FinanceDogma – Finance, loans, creditcard and mortgages

March 26, 2009

How credit card works?

Filed under: Credit Card — Tags: , , , , — admin @ 2:06 pm

Most of us knows what a credit card is and how it looks like. It´s a piece of plastic that will allow you to buy things now, and pay for them later. Most common credit cards are called for Visa, MasterCard and American Express.  The card you are using has the size of 3-1/8” x 2-1/8″.

Credit Cards

Credit Cards

There is the shiny strip on the back side of the credit card that is known as “magstrip” and it is the main thing on your credit card. It contains all the details on the card and the amount of credit that you are entitled to. So, when the person swipe the credit card on the machine, the “magstrip” will read the information of your card and send it to the central tracking system. The central tracking system has all the information on the balance details, country, zip code, card owner etc.

To protect your personal information (on credit cards) from identify theft, there is a computer chip embedded in your card that requires you to identify yourself every time you use the card. You really don´t want somebody else to use your credit card to buy stuff for him/her self, right?

With great power comes great responsibility right? Same thing is applied with credit cards. Credit card is a very useful tool when you are shopping but only if you use it wisely. So, remember…be a smart shopper!

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