Credit card
Definition
A credit card is a payment card issued by financial institutions that allows the holder to borrow funds for purchases, up to a pre-approved limit. It is widely used in various transactions and involves paying back the borrowed amount with interest.
5 Must Know Facts For Your Next Test
- Credit cards work on the principle of electromagnetic induction for secure transactions.
- The magnetic stripe on a credit card stores data using tiny iron-based magnetic particles arranged in stripes.
- Reading and writing data on a credit card's magnetic stripe involve changing the magnetization of these particles, which generates an electric current as per Faraday's Law of Induction.
- Modern credit cards also use EMV chips, which rely on more advanced forms of electromagnetic induction for secure communication with point-of-sale terminals.
- Skimming devices can exploit principles of electromagnetic induction to illegally read information from a credit card's magnetic stripe.
Review Questions
- How does electromagnetic induction make secure transactions possible with a credit card?
- What role do the magnetic particles play in the functioning of a credit card?
- Explain how EMV chips in modern credit cards enhance security using electromagnetic principles.
"Credit card" appears in:
Related terms
Electromagnetic Induction: The process by which a change in magnetic field induces an electric current in a conductor.
Faraday's Law: $$\text{Faraday's Law states that the induced electromotive force (EMF) in any closed circuit is equal to the negative rate of change of the magnetic flux through the circuit.}$$
Magnetic Stripe: $\text{A band of iron-based magnetizable material on which data can be stored and read by modifying its magnetization.}$
