The term credit card is used for different types of cards. With a “real” credit card, the cardholder is granted a credit limit. This can be a maximum credit limit, such as 2,500 GBP. Alternatively, the monthly credit limit can be 1,000 GBP, for example. The amount of the credit limit depends on the respective conditions of the card and the provider.
Depending on the provider, the amount used with the card can be settled once a month or paid off in instalments. How a credit card works therefore always depends on the card conditions. In addition, there are the so-called prepaid credit cards, which are managed on a credit basis.
How exactly does a credit card work?
Since there are so many different types of cards and conditions, it is important to ask yourself before you search for a credit card how it works and for what purpose you need it. For example, if you only want a card that works on a credit basis, you do not need a credit card with a credit limit. If, on the other hand, you want to use the card to have money available when your account is empty, you should look for a credit card with an actual credit limit.
Exactly which card is used at the end depends on what you intend to do with the credit card. The advantage of a prepaid credit card is that, depending on the provider, you can apply for and use these cards even without Experian. This means that there is no credit limit, but you can still use it if you want to finance your trip. Even prepaid credit cards can be used at more than 40 million acceptance points worldwide.
Why do I need a credit card and what advantages does it offer?
The functions of a credit card are also reflected in what the card is used for. If you use it to pay for goods or games ordered on the Internet, a prepaid credit card is often sufficient. This can be topped up to the amount to be spent. In this way, the cardholder also keeps track of his or her spending. If, on the other hand, you have spent more money or do not want to top up the card all the time, you should choose a credit card with a credit limit.
A credit card is always practical, which is also reflected in the various functions of such a card. You can pay faster at the supermarket checkout if you have a credit card. There is no need to search for cash in your wallet in order to pay. If you have a credit card that allows contactless payment, it is even faster. In this case, the credit card no longer needs to be inserted into the reader, but simply held in front of the reader at the terminal. There is simply no faster way to pay.
Your advantages of a credit card:
- Pay worldwide: It can be used to pay anywhere in the world. Which, by the way, is not the case with the EC card, the Girocard or the Maestro card.
- Withdraw cash abroad: Depending on the credit card, withdrawing cash in the local currency is often free.
- More security through payments on the Internet: If your credit card is misused, these payments are insured.
- Credit cards often have bonus programs: By using your credit card frequently, you can secure attractive premiums!
If you are on holiday, you will quickly realise how important a credit card can be. For long-distance travel, depending on the country, hotel and rental car bookings can no longer be made at all without a credit card being presented. This is the case in the USA, for example. You will not really get anywhere with cash there. Even as a traveler, everyday life there can almost only be managed with a credit card.
What does a credit card cost?
There are both chargeable and free credit cards. Here it is important to define the requirements for the credit card. For what purpose should the credit card be purchased? In general, free credit cards are suitable for most consumers. You should consider important factors when choosing a credit card:
- Annual fee of the credit card
- Foreign assignment fees
- Cash withdrawal fees
- Credit fees
Often with credit cards without an annual fee, the interest rates for the credit drawn are usually very high, so that a credit card that is free of charge is not always the cheapest credit card. It depends very much on what you want to do with the credit card. Therefore, compare the offers so that you do not end up paying more than you want.