A bank issues Credit Card to customers to provide quick and easy credit facility. There is a release of a credit card on the basis of the financial stature of the customer, and the credit limit of the card depends on their financial transactions. The credit card comes along with a secret PIN that you must use for all the transactions. Let’s learn How Does a Credit Card Work!
See Also: How to Pay off Credit Card Debt?
- 1 How Does Credit Card Work?
- 2 Uses Of Credit Cards
- 3 Process of a Credit Card
How Does Credit Card Work?
The procedure below describes How Does a Credit Card Work:
- On receiving the credit card, sign on the signatory space.
- Keep credit card number and PIN separately.
- The credit card has a unique sixteen-digit number, customer name, and validity date on the front. On the back, space for signature and CVV number are available.
Caution: Do not disclose the credit card number, PIN, or the CVV number (three-digit number behind the card) to any person.
Uses Of Credit Cards
Here are the various ways you can use your Credit Card.
Shopping and traveling
The credit card enables the customer to purchase goods or fulfill their travel requirements. It can be used within the country of issuance or overseas. During the purchase, the customer must provide the card to the vendor and use the secret PIN to complete the transaction.
After a successful transaction, you will receive an SMS alert to the customer mobile number for which there is already a registration with the bank. This also answers how does a Credit Card work for you.
Online transactions or pay utility bills
Caution: Customer must ensure that the portal used for online transaction is authentic and reliable.
For online transactions, the customer requires the sixteen-digit credit card number, validity date, and the CVV number. During the transaction, portals may require an OTP (One Time Password) to ensure customer authentication.
An OTP is sent to the customer mobile number that is registered with the bank. After a successful transaction, you will receive an SMS alert to the customer mobile number for which there is already a registration with the bank. Online transactions too answer how does a Credit Card work for you.
The credit card allows the customer to withdraw cash from the Automatic Teller Machines (ATM). It works exactly like a debit card for cash withdrawal. Customer must use the secret PIN to complete the transaction.
After a successful transaction, you will receive an SMS alert to the customer mobile number for which there is already a registration with the bank. This also can answer how does a Credit Card work for you.
Note: Bank may charge interest from the day of cash withdrawal. The interest rates may vary from bank to bank.
Process of a Credit Card
Below are different processes for using a Credit Card
The bank generates the credit card statement with all the transaction details. The generation of a statement takes place on a monthly basis (on a specific date), along with the minimum payment and due date to repay/clear the credit. On generation of the statement, you will receive an SMS alert to the customer mobile number for which there is already a registration with the bank.
Statement or Credit Card Bill
You will receive a copy of the statement to your residential address, or to the registered email ID. All the statement history is available online in customer net banking.
A customer can download the statements directly from the net banking using their login credentials. Your Credit Card works in the process of Bill Settlement.
A customer can repay the billed amount (minimum, full or other) on or before the due date which is on the statement. You can transfer through NEFT, cheque deposit, or ATM. Customer can also pay the billed amount through cash directly at any of the bank (that issued the credit card) branches. The bank may impose charges for cash payments. After the payment, you will receive an SMS alert to your mobile number for which there is already a registration with the bank.
Late Payment and Extra Charges
A customer failing to clear/repay the credit within the due date is liable to extra (late payment and interest) charges. The unpaid bill is carry on to the next statement. The bank carries such unpaid bills up to third billing statement.
Later, the card gets blocked till the payment is made. The customer care reminds the customer at regular intervals about the payment. The extra charges may vary from bank to bank, making your Credit Card Work on late payments.
See Also: 7 Best Credit Cards to Get as of 2019
Blocked Credit Card
A credit card gets blocked automatically after entering the wrong secret PIN for more than three times. Such credit cards cannot be used for any financial transactions. Customer should call the customer care or helpline number to unblock.
A customer failing to repay the credit after multiple billing cycles (statements), the bank blocks the card and puts the customer under the defaulters’ list. A blocked credit card cannot be used for any financial transactions. The customer requires to clear/repay the credit dues to unblock the card.
Lost or Expired Credit Card
One must inform a lost credit card to the customer care within 24 hrs. The bank blocks the card from any misuse. There will be an issue of a new card to the customer with nominal charges; The charges may vary from bank to bank.
A customer cannot use a credit card for any financial transactions on its expiry. When a card reaches its expiry, the bank issues a ‘renewed card’ to the customer. This answers How Does a Credit Card Work when you lose it.
We hope you liked our article & the question, How Does a Credit Card Work has been answered.
Also See: 5 Best Business Credit Cards in 2019
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