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How Do Credit Cards Work?

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A credit card is your cash in advance. You may apply for a financial help whenever you need it. Your lifebuoy with a magnetic strip is always with you. We have already told you about the way you can get your credit card.

Working principle of the credit card is simple. Each credit card has a credit limit, which covers funds you can spend without paying a fee. If you exceed a card limit, you will have to pay off a fee and next time you will more likely receive a refusal of a financial operation until you resume your balance.

Each credit card has either a magnetic strip or a small chip, which contain information about the card holder. Every time you use your credit card to pay off goods or services, all information about your payments stays inside your credit card. Along with reading the information, the terminal checks your credit card balance to figure out is it possible to complete an operation. The system automatically approves or refuses the operation. You receive your funds if your request is approved.

Interesting: Do you know that you can travel without a credit card?