credit card

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credit card,

device used to obtain consumer credit at the time of purchasing an article or service. Credit cards may be issued by a business, such as a department store or an oil company, to make it easier for consumers to buy their products. Alternatively credit cards may be issued by third parties, such as a bank or a financial services company, and used by consumers to purchase goods and services from other companies. There are two types of cards—credit cards and charge cards. Credit cards such as Visa and MasterCard allow the consumer to pay a monthly minimum on their purchases with an interest charge on the unpaid balance. Charge cards, such as some American Express cards, require the consumer to pay for all purchases at the end of the billing period. Consumers may also use bank cards to obtain short-term personal loans (including "cash advances" through automated teller machinesautomated teller machine
(ATM), device used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip or computer chip.
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). Credit card issuers receive revenue from fees paid by stores that accept their cards and by consumers that use the cards, and from interest charged consumers on unpaid balances.

Diners Club became the first credit card company in 1950, when it issued a card allowing members to charge meals at 27 New York City restaurants. In 1958, Bank of America issued the BankAmericard (now Visa), the first bank credit card. In 1965, only 5 million cards were in circulation; by 1996, U.S. consumers had nearly 1.4 billion cards, which they used to charge $991 billion in goods annually.

The growth of credit cards has had an enormous impact on the economy—changing buying habits by making it much easier for consumers to finance purchases and by lowering savings rates (because consumers do not need to save money for larger purchases). Oil companies, car makers, and retailers have also used the cards to market their goods and services, using credit as a way of encouraging consumers to buy. Concern has been voiced over widespread distribution of bank credit cards to consumers who may not be able to pay their bills; costly losses and theft of cards; inaccurate (and damaging) credit records; high interest rates on unpaid balances; and excessive encouragement of consumer debt that has cut savings in the United States. Legislation enacted in 2009 (and effective in 2010) imposed restrictions on credit card companies, including restricting how they could raise interest rates and placing limits on the issuing of cards to persons under 21 years of age, and attempted to make credit card bills clearer and more informative.

Technology advances have facilitated the use of credit cards. Recording and confirming purchases made using credit cards has progressed from taking a mechanical impression of the card on a paper slip to reading a magnetic strip and transmitting the data electronically to replacing the strip with smart cardsmart card,
small device that resembles a credit card but contains an embedded microprocessor to store and process information. Magnetic-stripe cards, which store a very small amount of information (most typically used to identify the owner) and have no processing capability of
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 electronic chip technology which can in some cases be read using radio-frequency identificationradio-frequency identification
(RFID), a technology that uses radio waves to transmit data and uniquely identify an animal, person, or thing. An RFID system typically consists of a tag and a reader.
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. Merchants, who once needed to telephone a bank office for approval, are now connected to banks by modemmodem
[modulator/demodulator], an external device or internal electronic circuitry used to transmit and receive digital data over a communications line normally used for analog signals.
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, so purchases are approved rapidly; on-line shopping on the InternetInternet, the,
international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises (called gateways
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 is possible with credit card payment. An alternative to credit cards is the debit carddebit card,
card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account.
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, which is used to deduct the price of goods and service directly from customers' bank balances.

References in periodicals archive ?
Furthermore, bankcards from 77 different countries have been used on the London system, bringing a new level of convenience for the millions of visitors who visit London each year.
Experian-Oliver Wyman data reports a 46 percent increase in home equity lending; 19 percent increase in bankcard origination volume
A MAN loses his wallet and does not realise his bankcard pin number was written inside.
And for borrowers scoring high on the FICO[R] score's 300-850 score range, the level of repayment risk actually has become greater for real estate loans than for bankcards.
Effective today, millions of customers are set for easier and more convenient journeys as Transport for London (TfL) introduces contactless bankcard payments across all its services including Tube, tram, DLR, London Overground and National Rail services currently accepting Oyster.
The increase in number of new bankcards coincides with an increase in credit limits as well, as January-June 2011 new bankcard credit limits maintain a 27 percent increase over January-June 2010 levels, and new subprime bankcard credit limits maintain an increase of 68 percent for the same timeframe.
Apart from the prevention of fraud risks with the counterfeit cards, the standard IC cards will support the bankcards used in the small payment areas and the fast payment areas, such as in the public transportation, convenient supermarkets and fast food industry, making the bankcards get out of the appearance limitation and realize the convenient functions like mobile phone payments.
The investigation reports that mediators in Bulgaria have kept contact with bankcards skimming on the territory of different countries.
The gains made in the issuance of new bankcards for subprime borrowers are evidence of the continued easing that we are witnessing in underwriting," said Michael Koukounas, Senior Vice President - Special Client Services for Equifax.
1 Analysis on the Technology Categories of Chinese Bankcards
Average bankcard borrower debt (defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower) inched upward nationally 0.
The new FICO scoring model for bankcards is designed to give card issuers greater predictive capabilities in their origination and account management decisions.