How does a credit card work?

We have information on terminology, uses and processes so that you know how a credit card works. And also what are the credit card numbers to facilitate payments on the internet.

Understanding how a credit card works helps you to know in which cases it is convenient for you to use it, if it is worth paying the interest, what the monthly commission is like and, most importantly, knowing what the credit card numbers are for that when you want to make a purchase online you know how to find them quickly.

Let’s start with what a card can be used for :

  • Lend you money to buy products or services and pay them the next month or in installments.
  • Give you cash , known as a money order, to use immediately.

Let’s get to know the cards a little more …

What are the credit card numbers?

There are three key numbers on the plastic of your credit card that you should know:

1.- Card number : it is a series of 16 numbers found on the main face of the plastic.

2.- Expiration date : month and year, found below the credit card numbers. There are four – the first two represent the month and the last two represent the year – separated by a slash (/).

For example, if a card expires in May 2025, the number of the plastic is: 05/25.

3.- Security code : three digits on the back on most cards. They are generally located on a white band. In American Express, the number is usually on the front of the card and is four digits long.

The other important piece of information is that when they ask for the name of the holder you have to place the name as it appears written on the plastic , if the middle name or surname is abbreviated you have to place it in the same way.

These four data are important for online purchases, since they always ask for them in the purchase forms.

Now we go to the operation.

How does a credit card work?

The card assigns you a quota of money to buy or spin. Then you have to return it according to the fees you chose . It is similar to a consumer loan.

Simple, right? It seems, but you also have to understand the operation of other credit card mechanisms so that it does not get out of hand.

Let’s check them …

Credit card interest rates

Interest is the key to understanding how a credit card works. It is an amount that is applied to the fees of your purchases in order to charge you for the money that the card lends you . There are generally three types of interest:

  • Interest for installments.
  • Revolving interest (the most dangerous is the one applied in the ” minimum payment “).
  • Interest for advance.

All three make the monthly installments rise in value depending on what is stipulated in the contract . Therefore, it is important that you review well what are the interests that the bank applies to purchases and advances. If you want to know how your credit card and interest work.

Monthly maintenance fee

This is another of the costs that mark how a credit card works. This is an amount that is included monthly and is the cost of using the plastic . If you want to know all the details of this charge, check this content on the maintenance of the cards .

Keys on how a credit card works for payments

You also need to know how credit card payments work. There are two options: that you keep orderly accounts and that your card becomes your ally to get everything you want. Or that you mess up and become your worst nightmare.

Keep these points in mind to make it your ally.

Pay in a single installment

If you keep a good control of your expenses, we recommend that you pay for your purchases in a single installment to avoid paying interest and maintenance costs . You may have collected 80% of the value of what you want to buy and you know that you have that remaining 20% ​​at the end of the month, so to speed up the purchase, you can use credit.

Pay the full debt for the month

It is essential that when the monthly summary arrives you pay the full amount , if you only pay the minimum the debt becomes huge and you end up paying much more. If you pay the minimum, everything you do not pay is passed on to interest .

Late payment

Nothing worse than not paying the monthly fee. If you do that , revolving interest is applied, a kind of monetary penalty that triggers the final price for which you bought a product. The interest rate applies from the day after maturity until you pay it .

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