Credit card

What they are

Credit cards are payment instruments that allow you to make purchases in stores and online, withdraw cash from automated teller machines (ATM) and make periodic payments. They are called credit cards because the amounts you spend or withdraw are advanced by the bank issuing the card. Unlike debit cards, credit cards allow you to purchase goods and services without having the amount of money needed available in your account because the amount you spend will be charged to your bank account at a later date.

The company issuing the card sets a monthly spending limit. Cards also have a daily limit on spending and cash withdrawals.

Credit cards are plastic cards that contain information identifying the holder (name and surname, card number and expiration date), security codes (CVV2 or CVC2), and a space for the holder's signature.

Some credit cards use contactless technology, meaning that you do not have to insert your card in a POS terminal, but only need to tap it against a panel on the terminal to use it. As well, there are cards that do not require you to insert your PIN or sign a receipt for purchases below a certain amount.

Interested parties

You can apply for a credit card if you have income or the ability to repay the amounts advanced by the card issuer and have a current bank account through which you can pay for purchases (see the keywords below).

Credit cards are useful for making purchases in your home country as well as when you travel since you can avoid having to exchange currency.

Strengths and drawbacks

If you have a credit card, you can carry little or no cash and have the money to spend at all times.

By using a credit card you delay actual payment to a later date. Any money spent or withdrawn is usually debited from the linked current account within 30 days. For example, if you buy something in November, it is debited from your account in December after you receive your pay packet, allowing to you spend your money with greater peace of mind.

The main risks are those connected with unauthorized use of your card by others. This can occur when a card is cloned, lost or stolen. As soon as you discover that your card has been stolen or lost, you should call your card issuer's toll-free number to 'freeze' the card; calls can be made from within Italy or from abroad.

Using a credit card also places you at risk of spending beyond your means since you do not see the money physically 'leave' your wallet.


The main costs of holding a credit card are:

  • an annual fee
  • ATM withdrawal fees
  • foreign transaction fees

Revolving credit cards (see below) allow you to pay for purchases in instalments spread over several months; interest is charged on each instalment so the final price you pay for the good includes that interest.

Underlying rules

To apply for a credit card you must provide:

  • an identity document
  • a taxpayer identification number
  • documentation proving income
  • the number and routing information of the current account on which payments are to be debited (see the keyword 'revolving credit card' below).

Carefully read the terms and conditions before signing the credit card agreement.

Once you receive your card:

  • sign it on the back immediately;
  • store your personal identification number (PIN) separately from where you usually keep your credit card;
  • when you make a purchase, check that the amount stated on the receipt that the vendor gives you is correct;
  • you can ask to have incorrect or unauthorized charges corrected and any amounts not owed reimbursed within the time period specified in your contract.

In the case of theft or unauthorized use of your card you should immediately contact your card issuer, usually through a toll-free or dedicated telephone number, to 'freeze' the card and you should file a report with the police or Carabinieri.

When using your credit card online, it is important to check whether the site you are visiting is secure; to do this, look for the icon of a green padlock to the left of the website address in your browser's address bar. If you click on the icon, you can verify the site information and view its security certificate to see whether it is safe to make online purchases.


It has been shown that, when we pay with credit cards, we not only spend more, but that we pay more for the same good or service than when we use cash. This is because we find it psychologically painful to pull cash out of our wallets. This is known as mental accounting, which refers to our tendency to sort cash into mental accounts based on its source.

Mental accounting can be useful when making complicated decisions, but we should not forget that choices are often interconnected and that our behaviour changes based on the mental accounts we use and this can lead us to make mistakes, like spending too freely when using a credit card.



Revolving credit cards are a type of consumer loan. Indeed, the cardholder is given an actual loan that he or she may use to make purchases directly with vendors or to withdraw cash up to certain limit ('ceiling'). The loan is repaid in instalments that consist of principal and interest. With the payment of each instalment, the principal that is repaid is returned to the total credit amount available to make new purchases. The interest rate charged may be much higher than the rates applied to other forms of consumer credit.