Credit cards are primarily obtained from banks, credit unions or building societies; in addition these financial institutions also provide transaction accounts. Most people tend to get their first credit card from the financial institution where they do their day to day banking, although other providers are available. The choice of provider comes down the convenience and facilities offered on the individual credit card.
A credit card can be regarded as a type of loan. Whilst the total amount of the loan isn’t advanced in one go, and there is no fixed repayment schedule or security required, nevertheless it is still a loan. A loan constitutes borrowing money which has to be repaid plus an amount of interest. A credit card is simply an alternate way of accessing funds that a lender has agreed to provide.
Banks are ideally placed to be credit card providers, since they are already established, with a trusted name and facilities, available funds and a license to operate as a lender of money. This often creates a sense of security for the first time credit card holder in approaching a known entity.
But you can find other credit cards lenders apart from banks. Well known stores or airlines can also offer credit card facilities to their customers. These cards are usually conveniently offered at a point of sale. In addition, they frequently offer enticing rewards should the shopper purchase their branded goods. Store or airline credit cards can be a good option for customers who use their services.
It is not uncommon for a person to have credit cards with one bank whilst doing their daily transactions with another. One benefit of shopping around for different banking facilities means a customer can get the benefits of the best interest rates and fees to suit themselves. But on the other hand customers who bank with the one facility only, can make arrangements to have their credit balance paid and cleared each month, which isn’t possible when different banks are involved.
A further advantage of having one bank handling both transaction and credit accounts is that a package fee can be offered by the bank; consequently the customer only has to pay one fee to cover all their accounts, resulting in a saving of excessive fees for them. So having a credit card with your regular bank does have its advantages; however, these may be outweighed if a different credit card offers great facilities or lower fees.
