace period, there would be no interest charged. If, however, even $1.00 of the total amount remained unpaid, interest would be charged on the $1,000 from the date of purchase until the payment is received. The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. The general calculation formula most financial institutions use to determine the amount of interest to be charged is APR/100 x ADB/365 x number of days revolved. Take the Annual percentage rate (APR) and divide by 100 then multiply to the amount of the average daily balance (ADB) divided by 365 and then take this total and multiply by the total number of days the amount revolved before payment was made on the account. Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as RRFC or residual retail finance charge. Thus after an amount has revolved and a payment has been made, the user of the card will still receive interest charges on their statement after paying the next statement in full (in fact the statement may only have a charge for interest that collected up until the date the full balance was paid...i.e. when the balance stopped revolving).[1]
The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, to encourage balance transfers from cards of other issuers. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue.

Article by: http://wikipedia.com

How credit cards work

2008-10-14T07:42:00.000-07:00

Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card.
When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates his/her consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a 'Card/Cardholder Not Present' (CNP) transaction.
Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom and Ireland commonly known as Chip and PIN, but is more technically an EMV card.
Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.
Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding late payment altogether as long as the cardholder has sufficient funds.

article by: http://wikipedia.com

Instant Credit Card Approval Online

2007-06-23T08:42:00.000-07:00

What do we mean when we say an instant credit card? As most of the internet surfers should already have noticed, many credit card companies operating online and offline for that matter, announce they can offter the best credit card online, even with instant approval if you apply for it on their website. Some people think that this means they can instantly download a copy of a card like waving a magic stick and start to purchase with it immideately. Let's sort out some confusion here. Many credit card websites can approve your application instantly, which in most cases means within a few minutes. But that doesn't mean you can print out your card and run to your local Wal-Mart or Target or wherever and immedeately shop. Of course you can shop, but not with your newly approved card, because you have not received it yet.

Though the approval procedure only takes minutes, you have to be patient and wait for your card. This will be sent in the mail, and it will take a few days. Now, the nice thing with applying online for a card is that you know if you are approved for it or not within a fairly short time, and I would think that this is the best thing for people to know, or like the saying goes "those who are waiting for something good don't wait in vain"

Compared to the old-fashioned way of doing it, returning the snail mail offer for a credit card, waiting days or even weeks for the bank or credit card company to process it and run your credit, and finally waiting for them to send out your new credit card, the online way is far more convenient and fast. Another advantage of doing the application online is that it also gives you a fantastic option to compare the cost of credit offered from a lot of card companies.

There are certain limitations however on who is eligible for an Instant online credit card approval. Instant approval credit card offers are targeted to - or at least originally meant to be for - people with good credit records. However, there are ways to go around this and sometimes this might be pure luck. What I mean is, sometimes the card company you apply to, may not be able to access your credit records for some reasons. But this is an exception. The competition on the credit market is so high today, that some companies are willing to tow the line pretty far to get customers. The bottom line is that even if your credit history is not so good, you can obtain an instantly approved credit card. So regardless to what your credit rating is, there is no reason not to apply.

If you want to apply for an instant approval of a credit card online, go to the web and search for instant credit card approval an you'll have more than enough websites to choose among, giving you the opportunity to compare the offers from different sites with respect to the cost of credit. Then you will be able to find the best deal. Good luck!

Terje Brooks Ellingsen is a writer and internet publisher. He runs the website 1st-In-Loan.net Terje gives advice and helps people with personal financial issues like applying online for an instant credit card and getting rid of bank debt.

Article Source: http://EzineArticles.com/?expert=Terje_Ellingsen

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