It nets the claims of one bank on another to minimize the amounts needed to settle accounts. To combat default losses, the credit card industry developed an on-line computer system to monitor and authorize credit card use. The issuing bank now receives instant notification of the purchases, to set aside depositor funds and to facilitate billing. Charge Cards With a charge card, you are expected to pay upon receipt of a monthly statement. Nevertheless you do receive a loan up to the date of the payment.
Most people write a check to pay off their card bill.
The American Express Green Card is the predominant charge card. With a credit card, you can pay your charges in full or finance them up to the credit limit that the card issuer has offered you. You still get the same basic loan as with a charge card, but you can extend the term of the loan almost indefinitely so long as you make a minimum payment each month. The most widely used is the CitiBank Visa card. Visit Credit Cards for a detailed explanation of how the system works.