The little piece of plastic-the credit card

Know how your credit card
works before you swipe...."


It is just a piece of plastic the size of a visiting card, which has changed the way we handle our money and finances. You do not have money right now, do not worry, use your credit cards, make your purchase, wait for your monthly statement, and pay the bill in installments. Is that all that there is to using a credit card?

The credit card as a concept started in America. The success and popularity of the concept led to the global presence and usage of the credit card. A credit card is essentially a plastic card containing a magnetic strip. The card is issued in the user's name and allows the user to purchase products without making any cash/cheque payment. At the beginning of every month the user receives a statement from his/her bank. The user has to pay the bank the amount within a specified period either in installments or as a one-time payment. If the user pays the amount in installments the bank charges interest for the balance amount.

The bank specifies a credit limit based on the user's income and financial security. The user can make purchases using the credit card within the specified credit limit. A credit card is valid only if it has the user's signature on the reverse of the card.

Identity theft is an issue of growing concern as more and more cases of online fraud are being reported everyday. This is primarily due to the increase in the number of users conducting their transactions on the Internet and the carelessness of the credit card users. There have been instances where portable card-readers were used to get data from credit cards and this information was misused. Hackers also use this information to conduct online transactions.

Some simple tips that can help prevent identity theft and misuse of credit card details are as follows:

1-Never reveal your credit card details, like account number and PIN(Personal Identification Number) to others.

2-Be sure to tear all receipts or bills once the transaction is over and the bills are paid.

3-If you are buying something online, ensure that the Website is approved by digital security firms like Verisign, Entrust, RSA Security, etc...

4-Always collect your credit card once you complete your transaction and keep analysing your bills to check if someone has misused your credit card.

A credit card is a boon for the middle-class citizen as it allows the luxury of buying things now on credit and paying for them later. One has to remember that all things should be used in moderation and it is always good to pay one's bills on time.