On credit cards

What is a credit card?

• A kind of card with which you withdraw from any account.

• A plastic on which you can whitdraw money.

• A kind of card that lets you borrow money from a special account.

• Like a loan, but without real money.

Answer explanation

Even though the card has a similar base to a loan (credit line), the card itself is different.

A credit card has a kind of account named "revolving account", which allows the bank to "roll" the debt on the card to the next month if it is not payed.

To control the debt, usualy the card has an credit line and an overdraft limit, but it may not have it under certain conditions.

Which are the necessary requirements to get a credit card?

• Personal information

• Nice credit score

• Stable and good income.

• All are correct (including this one, of course).

Answer explanation

To get a credit card you must have:

-Personal information, so the bank knows and can contact the cardholder.

-Good and stable income. This tells the bank how much can you pay and there stablish the credit line and the overdraft limit (or not).

-Nice credit score. This one was tricky (sorry, hehe), because it's not mandatory to have it. But is going to help a lot in the process.

Advantages of a credit card?

• Get insurance for traveling, health...

• Can be used anywhere in the world.

• All are correct (again)

• Better credit score.

• Easiness on web shopping.

Answer explanation

Being a cardholder may be scary. Feels like having a debt bomb in your hands.

But, with good management, it can have a lot of benefits, including trust from credit institutions, easiness on shopping and some insurance.

On what is based the credit card?

• Debt.

• Simple and compound interest.

• Line of credit.

• Anual percentage rate.

Answer explanation

The foundations on which the credit card can work is the interest. Basically: the loaner (the bank) gives money to the borrower (any mortal person), under the promise that they is going to give it back in a certain amount of time.

But that is not benefitial to te bank. So, it charges a little bit of extra money, which is called interest. And, depending on who gets the charge (the borrower, wherever the money its spent...), it is called "simple" or "compund" interest.

Do I need to have a good credit score to get a credit card?

• Yes

• No

Answer explanation

Sometimes, you can receive credit cards out of thin air. Other times, you have to do a lot for getting one that with a low overdraft limit.

It depends on the institution and the policies that they determined are the best for their goals.

Which institutions ares allowed to give credit cards

• Banks

• Credit unions

• Joe mama

• Natural people

• Stores

Answer explanation

The banks are the ones that are famous for their credits. But they are not the only ones which can give credit cards.

Credit institutions can also lend money to its members. And Stores can trust their clients with one (if they have the right requirements).

Which are the security parts of the credit card?

• Expiration dates and security codes (CVC).

• All of 'em.

• Chips and peripherals.

• BIN or credit card number.

Answer explanation

All the different parts of the card have some function.

For security on your online shopping, there are a lot of codes and information that only the caldholder can give.

And, for physical purchases, there are chips and peripherals that only activate with the cardholder present.