With the very many “runaway” credit card holders nowadays, is a credit card business still as viable as before? This is a question that you may ask yourself whenever you hear or read about creditors trying to bail out of their credit card dues.
And it may also be the same question you want answered each time a credit card business agent approaches you to sell you an account or two. In fact, you might even have a lot of questions in your mind about this business.
For that, here are some of the things that you want to know about credit card business before you accept one:
What is a Credit Card Business?
First thing off is the credit card. What is this card and how does it differ from your ATM card and other cards? A credit card is just like any other card in appearance but it can be used to pay something when you don’t have enough cash for it. Simply put, it is a system of payment.
Now, what is the business in this credit card? It is actually one of the huge commercial businesses that geniuses in bank industry ever thought of. A credit card business is funded not by the bank itself but a regulator or group of regulating financing companies that has contact with not only the bank but also merchants around the world.
The job of the loaning bank is just to find accounts that are willing to use this system of payment under their bank.
In default, the credit card or the account name on the card is already loaded with as much cash as the approved credit limit. All the account has to do is use this credit to whatever he or she thinks is necessary for him or her. Used or not, the bank and the affiliate credit owners will still earn from the interests and other rates they charge the card.
Who Gets a Credit Card?
Creditors and banks are not blind or deaf. They only offer their credit cards to accounts who have outstanding credit scores or to new accounts who have bankable deposits and investments in their bank. Sometimes, they also offer applications to anyone pending background check and approval.
They do that by allowing a person complete an application form and provide the necessary paper works.
Only when the account sends all the necessary document does the bank representative, usually a loan officer, does the processing of the application. He or she does that by running the name of the applicant over a data bank where names of delinquent and high risk accounts are listed by other banks and financial institutions. Only when the applicant passes this random check does the loan officer approves the application.
After the random checking of the accounts verifiable documents, the loan officer approves the loan and submits the information to the accounts manager. There, the manager does another random check for verification and then approves a request to deposit a sizeable amount as credit to the credit card that bears the name and signature of the account. This card is also assigned a unique number and pins that only the account is supposed to know and use. And then, the card is sent to the account.
Sending the card is not the last of the card’s processing state. It has to be confirmed by the account before the bank representative unlocks the credit to the account. For that, the account needs to receive the card and call the provided number to do some confirmation of the information and details in the card and of the account. Once this information match, the credit card’s lock is opened and the credit is free for use right after the confirmation.
Who Offers a Credit Card Business
Initially, only large banking and financing corporations have the capacity to offer credit card businesses. Today, almost all banks have their own loan units and credit cards have become a mainstay in this unit.
Basically, these cards are offered to their outstanding clients although there are some applicants that do not have accounts in the bank but can still apply and land one of these credit cards as long as his or her financial record fits the requirements of the bank.
Is it Wise to Enroll in a Credit Card Business
Applying for a credit card is actually wise because it is the safer payment option than cash. What is unwise is when an account start to splurge the credit to a point that it is already beyond his or her means.
That is not what a credit card is for. The main purpose of the card and the credit placed on the account is to provide a contingency fund for this account in case the going gets rough.