Once you understand the roles of the issuer and the network, you’ll be better prepared to choose the card that will work best for you.
When evaluating and comparing credit cards, it helps to understand the terminology used in the industry. The card issuer, for example, is entirely separate from the credit card network used to process transactions on your card. Once you understand the roles of the issuer and the network, you’ll be better prepared to choose a credit card that works best for you.
A credit card issuer is the financial institution that extends the credit for you to use the card. There are Chase credit cards as well as those issued by Citi and Bank of America.
The credit card network, on the other hand, is the entity that processes credit card transactions. These include Visa, MasterCard and Discover, as well as other lesser-known networks. In some cases, the network is the same as the issuer. Many Discover cards, for example, are issued by Discover Bank.
However, it is important to understand that your credit card agreement is with the issuer. This is the entity that will determine things like credit limit, interest rate, annual fee and grace periods, and they are the ones that you need to contact for information about your card.
When you apply for a credit card, you will usually see the issuer’s name on the application. For example, Citi cards such as the Citi Platinum Select Card issued by Citi bank, while the network is MasterCard. When you have questions about your account or when you want to raise your credit limit, you’ll contact Citi for those services.
So, why does the credit card network matter? For one thing, certain establishments (restaurants, supermarkets, electronics stores, etc.) have agreements with certain credit card networks for transactions. You’ll find that most establishments accept Visa credit cards and MasterCard, but might not accept American Express.
However, you’ll find that certain cards such as American Express are extremely useful when you shop overseas. Foreign markets often place a higher value on American Express credit cards, meaning you’ll have an easier time shopping with that particular card.
When shopping for credit cards, it helps to know exactly what you plan to buy and where. You can then make appropriate decisions about the card issuer and the network. If you shop primarily at stores that accept MasterCard, that might be the network that can help you narrow your choices.
That said, be aware that the credit card issuer is still most important. For example, both Chase and Bank of America offer Visa cards, but which one has terms more favorable for you? Be sure to evaluate all aspects of each card you consider, then narrow down your options based on the terms offered on each of the cards.
