You use a credit card to withdraw money, to pay or to make bookings. But how do credit cards actually work, what are the different types and what do you have to pay special attention to? Our financial flow recommendation on the best credit cards can be found below!
A credit card is a „payment card“ issued by a credit card provider and a credit card issuer. If your application for the card is approved, you can use it to withdraw money, pay and make bookings worldwide. With a „real“ credit card, you are granted a small monthly credit for this purpose with a fixed credit limit, which you then pay off monthly or over a longer period of time.
Credit card issuers, in turn, are credit institutions (usually banks) that obtain so-called issuing licenses from a credit card provider to use the respective payment system. The issuers also determine the conditions for a credit card. In some cases, the issuing banks also cooperate with companies such as Amazon or Ikea.
Actually, only the real credit cards, which are further subdivided into charge cards and revolving cards, are actual credit cards. This is because only with these cards does the credit card issuer (usually a bank) grant the user a small loan, so to speak, which he or she must repay monthly or within a fixed period of time.
With debit cards, the amounts used are deducted directly or within a few days from the associated checking account. You can then use this account to make transfers or request direct debits. With prepaid cards, on the other hand, you pay credit into a collective account of the bank, which is then assigned to your card. Therefore, you cannot use the usual account functions with a prepaid credit card.
Find the best credit card Germany here.