Credit Card

Credit cards are innovative ones in the line of financial services offered by commercial banks. The idea of credit card was first develop by a Bavarian Farmer, Franz Nesbitum Mc Namara ,an american businessman who found himself without cash at a weekend resortfounded Diners card in 1950.

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Right from that time, the commercial banks and non banking companies in USA adopted the idea of credit card to develop their business.Barclays Bank was the first bank to introduce credit card in 1996 in britian.The credit card business got momentum in 60s and a number of banks entered the field in a big way.

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A credit card is a card or mechanism which enables cardholders to purchase goods, travel and dine in a hotel without making immediate payments.

The holders can use the cards to get credit from banks up to 45 days.

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Who can be a card holder?

Earning a salary of Rs.60,000 per annum A reference from a banker and the employers of the applicant is insisted upon

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Types of credit card

Credit Card Charge Card In-Store Card

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Credit Card

It is a normal card whereby a holder is able to purchase without having to pay cash immediately. A limit is set to the amount of money cardholder can spend a month using the card. Interest is charged for the outstanding amount which varies from 30% to 36% per annum
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At the end of every month the holder has to pay a % of outstanding.

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Charge Card

A charge card is intended to serve as a convenient means of payment for goods purchased at Member Establishments rather than a credit facility.Instead of payinf cash or cheque every time the credit card holder makes a purchase,this facility gives a consolidated bill for a specified period , usually one month.
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The charge card is useful during business trips and for entertainment expenses which are usually borne by the company.

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In-Store card

The In-store cards are issued by retailers or companies. These cards have currency only at the issuers outlets for purchasing products of the issuers company. Payment can be on monthly or extended credit basis.For extended credit facility interest is charged. In India ,such cards are normally issued by 5 star hotels,resorts & big hotels.

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Difference between credit card & Debit card Credit card Debit card

Payment later Avail credit for 3045 days Opening a bank account and maintaining a required amount are not essential

Pay now product Customer account is debited immediately Its essential

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Cont

Possibility of risk of fraud is high.

Risk is minimized

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Parties to credit card

Issuer Cardholders Member Establishments (accepting credit card)

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Procedure at the time of purchase at member Establishments

Validity period of the card has not expired The signature of the card holder tallies with specimen, signature on the credit card. The card has not been interfere within any manner

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Facilites offered to card holders

Making purchase/availing of services at any of the member establishments Cash withdrawals at any of the issuer/member affiliate of the issuer to meet emergent requirements.

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The children are entitled to use the card for making purchases Free Credit period ranging from 15-45 days ATM facility at selected centers Wide range of Insurance facilities are available which include personal accident insurance, cover for accidental death etc

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Benefits Simple to operate Easy to carry The holder have option of paying amount conveniently. ATM facility. Overdraft facility is given to card holders

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Demerits

Service charge High rate of interest charged for delayed payment Credit card force the holdersfor more purchases beyond income. The commission paid to the issuing bank is heavy.

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Some banks make delay in payments due to lack of adequate system . The cost involved in the credit card business is high include cost of plastic card to be imported, cost of placing & marketing cards.

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THANK YOU

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