Prepaid "credit" cardsSee also: Stored-value card
A prepaid credit card is not a true credit card, since no credit is offered by the card issuer: the card-holder spends money which has been "stored" via a prior deposit by the card-holder or someone el
CostsCredit card issuers (banks) have several types of costs:
 Interest expensesBanks generally borrow the money they then lend to their customers. As they receive very low-interest loans from other firms, they may borrow as much as their customers
Costs to merchantsMerchants are charged several fees for accepting credit cards. The merchant is usually charged a commission of around 1 to 3 percent of the value of each transaction paid for by credit card. The merchant may also pay a variable charge, c
Collectible credit cardsA growing field of numismatics (study of money), or more specifically exonumia (study of money-like objects), credit card collectors seek to collect various embodiments of credit from the now familiar plastic cards to older paper m
Code 10Code 10 calls are made when merchants are suspicious about accepting a credit card.
The operator then asks the merchant a series of YES or NO questions to find out whether the merchant is suspicious of the card or the cardholder. The merchant may b
ChannelsBanks offer many different channels to access their banking and other services:
Automated Teller Machines
A branch is a retail location
Mail: most banks accept cheque deposits via mail and use mail to communicate to their customers, e.
A certificate of Deposit (CD) is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions.
CDs are similar to savings accounts in that they are insured and thus virtually riskf
Business modelA bank can generate revenue in a variety of different ways including interest, transaction fees and financial advice. The main method is via charging interest on the capital it lends out to customers. The bank profits from t
Brokered CDsMany brokerage firms known as "deposit brokers" offer CDs. These brokerage firms can sometimes negotiate a higher rate of interest for a CD by promising to bring a certain number of deposits to the institution.
Unlike traditional bank CDs, bro
HistoryThe concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel.
The modern credit card was the successor of a variety of merch
Benefits to merchants
An example of street markets accepting credit cards. Most simply display the acceptance marks (stylized logos, shown in the upper-left corner of the sign) of all the cards they accept.For merchants, a credit card transaction is ofte
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grant
ControversyCredit card debt has increased steadily. Since the late 1990s, lawmakers, consumer advocacy groups, college officials and other higher education affiliates have become increasingly concerned about the rising use of credit cards among college st
USThe Credit CARD Protection Act of 2009, that was signed into law by President Obama, requires that consumers "opt-in" to over-limit charges. Some card issuers have therefore commenced solicitations requesting customers to opt in to overlimit fees, prese
How credit cards workCredit cards are issued by a credit card issuer, such as a bank or credit union, after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. Merchan
Bump-up CDsA Bump Up CD allows the account holder the option to increase the interest rate once during the term of the CD. Upon request, the bank will bump up the interest rate on the certificate of deposit to a higher rate being offered by the issuing ba
Callable CDsA callable CD is similar to a traditional CD, except that the bank reserves the right to "call" the investment. After the initial non-callable period, the bank can buy (call) back the CD. Callable CDs pay a premium interest rate. Banks manage
Interest on outstanding balancesInterest charges vary widely from card issuer to card issuer. Often, there are "teaser" rates in effect for initial periods of time (as low as zero percent for, say, six months), whereas regular rates can be as high as 40 p
FeaturesAs well as convenient, accessible credit, credit cards offer consumers an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. C
Double taxationDouble taxation still occurs within these tax-sheltered investment arrangements. For example, foreign dividends may be taxed at their point of origin, and the IRS does not recognize this tax as a creditable deduction. There is some controve
Distribution of fundsAlthough funds can be distributed from an IRA at any time, there are limited circumstances when money can be distributed or withdrawn from the account without penalties. Unless an exception applies, money can typically be withdrawn pe
Detriments to customers High interest and bankruptcyLow introductory credit card rates are limited to a fixed term, usually between 6 and 12 months, after which a higher rate is charged. As all credit cards charge fees and interest, some customers b
Deposit insuranceIn the US, the amount of insurance coverage varies depending on how accounts for an individual or family are structured at the institution. The level of insurance is governed by complex FDIC and NCUA rules, available in FDIC and NCUA book
DefinitionThe definition of a bank varies from country to country. See the relevant country page (below) for more information.
Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:
Benefits to customersThe main benefit to each customer is convenience. Compared to debit cards and cheques, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, p
Bankruptcy statusIn the case of Rousey v. Jacoway, the United States Supreme Court ruled unanimously on April 4, 2005 that under section 522(d)(10)(E) of the United States Bankruptcy Code (11 U.S.C. 522(d)(10)(E), a debtor in bankruptcy can exempt his or
Parties involvedCardholder: The holder of the card used to make a purchase; the consumer.
Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bear
Origin of the wordThe word bank was borrowed in Middle English from Middle French banque, from Old Italian banca, from Old High German banc, bank "bench, counter". Benches were used as desks or exchange counters during the Renaissance by Florentine banker
Neutral consumer resources CanadaThe Government of Canada maintains a database of the fees, features, interest rates and reward programs of nearly 200 credit cards available in Canada. This database is updated on a quarterly basis with information s
NameA transactional account is known as a checking account (or chequing account) in North America, and as a current account or cheque account in the United Kingdom, Hong Kong and some other countries. Because money is available on demand it is also som