The Ins and Outs of Credit Services

Credit services are a commonly utilized by both individuals and businesses around the World. Credit commonly takes the form of electronic money that is recorded in virtual accounts in the form of a loan with interest. This interest is usually 'compounded' at or near the quoted Annual Percentage Rate (APR) on a regular basis. When interest is 'compounded' it is recalculated based on balances during each billing period rather than once a year. This allows the credit card company to charge interest 12 times a year instead of just once.

To benefit from credit services it is important to read the terms of agreement before acquiring the service. The terms of agreement include information on how interest is calculated, whether the interest rate is variable or fixed, annual fees, finance charges, late penalties and so forth. Credit services may increase interest rates in the event of late payment and special rules regarding introductory offers may only be printed in the terms of agreement. Some credit services may offer a grace period and information distinguishing various kinds of credit use.

Several unique advantages can be acquired through proper use of credit services, however understanding the need for and usage of the credit can be quite important to the effective use of the credit. For example, credit services can be used to improve credit scores, manage cash flow and have an alternate form of payment to cash, checks, money orders etc. Use of credit can also assist in transaction security as signatures are often required in making payment by credit except in the instances of smaller payments. A few of key aspects of credit are described hereafter.

• Credit Card Balance Transfers

Credit card balance transfers are often a part of a new or promotional credit card agreement. In a credit card balance transfer a credit card holder pays debt on another credit card with a second card. The transfer may be approved and performed by the second credit service provider. Balance transfers can be used to pay off more than credit card debt and can be made with special checks sent out to credit clients. These checks often have promotional interest rates associated with them to encourage balance transfers from an existing creditor to the creditor offering the transfer.

• Credit Card Services

Credit services may include but are not limited to record-keeping, online credit card processing, billing, special introductory offers, travel insurance coverage, automated teller machine access, and telephone support. Credit card services may be expanded over time to include lower interest rates and/or increased credit limits.

• Fixed-Rate and Low-Rate Credit Cards

Fixed rate credit cards have interest rates that do not change over time and/or the time agreed upon in the credit application. These credit cards can be cost effective if a low fixed rate can be secured. Fixed rate credit cards provide more consistent and predictable credit card expensing. Low-rate credit cards are usually reserved for applicants with good to excellent credit ratings. These cards offer competitive special features such as 1 minute approval, 0% introductory offers, low-rate balance transfers, rewards programs, no annual fees and annual percentage rates between 8%-15%.

• Credit card merchants, Merchant credit cards, and Merchant account services

The businesses that make credit card and credit service offers are credit merchants. Credit card merchants are in the business of offering and selling credit to both customers and businesses alike and facilitate credit services. Additionally, credit card merchants are often banks and/or businesses that also engage in financial services. When a business receives payments from customers who use credit cards, the credit information must be processed using electronic transactions or modem transferred account reconciliations.

The credit card company i.e. merchant account service provider, then credits the merchant with the applicable fees and offers equipment or software technical support. It is also useful to note, a fine distinction exists between merchant credit cards and merchant credit card accounts. The former is an actual card with a credit balance whereas the latter is an account through which a merchant can accept credit card payments. Merchant credit cards are used solely for business transactions.

To summarize, credit services can become quite involved, especially at the business end of the transaction(s) because businesses compete with prices and offer credit card payment options while also having to deal with the credit card merchant at the other end of the transaction. The range of credit services include balance transfers, credit cards with varying benefits and interest rates, business credit cards, merchant credit services, credit card facilitators and account services. Credit agreements outline the details of the credit services in addition to any fees, surcharges, late penalties, benefit rules etc. Such being the case, reading and understanding the credit service terms of service can be beneficial especially with large lines of credit.