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Why credit card called so?

I think credit card should be called as loan card, why because when we take some money through credit card we pay back with interest that is as good as taking money on loan. What is your idea on this?

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Answer #1

Credit and Debit are accounting terms.

When you take a loan from a bank, (by lump sum or through a card at a store) that amount is a “credit” on the banks accounting records because it is an asset account (accounts receivable) to the bank.

Conversly, when you “debit” (spend money through a card agianst a savings/checking account) it’s a “debit” on the banks accounting records because it is a liability account (accounts payable) to the bank. ie, the bank owes you this money.

This is where the terms originated.

Of course nowadays when you have an option to choose “debit or credit” at the checkout, you are choosing which service is carring out the transacion, with no reguard to wheather the money is coming from a loan or checking. Credit is the service on the front (Mastercard, Visa, AmEx, Discover, companies that used to deal exclusivly in credit or charge cards) and debit is the service listed on the back of the card on the bottom, of which there are many companies but Cirus is one of the most popular.

Answer #2

A credit card is a system of payment named after the small plasic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user’s account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also ddifferent from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to ‘revolve’ their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard. Therefore, that is why it is called a credit card.

Hope I helped and sorry it was so long,

                                                                   Amanda
Answer #3

Its called a credit card because you buy as and when you need or want to and pay back later, with a loan you get a lump sum and pay it back.

My advice is to steer clear of credit cards. Here speaks the voice of experience.

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