You’ve probably wondered what is a credit card ? Who supports its use?
A credit card is a credit instrument backed by a financial entity or a bank. If you have one of these cards in your name, you can purchase with it goods and services that you will pay later.
How does payment with a credit card work?
To understand what a credit card is and how it works, let’s look at the following example. Imagine you go to a store and buy a phone using a credit card as payment . The bank that granted you the card is the one who cancels the product in cash. And you acquire a debt with that bank for the amount of the purchase plus the interest generated.
In this way, this instrument allows you to make purchases on credit, where all the parties involved benefit. For the seller, the important thing is that the issuing bank guarantees the payment of the good or service. And the bank benefits by charging the interest that the loan granted for the purchase generates. And you win by easily acquiring a product that you pay on credit .
What is a credit card franchise?
Credit cards are issued by major international brands, which offer them in franchise to banks. Therefore, the cards are not named according to the issuing bank, but by their brand or franchise. The main brands of these instruments are:
- American Express
- Diners Club
Where can I pay with a credit card?
You can cancel with a credit card in stores affiliated with your card’s payment network. Something important that you should know is that the affiliation is made according to the franchise and not according to the bank. That is, if a merchant accepts a Visa credit card as payment, it accepts it independently of the issuing bank.