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What is a Credit Card Issuer?
It may seem like a strange question, but the truth is that a lot of people don’t really understand the difference between their credit card issuer and the processing network. Contrary to popular belief, major brands are not your card issuers – they just process the payments via their networks. American Express and Discover cards, though, provide both services; they issue your card as well as process the payments therein.
Who are credit issuers?
Your credit card issuer is the company that determines your credit limit, sends the payment to retailers for your transactions, and they’re who your money goes to when you’re paying off your balance. Basically, the credit issuer is the entity that provides you with the line of credit you’re using – the logo just represents the system used to process the transaction.
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Don’t be surprised if you don’t recognize a lot of credit issuing entities; they aren’t really the names most people pay attention to when they’re applying for credit cards. More often than not, people are most concerned about whether their card is a major brand and what the credit limit is.
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What do credit issuers do?
Depending on the bank, your credit card issuer might offer secured and unsecured credit cards, with limits ranging from a low $100 high balance to no limit whatsoever. You can apply for a student charge card, a prepaid debit card, a prepaid credit card (also known as a secured credit card,) business credit card, among other things.
Your credit card issuer is the one who underwrites your loan balance – because yes, your credit card transactions are small loans, which by your signature you agree to repay. They determine how much, if any at all, the credit limit on your card will be, because they are the ones who decide whether to approve or deny your credit application. They review your credit profile to determine your credit worthiness, and based on their perception of your credit history will make a decision on whether to provide you with a line of credit.
Not all credit companies deal solely with unsecured credit cards, though – some underwriting banks provide secured credit for people with poor credit, or no history to speak of. By providing your credit card issuer with a deposit prearranged between you and that bank, you can have a credit card that works every bit like a regular, unsecured card. The only difference between the two is that the limit of a secured line of credit is provided by you, not the issuing entity. So, you can still get a line of credit even if you’re turned down by your credit card issuer for an unsecured card.
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