All about Credit Cards
In this short lesson, we plunge into what Credit cards are all about and deconstruct it in s-i-m-p-l-e words, for you to understand.
Credit cards :
A credit card is a card that allows you to make purchases from any place that accepts such cards, on credit. The bank that gave you the credit card pays the merchant at the time of purchase and you get time till the end of the credit cycle to pay the bank
Requirement to get a credit card :
To get a credit card in your name, you have to be a working person. Unless you are an earning individual, no one will give you a credit card
How to use the credit card :
Once the bank permits you to have a credit card, they will send you the card and a 4-digit PIN that you need to use for the first transaction. You must change your PIN after the first transaction. This is like your ATM PIN, a number you must keep confidential and use only to validate that you are the real owner of the credit card. Every time you swipe your credit card on an ATM machine, you need to enter the PIN number to validate that you are the real owner of the card.
How does the bank know that the transaction is correct?
Every time you get a bill of the credit card transaction, you have to put in your signature as a proof that the transaction is correct and the vendor did not wrongly charge you.
Online payments :
When we make an online purchase and use our credit card to pay for it, we have to enter details like our name as given on the card, the date of expiry and the CVV number first.
CVV number :
CVV stands for ‘card verification value’. It is usually a 3-digit number on the back of a credit or debit card that you have to enter, to authenticate that you are actually holding the physical card. It is one of the security measures built into credit cards.
Do we need to enter the credit card PIN during an online transaction?
For online transactions, you don’t have to use your credit card PIN. Instead, you either have to use an online transaction password that you would have set when you got your new card, or an OTP.
Note : I intend to share what I learn through this blog. Since these are mostly notes, I have tried not to be extra creative with my sentences. The phrases are mostly extracted from the source, as they were. Due credits go to TCSiON Reference Material for Financial Literacy
