-
Credit Card !
A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. A credit card is different from a charge card, where a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers to 'revolve' their balance, at the cost of having interest charged. Most credit cards are issued by local banks .
HISTORY OF CREDIT CARD
Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange - the forerunner of banknotes - was established in the 14th century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century. The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly.
From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments. They were called "tallymen" because they kept a record or tally of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s, a shopper's plate - a "buy now, pay later" system - was introduced in the USA. It could only be used in the shops which issued it.
In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.
The first use of magnetic stripes on cards was in the early 1960's, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size
FEATURE OF CREDIT CARD
· FEE
· Most credit cards charge fees for various things, and it is important to know what these fees are and how to avoid them.
· THE ANNUAL FEE
· Some credit card companies charge you an annual fee just for using their card. Because of stiff competition, you can often negotiate this fee away if you call and speak to a customer service representative.
· CASH ADVANCE FEE
· Many card companies are competing for your business and are now offering an introductory cash advance and balance transfer rates for a specific amount of time. This lower rate can be applied to any balances you may wish to transfer from another card. Although it sounds good, some companies will charge you a fee for the transfer. Know what the fee is before you transfer any balances
· MISCELLANEOUS FEE
Things like late-payment fees, over-the-credit-limit fees, set-up fees, and return-item fees are all quite common these days and can represent a serious amount of money out of your pocket if you get whacked for any of these fees.
· INCENTIVE
· There are so many credit card companies, competition is stiff. Adding incentives to their offers is one of the more popular ways to tip the scales in their favor. Incentives like rebates on purchases, frequent flyer miles on certain airlines, and extended warranties on purchases are just a few of the bonuses that card companies will now offer.
· Benefits to customer
The main benefit to each customer is convenience. Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card. Credit cards also provide more fraud protection than debit
cards. In the UK for example, the bank is jointly liable with the merchant for purchases of defective products over £100.
Additionally, carrying a credit card may be a convenience to some customers, as it eliminates the need to carry any cash for most purposes.
ADVANTAGE OF CREDIT CARD
There are lots of advantages credit cards have. The major advantage of credit cards is that they permit people to make large purchases, such as expensive semester textbooks or those for cars. Also, credit cards can help for emergencies like medical bills caused by accidents. A responsible repayment of credit cards would permit the card holders to fit into middle class American life and, the same time to develop quality spending habits. Additionally, adolescents may develop a basic moral code and stronger ethics while putting face to face credit cards and the societal rules for delayed gratification.
DISADVANTAGE OF CREDIT CARD
While parents offer credit cards to their children who have not totally learned how to delay gratification, the American society induce to their consumers the tendency to buy excessively without paying attention whether they will be able or not to pay the debt accumulated when purchasing with credit cards. In turn, this make lot of Americans to increase in debt and finally to be unable to repay, causing problems with the economic balance and with personal credit too.The real problem with credit cards is that the owed amounts must be paid back, this way the higher costs accumulated since the initial purchase could be avoided as well as the high interest rates of credit cards. As a conclusion, credit cards could be considered the best friends as long as they are used in a right manner and the payments are made without getting in debt.
Conclusion
A credit card is a small plastic card with some numbers embossed on it and which helps to purchase the things with no requirement of cash in pocket. It is 3-1/8 inches by 2-1/8 inches in size and has identification information. Today there are thousand of financial institutions that issue credit cards as compared to previous when the number was less. They have become important sources of identification. The first all-purpose use of credit cards appeared in 1958, with the BankAmerica card, from the Bank of America. This card later was named as VISA card. One more popular card also renamed from Master Charge card to MasterCard. The digitally encoded credit card permits its user to borrow money or buy goods and services on credit up to a pre decided spending lim .
By Hatim
Subscribe to:
Posts (Atom)