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What is an issuing bank?

is - suing bank
noun

Issuing banks are basically banks or financial institutions that provide credit cards and lines of credit through partnerships with card associations. These partnerships allow people to access credit for their purchases and expenses. The issuing bank works with the card networks to issue credit cards, set credit limits, and set terms and conditions for cardholders. This collaboration ensures that individuals and businesses can enjoy the convenience of credit cards while adhering to established financial regulations.

How does an issuing bank work?

An issuing bank holds the responsibility for ensuring that a cardholder can repay the debt incurred through the credit card or line of credit provided by the bank. Initially, the issuing bank issues a letter of credit that guarantees the payment of both interest and principal for any transactions made by the cardholder. This process forms a crucial part of the credit card ecosystem, establishing a secure foundation for transactions and payments.