how do credit cards work? can i use them then throw them away after i'm done? my friends do this?

Question

Thanks everyone, I think one the answers I read was right! my friends use these prepaid type of credit cards and throw them away!

Answer 1

Oh dear...

A user is issued credit after an account has been approved by the credit provider, and is given a credit card, with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit. Often a general bank issues the credit.
When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Card not present (CNP) transaction.

Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom commonly known as Chip and PIN, but is more technically an EMV card.

Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.

Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts.

Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.

Answer 2

It isn't solid advice to tell someone to use it once and throw it away, one of the keys to establishing good credit is to build a credit history. Having two major credit cards (not store cards) open really helps people out especially if its open for a number of years and has been paid on time with a low balance.

Answer 3

Your friends might have gift cards from the mall like Simon malls. They have a Visa logo and are gift cards you can use anywhere --- not just the mall.

THESE ARE NOT "CREDIT CARDS". they are gift cards that look like credit cards.

You do not want to just use and throw away your 'credit cards' if this is truly what you have.

Answer 4

I really doubt your friends do this unless they are scammers/identity thieves. Is it possible they are using pre-paid gift cards that look like and are used just like credit cards?? Look up the meaning of credit in the dictionary.

Answer 5

have your friends ever heard of jails -- too bad they did away with debtor prisons. on the other i guess they did the right thing, because the state of texas would not hold all the total jerks that do not properly use credit cards.

Answer 6

You can if you pay your bill. If you dont pay your credit will be bad, and you wont be able to get any loans in the future.