Credit Cards 101: How Do Credit Cards Work For Beginners

Knowing the credit card types and how they function help you become a responsible consumer.

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How Do Credit  Cards Work?

The card reader receives your information and sends it to the Merchant’s bank.

Merchant’s bank then requests payment authorization from the credit card issuer. Once authorized, the issuing bank sends the money through the payment network to the Merchant’s bank.

Besides big banks like Bank of America, Capital One, Citi, and Wells Fargo, many other banks and credit unions issue credit cards.

Various products are available based on consumer types, credit history, reward structure, card network, and many other features. 

If you use credit cards responsibly, they work in your favor. The cards are slightly over 3 inches by 2 inches in size and can fit into your pocket.

With virtual cards, you don’t even need to carry them. You can store them in your phone’s digital wallet.