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Credit Cards

What are Credit Cards?


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

Credit cards
The concept of using a card for was first described in
1887 by Edward Bellamy in his utopian novel Looking
Backward.
The first credit card invented was dreamed up by a
man named John Biggins, and was called the "Charg-It"
card.

Credit cards
Another early credit card was the Diners Club card,
which was invented in 1949.
American Express had been in existence since the
1850s, but it was not until 1958 that the company
introduced their first credit card on a small piece of
purple plastic. In all of the history of credit cards,
AMEX was the first to use plastic in their material
instead of paper or cardboard.

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 size of most credit cards is 85.60


53.98mm

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.

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

What does 16 digit means

CLASSIFICATION
OF CREDIT CARDS
Based on
mode of
credit
recovery

Charge
Card

Standard
Card

Based on
status of
credit
card

Revolving
credit
card

Business
Card

Based on
geographical
validity

Domestic
card

Gold
Card

Based on
franchis
e/ Tie-up

Internatio
nalCard

Proprietary card

Master
Card

Based
on
issuer
Categor
y

Individ
ual
Cards

VISA
Card

Corpor
ate
Cards

Domesti
c Tie-up
Card

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 ithas 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
thecustomer'scurrent cash flow needs

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 creditcard companies to favoured clients,
entitling them to high unsecured
overdrafts, some insurance cover, etc

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.

Based on franchise/ Tieup

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 bank having


tie up with VISA international

Domestic Tie-up Card- it is issued by any


bank having tie up with domestic credit card
brands such as CanCard and IndCard .

Based on issuer
Category

Individual Cards- Noncorporate cards that are


issued to individuals
Corporate Cards- Issued to
corporate and business firms.

Innovative Cards

ATM Cards
Debit Cards- 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. )

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.

Credit card cycle


Credit purchase
Credit
Credit card
card processing
processing

Bill
Bill raising
raising

payment
payment

Bill
Bill to
to card
card holder
holder

Card
Card payment
payment

Purchase
Purchase of
of goods
goods and
and service
service
on
on card
card
merchant
merchant delivers
delivers goods
goods after
after taking
taking an
an authenticated
authenticated credit
credit card
card
and
and noting
noting the
the number
number and
and taking
taking signature
signature on
on certain
certain forms.
forms.
Merchant
Merchant raises
raises the
the bill
bill for
for the
the purchase
purchase and
and sends
sends it
it to
to
the
credit
card
issuing
bank
for
payment
the credit card issuing bank for payment
Issuing
Issuing bank
bank pays
pays amount
amount to
to the
the merchant
merchant
establishment
establishment

Issuing
Issuing bank
bank raises
raises bill
bill on
on the
the credit
credit cardholder
cardholder and
and
sends
it
for
payment
sends it for payment
Credit
Credit card
card holder
holder makes
makes the
the payment
payment to
to the
the
issuing
issuing bank
bank

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.

To Merchants/ Shopkeepers :

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

To credit card companies/ Banks :


Source of revenue

Joining fee
card renew fee
services charges from retailers
Interest charged to customer

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

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

Citi Bank credit card ad.mp4

Visa Credit Card Commercial.mp4

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