Traditionally, it is understood that credit cards are a payment method to buy any good or service, but the fact is that each time these plastic rectangles with an incorporated magnetic band are used, what really happens is a bank microcredit to the holder of the card. That is the reason why credit cards must be also considered also as a short term way of financing, in other words, it allows to face expenses without the need of taking money from the bank account.
How credit cards work is quite simple. In the contract signed with the bank entity will appear the main conditions, such as payment method of the money spent (the most accepted is the monthly one), the limit of credit above which one cannot make more withdrawals or purchases, and the commissions that will be charged when the card is used. Once the debit amount of money is replaced, credit will be as well automatically restored, starting from zero again.
Many users do not know exactly which are the differences between debit and credit cards, there are some people which even think that they are the same. Far from reality, because though both cards are used to purchase and withdraw money, they are very different. The main difference between them is that credit cards allow to spend the money one does not have, but that will be paid later, while in debit cards the withdrawal is made instantly from an associate account. In addition, ATMs charge a commission when using the first ones.
Credit cards offer many advantages. First, they are an easy and quick payment method, it avoids the need of carrying the wallet, and at the same time allows to buy on the Internet. They also can have implicit services of rewards for accumulating points or purchase or travel insurances.
On the other hand, the use of credit cards also has negative aspects such as the risk of being robbed or the copy that can be made of the magnetic band with its following illegal use. It can also incite to compulsive purchases and to have no control of the expenses already made. At last, the non-payment of the credit will means having a debt that will be increased due to the increasing commissions, leading to a dangerous spiral effect.
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