Visa Mastercard Discover Cards Give You Revolving Credit

2007-03-08 10:33:40

( Financial )



When you think about credit cards, it is almost inevitable that you recall Visa Mastercard Discover, and maybe a few other card brands. When you look at advertisements and printed material from card issuers, you find the same names, Visa Mastercard Discover.

You must have observed that there are thousands of banks offering credit cards. And all of those credits cards carry one of the Visa Mastercard Discover logos, along with the bank’s name.

Visa and Mastercard do not offer credit cards directly to consumers. A worldwide association of financial institutions owns the Visa credit card brand. Members of the association are authorized to issue Visa credit cards. Mastercard is similarly organized.

Discover is a separate credit card brand; it’s similar to Visa and Mastercard, but it is not organized as a membership association. It is owned by a distinct financial institution. Thus while you may see a lot of cards with a bank’s name plus Visa or Mastercard, you will never see a card with Discover Visa or Discover Mastercard together.

Visa Mastercard Discover credit cards are called revolving credit accounts. This means that you can elect to pay all or only part of your balance every month (as long as you comply with the minimum monthly payment), accumulate your balance again, and so on.

You may think it better that you pay off your revolving credit bill in full each month. Remember, however, that credit card companies make money by charging you interest when you run up a balance. As a consequence, card companies would prefer that you carry an outstanding balance, up to a point; that point generally is about one-fifth of your monthly income.

Thus, maintaining a small balance and then paying it off over time gives better overall effect on your credit rating than paying your bill in full every time.


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