Description of the credit card and its characteristics
A credit card is a payment card whose payments are only debited after a certain time from an account determined by the customer.
There are traditionally three types of credit cards:
1. the »deferred debit« card
which allows the purchase of goods and various transactions, but the payment of which is deferred one month later and without debit interest.
For example: the classic Visa card offered by banks.
2. the card accompanied by a payment credit opening
staggered, also called “revolving” credit, which allows the purchase of goods and various transactions. Payment is not only deferred, but also split monthly with a minimum monthly amount to be reimbursed (for example 5% of purchases).
Debit interest is calculated on the monthly debit balance.
3. the “flow-through” card
which combines the payment function and the deferred debit function, but which is offered and linked to a commercial brand or a particular distribution chain. Example: store card, in the supermarket sector.
These cards have one common characteristic, namely that:
each month, the customer receives a statement of expenditure giving an overview of all payments made using the credit card;
then, the total or partial amount of the expenses is either debited by direct debit, or paid by the customer directly and voluntarily, possibly taking into account a minimum contractual amount. Since the financial institution bears the risk of non-payment of cash withdrawals and expenses made with the credit card, the solvency of the client must be assessed.
The lender may refuse to issue a credit card when it is not certain that the future card holder will comply with the agreed terms. Any credit card is generally subject to a monthly spending limit, the amount of which can be adapted to the client’s profile.
The credit card linked to a current account allows a customer to make purchases or withdraw money from all over the world.
Cash withdrawals are subject to a higher rate than transactions made at a merchant
The customer can make cash withdrawals with cards linked to a current account at:
- vending machines in Belgium and abroad;
- ATMs of banks and exchange offices.
Confirmation of payment or withdrawal of money is made on the basis of:
- the signature of the card holder;
- introduction of the PIN code by the card holder;
- or any means of electronic identification.
Two new card reading techniques allow electronic identification:
- contactless / contactless payments;
- payments by mobile device.
Some terminals in Belgium are already “contactless / contactless” and foreign cards with this feature enabled can therefore make a payment in this way.
The expenses and transactions carried out by means of bank credit cards in our country are, for the most part, fully debited by direct debit on a monthly basis.
In recent years, the type of credit card with an opening of credit (opening of payment in installments, revolving credit or revolving credit described above) has gained importance. Different institutions offer these cards, including various distribution chains.
The purchase of more expensive consumer goods can thus be reimbursed in installments.
The credit card, of the “deferred debit card” type, is not subject to legislation, provided that it is a “credit”:
- without interest ;
- reimbursable within a maximum of 2 months;
- for which the lender requests fees lower than a certain amount (4.17 dollars per month, indexed, basic index: December 2010).