People often find themselves in situations where you have a financial bottleneck or lack the small change to make a wish come true. Here, loans and loans are often made available through banks or other lenders. If you regularly need more financial scope, you can apply for a credit line or an overdraft facility. The customer can then dispose of the money within this line. In addition to these options, the credit card is also often used to bridge short-term liquidity bottlenecks.
What is a credit card?
A credit card is primarily used for cashless payments. Similar to the EC or bank card, cardholders can use their credit card to make cashless payments in many shops that accept a credit card as a method of payment. The difference to other cashless payments is that the credit card holder has a credit line. With the help of a credit card, cardholders can also bridge short-term liquidity problems. The customer is not charged immediately, but usually only once a month. This means that credit card payments are made on the basis of the credit limit granted on the card. Cashless payment with a credit card can be used both in the real world, which means in local shops, or on the Internet. Cardholders can also use their credit cards to withdraw cash from ATMs.
Abroad in particular, it is often very important and helpful, since often not all German bank cards are accepted here, but often only credit cards. Credit cards can be used worldwide. Banks issue credit cards to their customers in cooperation with Master or Visa. Companies such as Dinners or American Express issue the cards directly to the end customer. These four credit card companies are market leaders, in Germany and across Europe. But other companies such as ADAC, car rental companies, airlines, railway companies and other automobile and leisure clubs also issue credit cards to customers.
Credit cards are divided into standard cards, gold cards and company cards. Most of the credit cards include other services such as certain insurance policies. However, the activity of such insurance is often linked to the fact that the corresponding service has also been paid for by credit card. For example, a travel credit card international travel insurance usually only applies if the trip was paid for with the corresponding card.
How does the credit card business work?
The cardholder acts as a buyer. He buys goods in a shop or on the Internet and receives a service. This creates a claim in favor of the seller, which the customer pays with his credit card. To do this, the card is pulled through a reader and a connection is made to the card-issuing institute. This determines whether the card is blocked or whether payments are still possible under the credit line provided. If payment is made, the customer and cardholder must sign a receipt. The seller then receives his money from the card issuer for a short time. The customer then has an open claim to the customer and cardholder. The claim is settled via the monthly debit.
Credit card billing
Customers can pay cashless with their credit card. However, the charge is delayed, so cardholders pay on credit. As a rule, the billing amounts are collected for a month and the amount used is then debited once a month from the cardholder’s account by direct debit. The customer then receives a corresponding invoice in writing. Here one speaks of the so-called charge cards. However, some institutes also issue the so-called Jean Valjean cards. Again, the amounts are accumulated on the credit card account over a period of one month. When billing and settling, however, the customer and cardholder can then decide whether they want to repay the claim in full or in installments. In addition to the main card, additional cards can also be issued, for example for married couples or in a company. The settlement is then made in one sum and from one account.
The credit card limit
With the help of credit cards, customers can make cashless payments without immediately feeling the burden. The credit line granted ensures that customers are given financial leeway here and the debit is only made once a month. But the customers cannot dispose of it without limits. Most credit cards have a card limit. This is granted individually for each customer. Before issuing a credit card, the issuers check the creditworthiness of the customer. The regular cash receipts are then often responsible and decisive for the amount of the respective card limit.
In Germany, card limits of 3,000 to 5,000 USD are common and common among normal average customers. The amount of the card limit is often similar to that of the overdraft facility. Here, too, the amount depends on the respective income. The cardholder can then make payments or withdraw cash up to the amount of the card limit granted. The reason for the card limit is that the cardholder is able to really settle and return his claims again and again through his regular incoming payments. If there are main and additional cards, the limit granted does not apply to all cards, but to all cards together. For example, if the husband has the main card and the wife has the additional card, the limit of $ 3,500, for example, applies to both cards together. Husband and wife can then pay 3,500 USD a month with their two cards. In rare cases it happens that credit cards are made available without limit. These are the so-called black credit cards. However, these are only given to selected customers who have enormous assets.