Credit Cards 101

What is a credit card? How does it differ from actual money?
How does it work? Will it really replace money? Can this piece of plastic
really buy me stuff?

These are the sort of questions that we ask ourselves or hear about from
other people. We really wonder if these are true or not, or if these
questions are valid or not. Let's take a closer look at credit cards and how
it is beginning to shape (if it hasn't already done so) the way we live at
present.

First off, what exactly is a credit card? The Columbia Encyclopedia defines
it as "a device used to obtain consumer credit at the time of purchasing an
article or service".
Basically, a credit card is the plastic, I.D. like thing with a black
magnetic strip across the back which can be used to make purchases via
signing. How is this possible? The seller receives the credit card
information from the customer by swiping the magnetic strip into a
specialized device that can specifically read the card. The bank or credit
card supplier then pays the seller. The customer and the credit card
supplier then do business with the customer paying the bank the amount he
owes via a monthly fee. If he is unable to pay the amount in full, he has
the option of paying a minimum balance; however, the remaining balance is
subject to an interest rate, usually around 3.5%. Once you get the
experience of using your own credit card, you will actually find out that it
is a simple process - just give the card, sign, get your card back, and pay
later.

Credit cards appear to be the thing of the present, and will go on growing
towards the future. It would not come as a surprise to many if it totally
replaces cash in a few years' time. As the days pass by, credit cards grow
more and more popular with a lot more people. More and more business
establishments are accepting credit cards, with the trend not seeming to
stop anytime in the future. Think about it - would you rather carry a few
inches thick of cash in your wallet or purse, or a lightweight, plastic,
I.D. size thing that you can use for the same function, or even more. The
cash, once you've run out of it, you can't purchase any more. With the
credit card, you can purchase a whole lot more in one day. Many people
nowadays shop with the power of the credit card at their disposal, bringing
home bags and bags of shopping items, all without having to pay a single
dollar in cash that day.

Yes, this tiny piece of plastic can be useful in shopping.
Before, only a few select stores would accept credit cards; now, only a few
select stores DO NOT accept credit cards.
Almost anything can be acquired with a credit card. You can even make online
purchases now. Online purchases are rapidly growing in popularity. You just
need to have a computer, internet connection, and a credit card to make it
happen.

Credit cards have a thing called credit limit. It is the maximum amount of
credit you are allowed in a month. Anything over it will not be credited for
that month. If you try to make a purchase when your credit limit is full,
your credit card will be rejected until you are able to pay at least the
minimum balance owed for that particular month. In some cases, credit card
providers will give you a "secured" credit card, wherein you have to give a
deposit in cash which in turn will be your credit limit (deposit $1000 -
that will be your credit limit).
Secured credit cards are usually for those people deemed by the provider to
have bad credit standing.

Credit cards are slowly transforming the way people live. It is like a
security blanket of sorts for a lot of people. However, it can also be a bad
thing since you have the ability to overspend in an instant. Owning a credit
card is a nice thing, provided that you use it responsibly and make sure it
doesn't control your life, because it has the power to do so.

About The Author: Sue Hunt has written many articles on the credit card
industry and is the webmaster of a website offering information regarding
credit cards. If you are are interested in learning more about credit cards
log onto http://www.searchcreditdeals.com