Credit card functions, various types of cards and help with loss

The credit card is a plastic card that your cardholders use as a means of payment for services and goods purchases.

A credit card can be used almost anywhere in the world. In most cases, it is issued by bank institutions on behalf of card manufacturers to bank customers, and some credit card manufacturers also issue their cards directly to their customers. The card is not debited immediately, but the cardholder, even though he has already used the service or the goods, is deferred for a few days or even weeks. That is why the card is called a credit card. Due to this deferral of payment, the credit card will only be issued to customers who have regular income and who are able to make payments in any case.

The credit card is usually made of PVC or similar plastics. Due to its handy, convenient credit card size, it fits in any wallet or in your pocket. The most important data is on the front of the card, some of which are “embossed”. In the case of cards with high embossing, the digits and dates rise slightly. These cards are read with the help of so-called ” imprinters “. Imprinter are the devices in which the cards are drawn to read the data on them or to carry out the payment transactions. The main features of the credit card are the credit card number and the magnetic stripe.

Credit card number and other key figures

Credit card number and other key figures

The credit card number consists of twelve to sixteen digits, which can be used to assign the card to the cardholder. At the same time, it is used by the owner for identification if he e.g. B. would like to pay with a signature. The signature is on the back of the plastic card and can therefore be compared immediately by the seller or service provider. The magnetic stripe is also on the back of the card, where all important data is saved.

In addition to the identification number, there is also the ” BIC code “, which contains the card type and identifies the credit institution that issued the card. The remaining numbers, in addition to the BIC code, contain the account number and some check digits.

There is also an expiry date on each card, from which date the card can no longer be used.

The PIN code

The PIN code

In order to use the credit card at the ATM, when paying in department stores with electronic cash machines or abroad, the borrower needs a PIN number. This number is neither stored on the magnetic stripe nor is it stamped on the card. The bank assigns the PIN code to the cardholder.

Some credit institutions have started to put chips on the front of the card. These chips should eventually completely replace the magnetic stripe. Since 2011, more and more credit cards with chips have been produced in Germany to support the so-called SEPA project. SEPA means Single Dollar Payments Area. This is to ensure uniform payment transactions in Europe, in which the customer can make payments without any problems, regardless of the country in which he is currently located.

The different types of credit cards

The different types of credit cards

The most common and classic form of credit card in Germany is the charge card. The customer purchases his goods or services immediately, but must only pay for them within a maximum of 30 days, which means that the bank grants the borrower a loan with a very short term ; this type of loan does not earn interest. Every month, the customer receives an invoice detailing each payment transaction.

The second most used card is the debit card, also called checking card. As the name suggests, this card runs on the account number of the cardholder’s current account. With a checking card, the holder can e.g. B. pay directly with the card when purchasing goods. This is done by using a payment terminal, by entering the customer’s PIN number or leaving a signature. The customer’s checking account is usually debited immediately with the payment. There may be a short delay in debiting over weekends and public holidays.

Prepaid credit cards

Prepaid credit cards

Prepaid credit cards are now available for customers who do not receive regular receipts due to unemployment or self-employment. A credit can be paid into the card account by the holder on these cards, this credit is then available as a means of payment. Such cards are considered credit cards rather than direct credit cards, but they have exactly the same properties as “real” credit cards and are also produced by the major credit card companies.

The advantage of this card is that some banks even offer credit interest for this form of payment. But there are also institutes that charge a fee for every entry. Loading the card can also be costly.

There are also mixed forms of credit cards. The daily charge card, for example, is a mixture of current and charge cards. This allows the cardholder to make payments directly from the credit account. If there is no more money in the account, they are granted a credit line that they can exhaust in the meantime. At the end of a month, all outstanding debit amounts are added up and debited from the reference account, which is usually the customer’s checking account, because regular payments are received there. This is usually initiated by the bank through direct debit.

The internet has created a new form of credit card. Virtual credit cards are mostly prepaid cards. The cards only have a card number, a validity date and are mostly only used for one-time online purchases or for making calls.

The fees for sellers and cardholders

For cardholders of a credit card, payment transactions within the Eurozone are free. However, there are many banks that charge fees when withdrawing money from ATMs. Some banks charge an annual credit card fee.

Sellers and service providers have to pay the banks a down payment fee for each transaction. This down payment, also called discount, is usually determined by the credit card institutes and is calculated by industry. In addition, merchants have to pay each month to use the credit card systems and there are fees between 0.10 and 0.30 USD for every transaction.

Card blocking and liability for loss of credit card

Card blocking and liability for loss of credit card

There is a general emergency number 116 116 in Germany that can be called if the card is lost. However, each cardholder will be informed of the relevant emergency call center for the respective credit card institute when concluding a card contract.

If the card is lost, the customer is only liable for gross negligence. A grossly negligent act is when, for example, the card is left somewhere in connection with the PIN number. The cardholder is obliged to keep the PIN number secret ; he must neither keep it with him as a note near the card, nor disclose it to a third person.

If there is no negligence, the customer is no longer responsible for further damage by calling a blocking hotline. There are banks where the cardholder has to pay a deductible amount if the card is lost. This is around 50 to 100 USD, but this only applies to damage that occurred before the emergency call.