Credit Card Loan

Credit card is a plastic card issued by a Credit Card provider to a person. The authority giving a credit card assures the person, that it pledges to lend him/her a money amount (equal to the limit of credit card) to make payments.

• Actually a credit card and debit card are different things, in a transaction with credit card, money is not taken from the client's account.

In fact, it is reduced from the amount which may be lent by the issuer of a credit card and interest rates are charged on the whole sum used by the person in a way of ‘revolving credit’.

All the operations, including calculating the min sum due and the interest rate, the period after which rates of interest will be taken etc. are mentioned in the agreement between the issuer of the credit card and the person.

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Credit cards are extremely popular nowadays. This idea is good for those who like to buy things, but often don’t have the needed sum available on them. The service provides the money which can be repaid later either by paying back the whole sum or by portions.

• However, credit card facility charges high rates of interest.

Dependent on the way the holder spends money from the credit card when he has a negative balance, owning a credit card can lead to further financial problems.

Many people who have several credit cards can find themselves in debt due to spending the cash available.

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• The companies issuing credit cards have been largely criticized for inducing people to opening their credit cards; actually they lure potential clients by offering various services and attractive credit limits.
• Another risk of credit cards is fraud. Some unscrupulous individuals collect the numbers of credit cards (stealing from the website database or copying the details during a transaction). The fraudsters make purchases using the details of credit cards and the actual holder of the credit card receives a statement with transactions he hasn’t performed.
• This causes troubles for credit card companies because they have to spend money and time to trace the fraudulent actions and guarantee that the clients do not bear the responsibility for fraud. This requires some time; meanwhile the clients may become hassled about performing payments.

Thus, it is obvious that owning a credit card has some advantages and disadvantages.