Finance

How a credit card works

Despite being used daily by millions of people around the world, most do not know how a credit card works.

A credit card is a financial tool that banks, chain stores, and other companies give their clients to make purchases without having to have a positive balance in a savings or checking account at the moment.

The credit card is used to be accepted to pay or buy in millions of commercial establishments around the world, which only needs to have an electronic point of sale or terminal to process the operation or a web sales portal.

If you are an economically active person or you are starting to work, and you plan to apply for this instrument to your bank of choice, it is in your best interest to know how a credit card works so that you can make better use of it.

What Is A Credit Card?

The Vanilla visa gift card works differently from a debit card, with which you can only buy as long as you have enough funds in the account linked to it.

The credit card allows you to buy using a pre-assigned money fee from the bank, which is independent of how much you have in your savings or checking accounts.

In short, this money is from the bank, and it “lends” to you so that you can make purchases, with the condition of returning it through the payment of monthly installments to which you recharge an amount for interest.

What Do I Have To Do To Have A Credit Card?

Banks use loan-like criteria to deliver credit cards to their customers.

First, they assess your income level and ability to pay, as well as your credit history in other banks, shops, or financial entities.

Based on this evaluation, the bank will approve the delivery of the card, as well as the maximum limit of funds it will have available.

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