Business Definition for: credit card
credit card
plastic card issued by a bank, savings and loan, retail store, oil company, or other credit grantor giving consumers the right to charge purchases and pay for them later. Most credit cards offer a grace period of about 25 days, during which interest charges do not accrue. After that, consumers pay nondeductible
consumer interest
on the remaining balance until it is paid off. Some credit cards start charging interest from the day the purchase is registered. Most credit cards also permit consumers to obtain cash on their card in the form of a cash advance.
See also
consumer credit protection act of 1968
credit card
plastic card authorizing the account holder to charge purchases against a preapproved credit line. Credit cards are issued by banks, thrift institutions, retailers, gasoline companies, and other credit grantors. Many card issuers charge an annual fee to cover account servicing costs.
Credit card purchases normally become payable after a
grace period
(up to 30 days) during which no finance charge is imposed. Afterward, the balance due may be paid in full or paid down in monthly installments of principal plus interest. Some issuers charge credit card interest from the purchase date if the cardholder's account has an outstanding balance. Credit card interest rates, annual fees, and repayment terms may vary considerably.
See also
co-branded card
,
gold card
,
debit card
,
travel & entertainment (T&E) card
,
cash advance
credit card
indication to sellers that the person who received the card from the issuer has a satisfactory
credit
rating and that if credit is extended, the issuer of the card will pay (or see to it that the seller receives payment) for the merchandise delivered. Most credit cards are made of plastic with raised letters to facilitate creation of machinereadable sales slips and a magnetically coded strip that is read electronically and verified by telephone.
Related Terms:
landmark federal legislation establishing rules of disclosure that lenders must observe in dealings with borrowers. The act stipulates that consumers be told annual percentage rates, potential total cost, and any special loan terms. The act, enforced by the Federal Reserve Bank, is also known as the Truth in Lending Act.
Visa or MasterCard credit card jointly sponsored by a bank and retail merchant, such as a department store. Co-branded cards can be issued at less cost than conventional retail private label cards, and give issuing banks access to new customers. Cardholders may be given incentives, such as discounts on merchandise, rebates, or discounts off purchases. A co-branded card has a tie-in with a specific merchant rather than an association or professional group. It also can be used at other merchants. Contrast with affinity card
Visa or MasterCard credit card with a minimum credit line of $5,000, and frequently higher. These cards have a higher annual fee than standard bank credit cards, and are marketed to consumers with above average incomes. Sometimes called a prestige card or premium card.
Also, the American Express Gold Card, which differs from bank issued cards. American Express issues the card, but the credit line is usually arranged separately, by a bank acting as an agent for the card issuer, and varies among banks. American Express Travel Related Services Co. issued the first gold cards in 1966 and has claimed a proprietary right to the name, a claim the courts have not upheld.
card issued by a bank to allow customers access to their funds electronically. Debit cards could replace checks as a method of payment for goods and services, and are more convenient because they are more widely accepted than checks. Debit cards can also be used to withdraw cash from automatic teller machines. Many debit cards combine the features of credit cards such as Visa.
charge card used to pay for hotel, airline, and other business related expenses. The first travel card was issued in 1950 by Diners Club, followed by American Express in 1958. Travel cards are 30-day charge accounts, with payment due in full before the next billing cycle; and some T&E card plans, usually corporate cards, give the cardholder a quarterly summary of charges to the card.
cash loan against a personal line of credit, obtained by presentment of a credit card at a bank teller window, at an automated teller machine, or by mail. Finance charges are paid from the transaction date.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
