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Credit Cards

Sometimes, we do have need and may want to purchase important goods and services at particular a particular time, even beyond our financial convenience. At this point, we rely on financial cards such as the credit cards. Just like the Debit Card, The Credit Card is issued by a financial institution; usually a bank, to users (cardholders) as a means of payment. Users (card holders) are given the opportunity to purchase goods and services, with a promise to make payment for them.

In this type of financial arrangement, some of the major players (not all) are:


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  • the issuing bank is known as “the issuer”,
  • the user or bank customer is known as “the card holder”,
  • Merchant is the business that accepts credit card payment from card holder.
  • Acquiring bank is known as “the acquirer” and it accepts payment for goods and services for the merchant.

The bank extends a definite credit line to the card holder in a revolving manner. This is packaged as a Credit Card. The card holder is empowered to make payment to merchants and others through the instrument of the credit card.


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According to Wikipedia, Edward Bellamy was the first person to describe the credit card as a means of purchasing items and Western Union became the first known institution to issue credit cards to its regular customers.


Benefits of a Credit Card – Why You Need a Credit Card.

Are there benefits? Oh yes! Convenience is the major benefit of the credit card. Card holders have the ease of getting a quick and secured short term loan to make purchases beyond their real account balance but within the maximum credit line, approved for the card. Others are rewards and benefits packages, price protection, car rentals etc.

Some of the consumer credit cards offered to users in the United States are: MasterCard, Visa, American Express and Discover.


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Cost of Credit Cards.

Are Credit Cards cheap? Oh No! You pay a lot of fees. Some of the major fees you pay include:

  1. Monthly or annual Membership fees.
  2. Overdue and late payment fees.
  3. Foreign currency transaction fee.
  4. When you exceed or overshoot your approved credit line, charges apply.
  5. Cash advances and convenience fees.
  6. Payment processing fees.
  7. Loading fee usually a hidden charge that may be really huge.


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In conclusion, Credit Cards are essential financial instrument anyone can have. But we must be wise and diligent so that we don’t accumulate unnecessary debts and become debt-ridden. Must you apply for Credit Card – Do You Need a Credit Card? Discuss this point in the comment box and share this post with friends.

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