Credit card allows people to charge goods and services at business places that accept the card. Many types of firms issue credit cards. To obtain one, a person must have a record of paying bills on time. Each credit card has the cardholder’s name and account number. The cardholder presents the card when making a purchase.
Many oil companies and department and chain stores issue credit cards that may be used only at their own establishments. Travel and entertainment card companies and many banks issue cards that the cardholder may use at a variety of hotels, restaurants, stores, and other businesses. The banks and the card companies pay the businesses for purchases but deduct a fee for the service. In addition, travel and entertainment card companies and many banks charge cardholders an annual fee.
Cardholders receive a monthly bill. Most types of credit cards permit cardholders to pay only part of the bill if they wish. But cardholders then must pay a finance charge on the unpaid part.
Cards called debit cards resemble credit cards. But when a cardholder uses a debit card, the amount of the purchase is typically deducted directly from the cardholder’s checking account. In the United States, the Consumer Financial Protection Bureau, a federal agency, guards consumers against deceptive practices involving credit cards.
See also Identity theft; Smart card.
