Dear Jashnimal,
You asked a lot of questions, I answered them, but if you need further
clarifications on this answers afterwards, please click the "Request
Answer Clarification" button above the answer, and ask me for
clarifications on terms or issues that are still not clear.
What are Credit Cards?
=====================
Credit Cards are electronic means of payment. They are personal
authorisation of the card holder to withhold money from his account,
on a certain agreed upon date (which is not the date of the purchase,
hence "credit", because the buyer receives some time - between the
purchase and the actual payment). Hoda Ahmed wrote a very good
description for those who are not familiar with credit cards:
"A credit card is a small plastic card, often referred to as
“plastic”, containing a means of identification, such as a signature
and/or picture, which authorizes the person named on it to pay for a
service and/or product over a certain period of time. A grace period,
often calculated as the first 45 to 50 days of credit, and calculated
from the day of billing and not from date of purchase, comes interest
free. As an individual to whom a credit card is issued, or a credit
card holder, you can choose to pay your entire amount due at once, or
spread it out over several payments. If choosing the second option, a
minimum amount will be due every month. A credit card may be used
repeatedly to borrow money or buy goods and services on credit.
Provided that it is used wisely, it can offer convenience and allow
the credit card holder to make purchases for future payments.
Credit cards are classified according to the industry. The three most
common types of credit cards available are bank cards, travel and
entertainment cards and house cards. Bank cards are issued by banks,
in association with the credit card company, such as Visa or
MasterCard, and can be used for almost any type of purchase. Travel
and entertainment (T&E) cards are issued by companies, such as
American Express and Diner’s Club, and finally, there are house cards,
which are accepted at only the chain of stores that issued the card,
such as a department store." (Source: Hoda Ahmed, "What are Credit
Cards" Arab Finance,
https://www.arabfinance.com/AFEducation/AFEducation.asp?C=9&T=28 - the
article is highly recommended: it includes history and further details
on credit cards.
Debit cards are also electronic means of payment, but unlike the case
of credit cards, you do not get that "grace period" before you have to
pay, and you cannot divide your payment into several parts. McKinsey
and Co. write, that "Unlike credit cards, debit card users are not
granted a grace period for their purchases. Customers must deposit
money into a checking or savings account before making purchases. When
the debit card is used, the amount of the transaction is immediately
deducted from the customer's account. If the funds in the account are
depleted, customers will be unable to use their debit cards. Automatic
Teller Machine (ATM) cards are a form of debit card. In most cases,
debit card users are not charged an annual fee." (Source: McKinsey and
Co., http://recruiting.mckinsey.com/app004/case2.nsf/keyview/EE03A501C87E3D01852567E8005A46B3?opendocument&starttime=03/28/2003+12:59:15+am).
Now for your questions, depending on the definitions above:
- Normal credit cards are those mentioned before. They are personal
cards, that allow you to give an order to withdraw money from your
bank for a payment, within a grace period.
- Debit cards are similar to credit cards, but have no grace period -
whatever you pay with a debit card, would be automatically deducted
from your account.
- American Express card (platinum) - American Express is a type of
credit card only that it is not issued by a bank, but by a company.
There are several other companies that perform this service, most
known is Diners. The "Platinum" marks the level, of the amount, that
one could spend with this card - some cards have lower limits, some
higher, and usually, the higher the limit on spending, the more you
pay the card company (or the bank) for the handling fees. "Platinum"
(or "Gold") could mark also a credit card issued by a bank, such as a
"Visa" or a "MasterCard".
Using a Card Online (and using your friend's credit card!)
==========================================================
Regarding your second question, I have to say beforehand, that unless
you are also mentioned and signed on your friend's credit card, it is
illegal for you to use it. As I said before, credit card is a personal
thing. Even husbands and wives or business partners, who share a bank
account, have either one card with both their signatures (which means
they have to be together and sign it together whenever they buy
anything with it) or two separate cards, with two separate names and
signatures. This is part of the security means, because credit card is
based on trust: the merchant trusts to get paid duly, the bank or
credit card firm pays for you, but trusts you to fill your part of the
deal, and pay them back, with their fees.
This could be part of the problem, why you cannot pay with this card
in some sites. They ask for verification, but find that one person
bought the goods, with a card with a name of another person. Another
problem could be, that some of these sites do not accept credit cards
payments from foreign destinations, like your homeland - or that your
friend's credit card could not be used abroad, which is what you're
trying to do. A third problem might not be related to you - certain
bugs in certain systems.
If it happened in more than one site, and always with that same result
(that your friend could purchase, but you couldn't), I'd say that your
problem is using someone else's card, which I assume was done
innocently, but is still illegal (even if your friend knows about it
and approved it to you).
Credit Cards while Travelling
=============================
When you travel to the USA, you may choose one of several options. The
first, is to get yourself a credit card from a bank or a company in
your country, that could be used in the United States - not all credit
cards could be used in all countries.
A second option, as you mentioned yourself, is to issue a card in the
United States. However, most companies would not issue to a tourist,
who has no proof that he could pay for his expences; if you have no
banking account in the US, issuing a credit card might be a problem.
If you ask me what I recommend for travelling and online trade,
American Express <http://www114.americanexpress.com/homepage/mt_personal.shtml>
and Visa <http://www.visa.com/globalgateway/gg_selectcountry.html?retcountry=1>
are well known and therefore many stores and merchants - online and
offline - accept them.
Of course, as mentioned before, getting these (or other) cards depends
heavily on the level trust you have in the companies or the bank you
applied to: if you have no regular income, no one that would vouch for
you, and you have a tainted credit history, you might not receive a
reliable card.
Online Banking
==============
Online banking works the same as any other bank, and sometimes in
cooperation with an existing bank. With online banking, you could all
your actions online. This might save money, as the bank might charge
less for these actions done online. This could be a perfect solution
for someone who is already selling and buying online. Actually,
"Internet banking may be the best long-term choice" (Source:
Telecommunication Knowledge Base, Moore School of Business,
University of South Carolina Board,
http://dmsweb.badm.sc.edu/grover/telecomold/890bank.htm).
Further articles:
What is online banking? https://www.bankrate.com/brm/green/ob/ob1.asp
"Is It For You?" http://4netbanks.4anything.com/network-frame/0,1855,5127-43338,00.html
FAQ on online banking -
http://www.firstcitizens.com/learn_more/learn_personal_online_banking/faq/
- First Citizens is a commercial bank, so it tries to draw customers.
Is it Safe?
==========
Many people have problems to trust online banking or online trade.
However, despite the hazards, these are safe. When you are aware of
the dangers, and prepare yourself against them, you are safe. The main
danger could be that someone would steal your passwords or would
perform actions on your account without your permission. In order to
avoid those, always hold the password in a separate place, change them
every once in a while, and always log out after you are done (also try
not to trade and do banking actions on a public computer).
Further Reading
============
Credit Cards.com – All about Credit -
http://www.creditcards.com/articles/allaboutcredit.html
Federal Trade Commission –
http://www.ftc.gov/bcp/conline/pubs/credit/choose.htm - Choosing and
Using Credit Cards
Google Directory - http://directory.google.com/Top/Home/Personal_Finance/Money_Management/Credit/?il=1
– About Credit Cards
PayPal - www.paypal.com/ - This service allows visitors to send money
and bills to anyone with e-mail, auctions, classified sites, etc.
How Stuff Works - http://www.howstuffworks.com/credit-card.htm - How
do Credit Cards work – highly recommended reading.
I hope that answered your questions. I used mainly my knowledge in
banking and administration here, but also searched and researched some
relevant terms. If you need any clarifications, do not hesitate to
ask. I'd be pleased to help you as much as I can (and bon voyage -
enjoy the USA!) |
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