What is a Credit Card?
A question that adults already know the answer to but it is something that kids are not still familiar with.
At some point, parents are faced with lots of different questions that their kids start asking during the journey of financial education, these questions are related to bank accounts, debit cards, credit cards, how to save money, etc.
Credit cards can be tricky and it is important for adult to show children the difference between credit and debit cards.
We use credit cards to buy items without cash, after that, you will pay back the money to the bank later. A credit card has a limit and you must pay back the money. If you don’t pay back the money in time, you will pay extra money called interest.
What are the Types of Credit Cards?
There are many types of credit cards, each credit card has its purpose. If you search for credit cards you will find many types, each country has its types of credit cards.
Here are some kinds of credit cards such as:
- Rewards Credit Card:
This type of credit card is offered by a store or group of stores that allows customers to get discounts according to their purchase amount. You can use it to pay your bill, and reduce the amount of credit card debt.
- Cashback Credit Cards:
A cashback credit card is a kind of credit card that refund a small amount of the total spent on your purchases.
- Balance transfer Credit Cards:
A balance transfer credit card is to move your money from one credit card to another, which transfer charges are less in interest.
- Travel Credit Cards:
A travel credit card is a kind of credit card, which give rewards “offers” to you in the form of points or miles. You can use these points or miles for travel purposes, plane flights, and hotel rooms.
A travel credit card is also used for buying foreign currency and taking it with you while traveling. The card can have one or two currencies.
- Student Credit Cards:
A student credit card is made for students to help them to build their credit. This kind of credit helps students to be more financial independence. The only disadvantage is that this kind of credit offers lower credit limits and little to no incentives.
- Business Credit Cards:
A business credit card is a kind of credit used by individuals who work in business more than individuals’ personal use. This business credit card helps businesses to build a credit profit which helps them in improving their business.
- Store Credit Cards:
Store credit cards are used at specific stores. Retailers combine with banks to apply offers to customers. Store credit cards encourage customers to buy items today and pay them off over time.
Which Type of Credit Card should I have?
We need money to buy things we need. Borrowing money is not a bad thing, youjust need to makw sure that you understand and plan to pay it back The right type of credit depends on your needs, such as buying, traveling, and rewarding points.
What do Credit Cards Look Like?
Credit cards don’t have any sort of codes until they have at the bottom under the name of the account holder, then it will be a debit card. Credit cards have eight digits numbers for example “12345678” that is written on the face of the card.
If you are making a purchase, you will ask to input eight-digit numbers, which are known as “credit card account numbers”. There is also a security code, which is printed on the back of the card. The security code includes the last three digits numbers. Credit cards also have expiration dates, magnetic strips, and EMV chips.
Guess who has the Guinness World Record for most Credit Cards holder?
The Guinness World Record for most Credit Cards holder is Zheng Xiangchen. He has 1,562 credit cards. The second one who has the most credit cards is Walter Cavanagh. He has 1,497 credit cards in his name.
What are the Advantages of using Credit Cards?
- Help you to build your credit.
- There are no foreign transaction fees.
- Amplify the power of purchasing.
- You can reserve a rental car or hotel room.
- Save on interest and fees.
- You can earn rewards such as cashback or miles points.
- Highly protected for purchase and travel.
- Manage your cash flow.
- Highly protected against credit card fraud.
What are the Disadvantages of using Credit Cards?
- Paying high rates of interest.
- Credit card fraud.
- Cash advance fees and rates.
- Credit damage.
- Credit card surcharges.
- Increasing fees on some items.
- Increasing annual fees.
- High rates of purchasing.
What is an ATM Card?
ATM is the abbreviation of “Automated Teller Machines”, it is used to withdraw cash. This type of card can only be used at ATMs and requires a PIN (Personal Identification Number). You can withdraw money at any time. When you withdraw money, it is immediately deducted from your account directly.
Is an ATM Card a Credit Card?
An ATM card is considered a debit card, which is a payment card that deducts money directly from your bank account. Bank accounts mean saving your money at the bank and you have a right to withdraw your money using ATM cards at any time.
On the other hand, credit cards are used for borrowing money and paying it back in time, and if you cannot pay in time, you should pay extra money called interest.