credit card

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Related to credit card: discover, American Express

credit card

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 machines). 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 card electronic chip technology which can in some cases be read using radio-frequency identification. Merchants, who once needed to telephone a bank office for approval, are now connected to banks by modem, so purchases are approved rapidly; on-line shopping on the Internet is possible with credit card payment. An alternative to credit cards is the debit card, 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.

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References in periodicals archive ?
Table 17: Brazil - Credit Card Balances Outstanding by Issuer (BRL Billion), 2010-2014
The new CashBack credit card provides the following range of features and benefits: free annual fee for the first year (normal fee QR200 per annum) and second year onwards if customers spend more than QR12,000 per annum on purchases and cash withdrawals, complementary VIP airport lounge access (Cairo, Dubai, Kuwait, Amman, Jeddah, Dammam, and Riyadh) -- giving card holders that extra degree of comfort and sense of prestige, 150 exclusive discount offers booklet -- allowing card holders access to a range of "2 for 1" offers at leading restaurants, spas, retail outlets, sports, and entertainment facilities.
o Cash back rewards and low interest rates were the top two reasons consumers open a new credit card.
The chips, which are embedded in the credit card, generate a different, single-use code for every transaction.
Richard Koch, head of policy at the UK Cards Association, said: "We've seen a steady decline in the level of debt across the credit card market in recent years.
The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank in Brooklyn, NY.
Summary: DUBAI -- Abu Dhabi Commercial Bank will start issuing new ADCB credit cards to former Royal Bank of Scotland (RBS) cardholders from next month.
Although these "business credit cards" largely resemble consumer cards, they do not carry any of the protections contained in the Credit CARD Act.
Consumers opened roughly 106 million new credit card accounts in 2018, though new account volumes remained below pre-recession highs across all risk tiers, the report said.