Title: Advantages of credit card described by jay wigdore
1Jay Wigdore expert in Credit Cards payment
2What are Credit Cards?
- Pre-approved credit which can be used for the
purchase of items now and payment of them later.
3Credit cards
- It is a plastic card having a magnetic strip,
issued by a bank or business authorizing the
holder to buy goods or services on credit. Also
called charge cards - The concept of using a card for was first
described in 1887 by Edward Bellamy in his
utopian novel Looking Backward. - The size of most credit cards is 85.60 53.98 mm
4Eligibility For Getting The Card
- Person should have a savings current account in
the bank. - His assets and liabilities on a particular date
are reported to bank. - A statement of annual or monthly income.
- He is considered credit worthy up to certain
limit depending upon his income, assets and
expenditure.
5Particulars Displayed On Credit Cards
- Name of the customer
- 16-digit card number
- Validity date
- The VISA hologram and the VISA logo
- Name of the issuing bank
- Signature period
- Magnetic strip
- PIN
6 What does 16 digit means
7 CLASSIFICATION OF CREDIT CARDS
Based on mode of credit recovery
Based on status of credit card
Based on geographical validity
Based on franchise/ Tie-up
Based on issuer Category
Charge Card
Revolving credit card
Domestic card
Internation- al Card
Individ- ual Cards
Corpor- ate Cards
Proprie- tary card
Master Card
VISA Card
Domestic Tie-up Card
Standard Card
Business Card
Gold Card
8Based on mode of credit recovery
- Charge Card-A card that charges no interest but
requires the user to pay his/her balance in full
upon receipt of the statement, usually on a
monthly basis. While it is similar to a credit
card, the major benefit offered by a charge card
is that it has much higher, often unlimited,
spending limits. - Revolving credit card-A line of credit where the
customer pays a commitment fee and is then
allowed to use the funds when they are needed. It
is usually used for operating purposes,
fluctuating each month depending on
the customer's current cash flow needs
9Based on status of credit card
- Standard Card- it is a generally issued credit
card - Business Card- (Executive cards ) it is issued to
small partnership firms , solicitors, tax-
consultants ,for use by executives on their
business trips. - Gold Card-a credit card issued by credit-card
companies to favoured clients, entitling them to
high unsecured overdrafts, some insurance cover,
etc
10Based on geographical validity
- Domestic card- Cards that are valid only in India
and Nepal are called domestic cards. - International Card- credit Cards that are valid
internationally are called international cards.
11Based on franchise/ Tie-up
- Proprietary card- A bank issues such cards under
its own brands. Eg. SBI card Cancard of canara
bank - Master Card- this card is issued under the
umbrella of MasterCard International - VISA Card it is issued by any abnk having tie
up with VISA international - Domestic Tie-up Card- it is issued by any abnk
having tie up with domestic credit card brands
such as CanCard and IndCard.
12Based on issuer Category
- Individual Cards- Non-corporate cards that are
issued to individuals - Corporate Cards- Issued to corporate and business
firms.
13Innovative Cards
- ATM Cards
- Debit Crds- debits designated saving bank a/c.
- Private label Card- issued by retailers and can
be used only in that retailers store. - Affinity Group Cards- it can be used by
collection of people with some form of common
interest or relation ( professional
,alumni,retired persons org. )
14Credit card cycle
- A card holder makes purchase , and present it to
the merchant instead of cash . - The retailer will check the number on the card ,
and he will tally signature of voucher and credit
card . - Vouchers are send to banks, which in turn
reimburses it for the customers purchase. -
15Credit card cycle
16Mechanics of Credit Card Operation
-
Contract for credit card
(1) -
-
Issue of credit card (2) -
Payment of credit card(3)
-
Clearing and settlements (7) -
Charging of
credit card Purchase of -
and raising
bills (4) goods
and -
services (3) -
Submission of bill -
for collection (5)
-
-
Payment for bills (6)
Card Issuing Bank
Card User / Customer
Marchants bank
Merchant establishment
17Advantages
- To Cardholders
- Simple, convenient and can be substituted for
cash - Convenient method of payment
- He need not approach a bank for taking credit
- Credit cards issued by leading banks are
acceptable in many countries - Holders can withdraw cash from any branch of
major banks worldwide. - Issuer of card provides 24 hrs customer helpline
available across the world in case of any
emergency.
18- To Merchants/ Shopkeepers
- Guaranteed payment
- Lessens the security risk of holding the cash
- Overseas visitors may purchase more, providing
new market for retailer -
19- To credit card companies/ Banks
- Source of revenue
- - Joining fee
- - card renew fee
- - services charges from retailers
- - Interest charged to customer
-
20Disadvantages
- To cardholders
- Loss or stealing of card
- To Merchants/ Shopkeepers
- Retailers are required to pay a certain fee and
service - charges at an agreed percentage of their credit
card sales. - To credit card companies
- Risk of bad debt
- Risk of fraud
21Safety Tips
- Sign card with signature
- Do not leave cards lying around
- Close unused accounts in writing and by phone,
then cut up the card - Do not give out account number unless making
purchases - Keep a list of all cards, account numbers, and
phone numbers separate from cards - Report lost or stolen cards promptly
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