Advantages of credit card described by jay wigdore - PowerPoint PPT Presentation

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Advantages of credit card described by jay wigdore

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jay wigdore nicely describes the value of credit card.Credit can be good when used wisely. The main reason most people use credit is that they do not have the cash to pay the total cost of an item or service at one time. Another reason is that it may be easier to pay for an item through regular installment payments. – PowerPoint PPT presentation

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Title: Advantages of credit card described by jay wigdore


1
Jay Wigdore expert in Credit Cards payment
2
What are Credit Cards?
  • Pre-approved credit which can be used for the
    purchase of items now and payment of them later.

3
Credit 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

4
Eligibility 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.

5
Particulars 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
8
Based 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

9
Based 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

10
Based 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.

11
Based 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.

12
Based on issuer Category
  • Individual Cards- Non-corporate cards that are
    issued to individuals
  • Corporate Cards- Issued to corporate and business
    firms.

13
Innovative 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. )

14
Credit 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.

15
Credit card cycle
16
Mechanics 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
17
Advantages
  • 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

20
Disadvantages
  • 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

21
Safety 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

22
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