Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
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  • How Does a Credit Card Work?

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  • Credit cards have made it easy for a lot of people around the globe to make purchases on credit. It is a form of plastic money and can be used to make payments offline and online. It seems almost magical that by swiping a plastic card you can pay for products and services, but in actual there is advance technology and multiple players involved in making the whole credit card system work.

    The credit card functions differently for a cardholder and for the other parties.

     

    For a credit cardholder:

    When you apply for a credit card, the card provider will check if you are financially eligible to own it or not. If you are eligible, then based on the amount you earn, the bank or Credit Card Company will set a credit limit for you.

    Once you receive your credit card, you can use it to make payments on credit. By using this card, you are borrowing money from your card provider (Credit Card Company or bank). Every billing cycle you can use either the full credit limit or a portion of it. If you exceed your credit limit, you will have to pay a penalty.

    At the end of every billing cycle, the lender expects you to repay the amount you have borrowed. There is a fixed interest free credit period, within which the cardholder is supposed to pay either the full amount due or a part of it. Credit card providers generally specify the minimum amount that cardholders have to pay every billing cycle, to avoid being considered a defaulter.

    If the cardholders pay the full amount due, they do not have to pay any interest on their card. In case they pay only the minimum amount due or do not repay any money, then they will have to pay an interest on the outstanding balance and on the new purchases. The card provider will keep charging the interest until they pay the full outstanding balance.

     

    For the other parties:

    The other parties involved in the credit card system are:

    • Merchants or sellers – They use the POS (Point of Sale) Terminals to swipe the credit cards of the customers to get their money.
    • Payment Gateway – It is the online version of the POS machines used at retail outlets. The payment gateway authorises the purchases that are made using a credit card online.
    • Credit Card Issuers – These are the banks or Credit Card Companies that offer credit cards, collect the monthly bills and deal with the customers.
    • The Acquirer – It is the bank or financial institution that process the credit card payments on behalf of the merchants. The Acquirers provide the POS machines to the merchants.
    • Association or Network – It refers to the payment processing network, which collect information from the processors, authorizes and collects the payments for the purchases, etc. For example - Visa, MasterCard, American Express, etc.
    • Payment Processors – The payment processors take care of collecting the data and sending it to the Network. The right network is identified by the first and last digits of the credit card numbers.
     

    Process:

    When a cardholder swipes his/her credit card to make payment at a merchant outlet, a request is submitted by the merchant to the acquirer via a phone or network connection. The acquirer forwards this request to the card issuer to authorize the transaction. The card issuer has to check if the cardholder has enough credit available in his/her account to make the purchase. If yes, then an authorization code is sent by the issuer to the acquirer, who then approves the transaction and the purchase is made.

    A merchant does not swipe just one card on the POS machine in a day. Depending on the number of customers, there can be many requests sent by the merchant to the acquirer. So, in order to track the sales, merchants send the requests to the acquirer in batches through the card association or network to the issuers to get the payment. The association distributes the transactions according to the issuers. The issuers deduct the interchange fee and transfers the amount to the acquirer, who after deducting their share, sends the balance to the merchants. The transaction rates varies from merchant to merchant and is dependent on the transaction numbers, type, category, etc. The payment process is same in case of online purchases as well except that the payment are processed by payment gateways such as PayUMoney, VeriSign, etc.

    Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

    Credit Card Reviews

    • Axis Bank Credit Card
      "Service is not up to the mark"
      0.5 1.0/5 "Really Bad"
      I am holding credit card from Axis Bank. I received the card on time. Credit limit is very less. I am not satisfied with their customer service. I lost my credit card. I informed them many times about it but they have not issued a credit card yet. When I call their customer care they ask me to go to branch and when I go to their branch they ask me to call customer care.
      Was this review helpful? 0
      , coimbatore
      Reviewed on Jul 16, 2019
    • IndusInd Bank
      Bank Bazaar Credit Card
      "User friendly"
      0.5 4.0/5 "Great!"
      While surfing a credit score in a website I came to know about Bank Bazaar for the first time then I preferred to apply for a credit card and the process was good. Customer service is a nominal and okay. I use to check credit score through a website.
      Was this review helpful? 0
      , thane
      Reviewed on Jul 16, 2019
    • IndusInd Bank Credit Card
      "Good "
      0.5 4.0/5 "Great!"
      I am using INDUSIND bank credit card for more than a month which was applied through an online. On time I received a card from bank. The credit limit is okay which was given from bank. Not yet use the card. The customer service is good and responsiveness.
      Was this review helpful? 0
      , thane
      Reviewed on Jul 16, 2019
    • Bank Bazaar Credit Card
      "Average"
      0.5 4.0/5 "Great!"
      I have come to know about Bankbazaar from the internet. Their customer service is good and very helpful throughout the process. I have been using Bankbazaar for the last 4 months. I check free credit score and mobile application is user friendly.
      Was this review helpful? 0
      , coimbatore
      Reviewed on Jul 16, 2019
    • Citibank Credit Card
      "Average"
      0.5 3.0/5 "Satisfactory"
      I am using my new INDIANOIL CITI PLATINUM CARD. I was delivered on time. Citi bank has given very less credit limit. I am expecting 1 lakh and above. It is a lifetime free card. I am having a hard time to pay my bills and it takes 2 days to reflect my payment.
      Was this review helpful? 0
      , coimbatore
      Reviewed on Jul 16, 2019
    • HDFC Bank Credit Card
      "Good service"
      0.5 4.0/5 "Great!"
      I am holding an HDFC credit card. I have been using this credit card almost 10 years. I had received the card on time and credit limit is nominal. Sometimes I am getting some benefits like cashback offer and reward points. HDFC bank customer service is great.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 16, 2019
    • Axis Bank Credit Card
      "Average"
      0.5 2.0/5 "Expected more"
      I am holding a credit card from Axis Bank. I received the card on time. It is a lifetime free card. I have been using this credit card for the last 2 years. Axis bank Netbanking and mobile banking are user friendly. They have given me enough credit limit.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 16, 2019
    • IndusInd Bank Credit Card
      "Need to imrprove customer service"
      0.5 4.0/5 "Great!"
      I am using INDUSIND bank credit card for more than 3 months which was applied directly to bank. On time I received a card from bank. It is a life time free credit card.The credit limit is nominal . I use this card for all purposes. The customer service is no proper response.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jul 16, 2019
    • Bank Bazaar Credit Card
      "Hassle free"
      0.5 4.0/5 "Great!"
      I have used the services of Bankbazaar earlier as well. The customer support is good and they are quick to respond. The process is also satisfactory as it was easy to use the portal and place a request. There were follow up calls as well. In all no hassles.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 16, 2019
    • Bank Bazaar Credit Card
      "Good"
      0.5 3.0/5 "Satisfactory"
      I have come to know about Bankbazaar from a promotional message. I have been using their service more than 5 years. I visit this website to check financial products and credit score. Their customer service is good. Website and mobile application is quite user friendly.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 16, 2019
    • IndusInd Bank Credit Card
      "Unhappy with the process"
      0.5 3.0/5 "Satisfactory"
      I had applied for a credit card with Indusind Bank. The process has not been satisfactory. The credit card was sent to my old address and I did not even receive a call as well. Since I was no available at that address it returned to the bank and after which I got no card from them.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 16, 2019
    • HDFC Bank Credit Card
      "Good"
      0.5 4.0/5 "Great!"
      I am holding HDFC bank titanium credit card for more than 9 months which was applied directly to bank. On time I received a card from bank. It is an annual fee chargeable card.The credit limit is nominal and enhanced it. I use this card for all purposes but I get less reward point.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jul 16, 2019
    • IndusInd Bank Credit Card
      "Average"
      0.5 3.0/5 "Satisfactory"
      I have received my Indusind Bank PLATINUM AURA EDGE MASTER CARD. I am not able to pay my credit card bill through netbanking. The process seems very difficult to me.It is a lifetime free card and credit limit is nominal. They deliver the card on time.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 16, 2019
    • RBL Bank Credit Card
      "Need to decrease charges"
      0.5 2.0/5 "Expected more"
      I am holding RATNAKAR bank credit card for less than 2 years. It is an annual fee chargeable. The limit is okay now they have increased to 7 thousands only. I use this card electricity, ticket booking, restaurants, to buy electronic items based on the usage I get more points. They are taking some hidden charges without any intimation.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jul 16, 2019
    • SBI Cards Credit Card
      "Excellent card"
      0.5 5.0/5 "Blown Away!"
      I have been holding SBI credit card from long time, their service is good, they have charged me annual fee but waived off option is available, i am happy with the credit limit they have given me good limit as per my requirement, even the interest rate they have charged me is less comparing to market price.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 16, 2019
    • YES Bank Credit Card
      "Good card"
      0.5 4.0/5 "Great!"
      I have been using YES bank credit card for long time my experience till now with this bank was good, they provide me good offers in all products, and they have not charged me annual fee in this card, it is life time free credit card, and i am happy with the credit limit which they have given me in this card.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 16, 2019
    • Standard Chartered Bank Credit Card
      "Not satisfied"
      0.5 1.0/5 "Really Bad"
      I have been holding standard chartered bank from long time, but i am not satisfied with their service , their service is not up to the mark, they have charged me annual fee but no waived off option is available in this card, i hold this account two years before, but they have not increase my credit limit, their customer care service is not up to the mark.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 16, 2019
    • ICICI Bank Credit Card
      "Excellent card"
      0.5 5.0/5 "Blown Away!"
      I have been using ICICI bank credit card for a while, and they have not charged any annual fee in this card , it is life time free card and i am okay with my credit limit which they have given me in this card and like they charge annual fee but most of time it use to get waived off so i considered as no annual fee they charge and they provide good offers and discount in this card.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 16, 2019
    • Bank Bazaar Credit Card
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I came to know about Bank bazaar through Online only ,This portal was well known to all ,I have tried checking credit score it is very useful ,This portal is very useful to search all the required information related to all financial products . I am satisfied with the service .
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 16, 2019
    • HDFC Bank Credit Card
      "Good card"
      0.5 4.0/5 "Great!"
      I have been using HDFC credit card for long time, they have not charged me annual fee in this card, it is life time free credit card and i am happy with the credit limit they have given me in this card, and there is not much offers they have given in maximum products, they mostly given offers on miles that more important for me , overall service is good.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 16, 2019
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