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, or a mobile payment service, which uses a smartphone app (usually linked to a bank account, debit card, or credit card) to complete a payment.

References in periodicals archive ?
In empirical analysis in the rest of the paper, we focus only on those individuals in the sample who had no bankcards at least at one point between years 2002 and 2007.
The delinquency rate for bankcards reached 5 percent of the number of outstanding accounts in June 2009, then receded to about 3 percent by the end of 2011.
According to the study, the Greatest Generation has less than half debt of baby boomers and Generation X, but proportionally, their highest debt burden falls in the mortgage category at 66.6%, followed by their second mortgages at 13.4%, and bankcards at 6.0 percent.
This is a sick theft and use of a personal bankcard which has left the man with only pounds 8 in his account.
The growth of the presence of bankcards enables a greater number of personal expenditures to be conducted with these financial instruments thus affecting consumer behavior in terms of spending.
While bankcards are today's dominant form of credit card, the first credit cards were store cards introduced in the early 1900s (Mandell 1990).
Customers will drive up to the store, place their orders on an electronic kiosk from their cars, and pay with their bankcards. In exchange, they will receive a ticker directing them to one of 22 parking places, where a sales assistant will load their purchases into their trunk.
With the Solitaire 850L, employees can even use their own credit cards or bankcards to access their facility, relieving organizations of the need to constantly order and track cards.
On the other hand, there is no way to determine how much medical debt, for instance, a debtor has paid with indirect payment resources, such as bankcards, home-equity or consolidation loans, prior to filing bankruptcy.
Customers of Singapore-based OCBC Bank and UOB can now store their NETS ATM bankcards on the NETSPay mobile app in Singapore.