How does a credit card work?

How does a credit card work?

Are you planning to purchase a credit card, but don't really know what it is and how it works? Here are some important things that you need to know when purchasing a credit card. 

What is a credit card?

A credit card is a debit card that you can use to pay directly, but unlike a normal debit card, the money does not immediately go from your account. This happens at a later time. Your credit card provider makes an overview of all payments at the end of the month and sends you the final bill. So you actually have a loan with your credit card provider, which advances the amount. The credit card is universal, you can use it almost anywhere in the world.

How does paying with the credit card work?

You can pay with the credit card in different ways. To pay for a dinner in a restaurant, or an overnight stay in a hotel, you often just have to hand over your card and put a signature. If you buy a product in a store, you often have to enter a pin code. Withdrawing money at a machine works the same as with a normal debit card, you also have to enter your pin code here.

For online payments you must enter your credit card number, expiration date and validation code. You can also, if you wish, set a password for the credit card so that you have more security. To set this up, you must contact your credit card provider.

Differences between Visa and MasterCard?

In principle, there are no major differences between the two largest credit card providers, Visa and MasterCard. The difference is noticeable in the fact that Visa started a little earlier as a credit card network, which means that this card is accepted in slightly more places worldwide than MasterCard. This means that with a Visa credit card you have a greater chance of paying somewhere. This can be especially useful on vacations in less (financially) developed areas.