Credit card

[3] In contrast, credit cards allow consumers to build a continuing balance of debt, subject to interest being charged at a specific rate.

[citation needed] Credit card numbers and cardholder names were originally embossed, to allow for easy transfer of such information to charge slips printed on carbon paper forms.

With an Air Travel Card, passengers could "buy now, and pay later" for a ticket against their credit and receive a fifteen percent discount at any of the accepting airlines.

The Diners Club, which was created partially through a merger with Dine and Sign, produced the first "general purpose" charge card and required the entire bill to be paid with each statement.

Early credit cards in the U.S., of which BankAmericard was the most prominent example, were mass-produced and mass mailed unsolicited to bank customers who were thought to be low risk.

According to LIFE, cards were "mailed off to unemployable people, drunks, narcotics addicts and to compulsive debtors," which Betty Furness, President Johnson's Special Assistant, compared to "giving sugar to diabetics.

[28] However, until always-connected payment terminals became ubiquitous at the beginning of the 21st century, it was common for a merchant to accept a charge, especially below a threshold value or from a known and trusted customer, without verifying it by phone.

Although credit cards reached very high adoption levels in the U.S., Canada, the U.K., Australia, and New Zealand during the latter 20th century, many cultures were more cash-oriented or developed alternative forms of cashless payments, such as Carte bleue or the Eurocard (Germany, France, Switzerland, and others).

[34] These often include money orders, prepaid debit cards, lottery tickets, gaming chips, mobile payments[33] and certain taxes and fees paid to certain governments.

However, a legal loophole in this system was quickly exploited by online shops dedicated to providing cash back as a form of easy loan with exorbitant rates.

The verification is performed using a credit card payment terminal or point-of-sale (POS) system with a communications link to the merchant's acquiring bank.

Each month, the cardholder is sent a statement indicating the purchases made with the card, any outstanding fees, the total amount owed and the minimum payment due.

Depending on the issuer, the cardholder may also be able to make multiple payments during a single statement period, possibly enabling him or her to utilize the credit limit on the card several times.

The credit issuer charges interest on the unpaid balance if the billed amount is not paid in full (typically at a much higher rate than most other forms of debt).

In cases where the minimum payment is less than the finance charges and fees assessed during the billing cycle, the outstanding balance will increase in what is called negative amortization.

This means that an account that is less than 150 days delinquent will continue to accrue interest and fees, and could result in a balance that is much higher than the actual credit limit on the card.

The prepaid card is convenient for payees in developing countries like Brazil, Russia, India, and China, where international wire transfers and bank checks are time-consuming, complicated and costly.

[citation needed] Because of the many fees that apply to obtaining and using credit-card-branded prepaid cards, the Financial Consumer Agency of Canada describes them as "an expensive way to spend your own money".

[66] Research shows that a substantial fraction of consumers (about 40 percent) choose a sub-optimal credit card agreement, with some incurring hundreds of dollars of avoidable interest costs.

[78] Merchants in the United States have been fighting what they consider to be unfairly high fees charged by credit card companies in a series of lawsuits that started in 2005.

These are one-time use numbers that function as a payment card and are linked to the user's real account, but do not reveal details, and cannot be used for subsequent unauthorized transactions.

In both circumstances, an alert system can be built in notifying a user that a fraudulent attempt has been made which breaches their parameters, and can provide data on this in real-time.

Senator Carl Levin raised the issue of millions of Americans affected by hidden fees, compounding interest and cryptic terms.

[107] Consumers who keep their account in good order by always staying within their credit limit, and always making at least the minimum monthly payment will see interest as the biggest expense from their card provider.

Whilst the law remains in the balance, many consumers have made claims against their credit card providers for the charges that they have incurred, plus interest that they would have earned had the money not been deducted from their account.

Some card issuers have therefore commenced solicitations requesting customers to opt into over-limit fees, presenting this as a benefit as it may avoid the possibility of a future transaction being declined.

What is called a credit card in the United States - meaning the customer has a bill to pay at the end of the month - does not exist in the French banking system.

Larry Page and Sergey Brin's start up of Google was financed by credit cards to buy the necessary computers and office equipment, more specifically "a terabyte of hard disks".

Famed hedge fund manager Bruce Kovner began his career (and, later on, his firm Caxton Associates) in financial markets by borrowing from his credit card.

[132] A 2010 public policy study conducted by the Federal Reserve concluded cash back reward programs result in a monetary transfer from low-income to high-income households.