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Means of payment: everything about credit cards

A credit card is a means of payment that allows transactions to be made on credit and the amount of which is refunded later. It allows you to shop anywhere in the world, whether online or at a point of sale.

The credit card works like a loan: you borrow money from the issuer of your card for each of your purchases. In other words, you buy now and pay later. The financial institution issuing your card will therefore advance you a particular amount over a specified period.

The three main credit card issuers are Visa, Mastercard and American Express,

With whom the various Belgian banks have licensing agreements that allow them to offer cards on their own. However, financial institutions are not the only ones offering credit cards; some commercial brands also offer their own cards. This is the case, for example, with Brico, Carrefour, or Brussels Airlines.

Credit cards generally have a predetermined monthly spending limit and specific repayment terms, which in most cases include miscellaneous fees such as an annual fee, interest payment (APR), or other fees. withdrawal. All these terms are, however, mentioned in the credit agreement that the cardholder must sign with his bank.

What are the means of payment on credit?

B.1. Classic credit card

When you pay with a credit card, you always borrow a little money. The total amount you can borrow each month varies from one financial institution to another, and depends on your personal situation. Unlike the credit card, your account is not debited when you use your card as a means of payment. However, you must repay at least a portion of the amount borrowed every month because you receive an invoice from your financial institution stating the amount to be repaid. On your bill are also mentioned the minimum amount to be refunded as well as the payment deadline.

B.2. Deferred debit credit card

This card works as a cash advance of a certain amount that you must repay at the end of the month after receiving your payment statement. The amount spent is automatically debited from your account as a monthly bill. However, if your balance is not sufficient to cover the expenses incurred with this method of payment, you pay interest on the basis of the applicable APR.

B.3. Credit card with a credit opening / revolving

With a certain type of card, you can have a credit line open. This is a cash reserve which you can draw indefinitely, provided that you repay each month a minimum amount set out in the credit agreement. If the monthly bill is not respected, you will have interest to pay on the remaining amount.

B.4. Prepaid credit card

The prepaid card is a means of payment in general not very difficult to get because it must be loaded before it can be used. You only spend the amount previously loaded on your card. Thus, you must never pay interest since no money is advanced and you never receive a card count. It allows to never exceed its budget and is particularly suitable for young users.

B.5. Virtual credit card

The virtual card is a means of payment allowing you to pay securely online. This is a temporary credit card associated with a specific amount: for each transaction, you receive a credit card number, expiration date and a different cryptogram. It is almost impossible to hack this information, unlike a standard credit card, which can easily be stolen.

What is the use of a credit card?

The credit card made its appearance in the 50s and comes straight from the United States. Although formerly marginal, its use is more and more common because it has many advantages. Beyond a small piece of plastic with a magnetic strip, it is a very practical means of payment which, according to the type of card, can allow you to:

  • Stagger your payments (for interest): you repay the amount borrowed at your own pace.
  • Pay and withdraw money all over the world: if you are planning a road trip to Asia or a hike in the natural parks of Latin America, no worries, you can pay and withdraw money almost everywhere with your card credit. However, be sure to activate the international function with your bank before each departure.
  • Pay for online purchases: For example, book a flight or pay for your Netflix subscription.
  • Assure you against loss, theft, damage and fraudulent transactions, and get an extended warranty: you are never safe from credit card scams or problems with your online orders. But no worries to have, some cards cover you in these situations!
  • Contract a wide range of travel insurance depending on the type of card: travel, cancellation, medical assistance, death insurance …
  • Get loyalty benefits: cashback, rewards, airmiles, etc. Everything is done to save you money.