Advantages of credit card described by jay wigdore

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Jay Wigdore expert in Credit Cards payment
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What are Credit Cards?

• Pre-approved credit which can be used for the
  purchase of items now and payment of them later.

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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

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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.

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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

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What does 16 digit means
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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
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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

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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

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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.

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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.

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Based on issuer Category

• Individual Cards- Non-corporate cards that are
  issued to individuals
• Corporate Cards- Issued to corporate and business
  firms.

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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. )

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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.

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Credit card cycle
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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
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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.

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• To Merchants/ Shopkeepers
• Guaranteed payment
• Lessens the security risk of holding the cash
• Overseas visitors may purchase more, providing
  new market for retailer

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• To credit card companies/ Banks
• Source of revenue
• - Joining fee
• - card renew fee
• - services charges from retailers
• - Interest charged to customer

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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

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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

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