Almost everyone has a credit card in the wallet. But not everyone is aware of the types of such plastics and the tips for their service. Here we observe what types of credit cards there are, what their differences are, and what to pay attention to.
Major types of credit cards can be classified according to several parameters:
- the means of payment;
- the type of payment system;
- the type of loan limit.
- Magnetic card. The most common type of credit card. Plastic is provided with a special magnetic strip containing the basic information on the credit card. The data necessary for calculations through terminals, ATMs, etc. is transmitted via the magnetic stripe.
- Chip cards. A special chip with a microprocessor is inserted into the plastic. Cards of this type have the best protection against hacking and data theft. The chip stores more personal and bank information than magnetic strip.
Let’s consider all the criteria more closely.
- Local. Loans created on the local payment system can be used in ATMs and terminals, which are serviced by the issuing bank. Such “plastics” can be used only inside the country.
- International. If an international payment system such as Visa, MasterCard or Maestro is used, the credit card is suitable for transactions in different countries. If you want to travel abroad, it is necessary to get an international plastic. Such credit cards are more expensive than local ones in terms of service and support.
Today brand line of almost every bank envisages credit products with various limits. You can distinguish the following types of credit cards:
- credit cards in the classical sense, not providing for the availability of own funds on the account;
- debit cards with permitted overdraft, for which the cardholder can use both their own and borrowed funds.
Those and other bank plastics can be with a preferential period of lending and without it. Due to the grace period, the card holder can use borrowed funds for a certain period of time free of charge, subject to full repayment of the debt until the expiration of the grace period.
For both credit and overdraft cards, the bank sets a certain loan limit for the holder, typically a certain amount for one-time debt. It is determined for each borrower individually, depending on their income, the quality of credit history, and other factors.
After all, a credit card with a grace period can be used as a regular loan. But one has to keep in mind that the loan limit is envisaged by the tariff terms of the bank depending on the category of credit card – regular, Silver, Gold or VIP. Thus a client is strongly recommended to research all bank products and choose the best one for his needs.