Credit Card – What Is It?

A credit card is a type of payment card that gives you flexible access to the credit limit granted by the bank. When you make purchases, the funds are taken from the card’s credit account rather than your personal account. This gives you the ability to make a commitment without having to apply for credit from the bank each time – within the limit you have previously been granted, of course.

A credit card looks the same as a debit card and any other card issued by a bank. According to the current regulations, each payment card must be marked with information whether it is a debit or credit card. However, the exact place of the marking is not specified, so it may be visible on the front or the back of the plastic.

How Does A Credit Card Work?

How does a credit card work? A credit card works in the same way as an ATM card. You can use it to pay in stationery stores and online, as well as to withdraw money at an ATM (however the latter option is associated with very high fees). Like any loan, you also have to pay it back.

How does the repayment work? When you sign up for a credit card, you sign a contract that specifies when you must repay the funds used to pay for the card. If you make it on time, the loan will be interest-free. However, if you are late, the bank will add interest according to the terms and conditions of this banking product.

What Is A Digital Credit Card?

A digital credit card is virtually no different in its functionality from a plastic card. The card, if the owner wishes, can either be named or not, it has all the details needed for bank transfers and online payments: it is the card and account number, expiration date, CVC-code.

 Such a card can be opened at the conclusion of the contract, and then, if a person has such a need, to issue a plastic carrier. If a person is already a client of the bank and wants to additionally issue a digital card, he can do it in the bank application.

 How Do I Use My Digital Card?

To use a digital credit card not only for online shopping, but also in offline stores, you need to load the card into a mobile wallet: Apple Pay, Samsung Pay, Android Pay and other wallets. In this case, the smartphone must necessarily support NFC (contactless payment technology).

 Unlike, for example, virtual cards, which can only be used to pay online and have various restrictions on the transfer of funds, a digital card retains all the capabilities of a debit card, only it cannot be held in the hand.

 Another peculiarity of digital cards is that only existing clients of credit institutions can open them. To receive a card, you will have to visit the bank in person – unlike virtual cards, you will not be able to open such a card remotely. This restriction is due to the fact that the bank must identify the client when opening an account.

What Are the Disadvantages of Digital Credit Cards?

Digital cards have mostly technological disadvantages. Such a card will not work on a smartphone that does not have NFC (near field communication) technology. Without it, a person will be able to pay with a digital card only online.

 Besides, not all terminals and ATMs are equipped with NFC-reader, which allows making payments and withdrawing cash without a card.

 Digital Cards and Ecology

Digital cards are the most ecological solution. They do not need to be produced and then disposed of. Nevertheless, nowadays, there are also more and more ecological solutions for the production of physical payment cards. These include recycled cards, cards made of biodegradable materials. There are even solutions that verify the carbon footprint left by the card.

What Are the Advantages of a Digital Card Over Plastic?

1. Fast. Digital cards are issued remotely through the Internet bank or mobile application, you do not need to go to the bank office or wait for courier delivery. The card is opened in a few minutes, and then you can use it in full. Details for transfers and payments can be received through SMS or viewed in a personal cabinet.

2. Convenient. At first, plastic unloaded purses from cash and change, but then successfully picked up the baton and flooded everything. Bankcards, travel cards, store cards – few people cannot boast a solid stack of this goodness. Digital card is a great opportunity to make your pocket lighter and the planet cleaner.

3. Safe. If you do not have a card, you cannot lose it. In addition, if the loss of the card you cannot notice soon, not to notice the absence of the phone is almost unreal. Of course, not many people carefully keep the PIN-code with the card, but if the card supports contactless payments, you can pay for purchases up to a certain amount without confirmation. If an intruder gets hold of the phone, it will take a lot of time to unlock it, during which time you can block access to the money.

 In addition, payments via mobile payment services are faster and safer than card payments. Instead of card data, the app instantly transmits an encrypted key to the merchant, from which card information cannot be retrieved.

4. Free. Usually digital cards are opened and serviced for free. This is due to the fact that banks also save a lot of money on giving up plastic.

Bottom Line

 Perhaps digital cards will replace physical cards. It will be influenced not only by ecology, but also by the trend of fast payments and the popularity of contactless payments. However, it does not seem that such a revolution will happen faster than within a few years.