Everything You Should Know About a Credit Card

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A credit card is a payment tool linked to an active account, it is made up of a plastic card and a microchip or magnetic strip for data recognition and security. On the front of each card, there is the cardholder's name, the card number, and its expiry date. On the back, you will find the CVV2 or CVC2 control code (necessary for online transactions) and a space in which you must put your signature. 

Credit cards are widely used for:

  • Making online purchases
  • Paying in monthly installments for purchases
  • Withdrawing cash at the counter of some affiliated banks and at ATMs (paying a commission proportional to the sum withdrawn)
  • Making purchases in shops equipped with POS at no additional cost and without cash

A Guide to Applying for a Credit Card

Different financial institutions have their steps for applying for a credit card. Some are common among them all. You should present documents such as an identity card and a fiscal code. You may also be required to give out documentation relating to one's income (payslip in the case of an employee, tax return in the case of self-employed and pension slip for pensioners) 

The issuance of the credit card is subject to the applicant's ability to repay the sums advanced. The card will be associated with a credit line, or “ceiling,"representing the maximum monthly limit that a specific customer can spend using the card.

When paying for items using your credit card during shopping, you may be required to present an identity card. The merchant should ask for an identity document to identify the holder, verifying the name and signature on the back of the same, and avoid illegal use of the card. It is a protection for the cardholder.

According to Credit Cards Compare NZ, a single bank or financial institution may offer up to ten different credit card types which can make choosing a credit card quite a challenge. Credit card comparison websites can help you filter through and find the best credit card to suit your needs. 

Types of Credit Cards

There are different types of credit cards. According to how the refund of the paid sum will take place, the following are distinguished:

  • The traditional credit cards, which provide for the repayment in a lump sum;
  • The revolving credit cards, which provide for a pro-rated refund (usually with the application of an interest rate).

It is also possible to shop without incurring charges, Thanks to an agreement and an authorization system based on three contracts, signed by the four parties involved:

  • credit card holder;
  • bank or issuer;
  • payment circuit (Visa, MasterCard, American Express, Diners, Maestro);
  • merchant.

Credit Card Safety

The main risks of using a credit card are cloning and phishing. Through cloning, the information from the credit card's magnetic stripe is copied, through the manipulation of the readers used by ATMs or merchants, and transferred onto similar plastic supports. This possibility has been eliminated with the recent insertion of the microchip, which has made the cards even more secure.

As far as phishing is concerned, it is a computer crime which, by sending e-mail messages in which the graphics of banking or postal sites are perfectly imitated, tries to obtain from the "victims" the password to access the account current, those that authorize payments or the number of the credit card and its control code. To avoid being victims of phishing and other scams, you must never communicate your card details or payment passwords to third parties, especially by mail or telephone.

For online payments, you need to check that the site offers a secure connection (the address must start with "https" and have a padlock at the bottom right of the page for Windows or before the https for other operating systems). It is necessary, especially in credit cards, to monitor your bank statement and, if you suspect that you have been a fraud victim, contact your bank immediately. To prevent cloning, it is better to ask the issuer to replace old cards without microchips.

What to Do When You Lose Your Credit Card

There are several things you should do if you happen to lose your credit card or witness anything strange. They include:

  • Blocking the Card- In case of accidental theft or loss of your credit card, as soon as you realize the fact, you must urgently block the card using the relevant toll-free numbers of your bank or card issuer.
  • File a Theft Report- Once your credit card has been blocked, file a report at the nearest police station, and don't forget to get a copy of the report.
  • Report to the Bank or Card Issuer- Within 48 hours following the card's theft or loss, confirm the blocking request by registered letter with return receipt, also attaching a copy of the report to your bank or company issuing the card.

How Banks Secure their Credit Cards

According to the relevant law, the bank or credit institution issuing a payment card must take all necessary measures to ensure security. Issuers usually use monitoring systems that identify possible fraudulent events, for example, by sending free SMS to the cardholder to verify the genuineness of transactions. Some banks and circuits also offer insurance coverage that intervenes to compensate the customer in various cases, such as cloning and computer fraud. These insurances are almost always provided in gold credit cards.

An account statement is also essential for your credit card safety. It is a report of all expenses made in the 30 days before the debit. It is a very useful tool for card security purposes as it allows you to view all the movements made with the card and identify any unauthorized actions. Transactions can be contested by submitting a written complaint within 60 days from the date the statement was sent.

Finally, we recommend that you comply with the rules for using payment cards and check whether there is insurance coverage associated with your card, activating the SMS alert service if available.