Understand Debit Cards and Credit Cards

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As we mentioned in previous article, Consumer loans refers to people borrow money to make a wide range of secured and unsecure loans to consumers for consumable items from lending institution. Beside consumer loans, debit cards and credit cards also play an important role in consumer daily purchase.

I. Debit cards
1) First of all debit cards are not used for credit, it is your money deposited in your bank, trust or credit union checking account.
2) A debit card allows the user to make purchases immediately and paid by his or her regular checking account.
3) Debit cards are also used to access to automatic ATM machines.
4) With debit cards, you don't have to use checks or cash. All purchases are transacted electronically.

II. Credit cards
1) Charge Cards
a) Charge cards is a form of short-term credit issued by the bank or trust to borrower for purchasing.
b) Charge accounts requiring full payment within a specific grace period.

2) Credit cards
a) Credit cards is a revolving loans.It offers the card holders to continue charging purchases to his or her account, as long as a portion of the bill is paid each month.
b) There are 2 major types of credit cards issued by bank and department store c.
i) The grace period on bank cards is 21 days.
ii) The grace period on department store cards is 21-30 days.
c) Cash advances are allowed with credit cards issued by financial institutions.
d) It is your responsibility to immediately report the loss or theft of your card to the respective bank, trust company, or credit union.
e) All banks limit the card holder's liability to $50 after notification.
f) Bank credit cards charge interest rate between 17-19% while the department store cards charge interest rate between 26-28%.
g) Interests are calculated on the daily outstanding balance.

III. Credit card payments
After receiving the credit card statement, you may pay off the balance in full without paying interest, or you may make a partial payment and start to pay interest.
If you make a partial payment, there are 3 types of concurrent interest rates are charged
1) From the date the credit card office posted the transaction to the next statement date.
2) From one statement date to the next.
3) From the second statement date to the payment date.

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