Credit cards are an everyday payment method. But what do we really know about them? What are they exactly? What’s the difference between debit, prepaid and credit cards? Find out all the details.

What’s a credit card?

A credit card is a plastic or metal document that a financial institution issues to an individual. We can apply to our bank for one and use it to make cashless payments. It also allows us to buy now and pay later. It’s called a “credit” card because the bank lends us money to make purchases with it (known as buying on credit). Like a debit card, it has a spending limit for acquiring goods or services, or for withdrawing from an ATM. To learn more, please visit Openbank.

How did credit cards start?

In the early 20th century, many US companies started giving employees credit cards for internal use to certify salaries and make simple transactions; however, they weren’t intended for external consumption. Several decades later, the first credit card accepted in retail stores was issued. 

What are the parts of a credit card?

The front of the credit card shows the name of the bank; a security chip; the bank identification number (BIN, or “card number”), which usually contains 16 digits; the card expiry date; and the cardholder’s name. At the bottom is the name of the card issuer (e.g, Visa, Mastercard and American Express) (see the image below):

The back of the card has a magnetic stripe; a space for the cardholder’s signature (because each card is personal and non-transferable); and the CVV security number, which is widely used in online purchases. 


To make online shopping safer, we now have numberless credit cards; cards with dynamic CVV numbers; and virtual cards with a numbering system. 

New Santander numberless credit cards
New Santander numberless credit cards

What is the difference between credit, debit and prepaid cards?

The differences between these cards are straightforward. A debit card makes payment with its holder’s current account balance. A prepaid card can make payments with pre-loaded funds for retail and online purchases and ATM withdrawals. A credit card, however, pays with funds borrowed from a financial institution. If you want to know more about card types, visit the Openbank website or Finanzas para mortales (Finance for mortals).

There are also many types of credit card. Classic cards let cardholders borrow money for payments on the condition that they repay the bank in one month (usually from the payment date). Gold and platinum credit cards have a higher credit limit. Revolving cards automatically defer payments. Lastly, points cards accumulate benefits and deals for cardholders.

Credit card statement

A credit card statement is an official document from our bank that provides a detailed list of payments, fees, interest and cash advances from a certain period to keep customers informed about their card activity.

Santander Chile explains what a credit card statement is
Santander Chile explains what a credit card statement is

What is the biggest advantage of credit cards?

The advantages credit cards can afford us include access to a higher balance of money, special offers, health insurance and the ability to raise our credit score to apply for a loan from our bank. For more details, check out this content from Tuiio.

Security and responsibility

Recently, a new EU directive entered into force to make online purchases with credit cards safer. Online purchases now have a stronger authentication system that requires users to confirm their identity twice. For more details, visit Santander Spain

Responsible and safe credit card use is very important. We should keep a watchful eye on our spending at all times. This will help us take care of our financial health. For more details, visit Santander Consumer

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