Credit Card Companies

Written by Kevin Tavolaro
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Credit card companies are usually affiliated with a general use bank. However, some card companies are built around a private bank that exists exclusively for the card. American Express is one such company. Although most major credit cards are affiliated with reputable institutions, there are many third-party credit card distributors who use the good name of a type of card to prey on unwitting consumers. These companies often employ misleading advertisements, or downright dishonest practices in order to lock applicants into a contract for a needlessly expensive credit card. This is why it is almost always preferable to deal directly with a credit card company, or the affiliated bank, when applying for a new card.

Early Credit Card Companies

When credit cards were first introduced, they were known as "charge cards." Charge cards provided a line of credit, but the balance had to be cleared at the conclusion of every billing cycle. Charge cards were issued by individual institutions, such as retail stores, and were usually only good for purchases from the same store. Shortly after the introduction of charge cards, the Diners Club card became available. This card was accepted at a variety of establishments, but still required that the balance be cleared each month.

When banking institutions decided to provide credit cards, the industry standards began to change. Bank-issued credit cards were fueled by interest, and accounts no longer had to be cleared wit each billing cycle. Instead, these new credit card companies only required a minimum monthly payment in order for the card to remain active. Any balance that carried over was charged subsequent interest, allowing the credit card providers to earn a profit. This became the standard for credit.

Recently, individual stores have once again begun issuing their own credit cards. However, these cards are issued in conjunction with a major credit card provider. It means that the cards can be used anywhere, rather than in one particular establishment. Cards issued by stores usually feature an incentive program, and provide the holder with additional savings or rewards when used to make a purchase from the store.


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