Credit Card

By:

Harsh Gupta

Himanshu Chugh

Credit

A legal agreement to receive cash,

goods, or services now and pay for

them in the future.

Credit Cards

Plastic cards with electronic

information that can be used by the

holder to make purchases or obtain

cash advances using a line of credit

made available by the card-issuing

financial institution.

Debit Cards

Debit cards are plastic cards with electronic information, that look very similar to credit cards, that you can use to take money out against your checking account.

When you swipe your debit card remember that the money is taken immediately from your checking account.

History of Credit Card

Invented in 1887 by Edward Bellamy.

1st - credit card - 1920s in US.

Bank of America - BankAmericard in 1958 Chargex – Visa Card

MasterCard - 1966 Group of Banks in US

In 1966 - 1st Non-US Credit Card was issued by Barclays’ Bank in the UK.

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

CREDIT CARD NUMBER

STRUCTURING 1ST – 6 No’s – Issuing bank code.

Next – 9 No’s – Individual A/c No.

Final Digit – Validity Check Code.

Extra Codes - Will be Issue & Security

Codes.

The size of most credit cards

is 3 3⁄8 × 2 1⁄8 in (85.60 × 53.98 mm)

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

Standard

Card

Domestic

card

International

Card

Individual

Cards

Corporate

Cards

Proprie-

tary cardBusiness

Card

Gold

Card

Master

Card

VISA

Card

Domestic

Tie-up

Card

Based on mode of credit

recovery

Charge Card- A card that charges no interest butrequires the user to pay his/her balance in full uponreceipt of the statement, usually on a monthly basis.While it is similar to a credit card, the major benefitoffered by a charge card is that it has much higher, oftenunlimited, spending limits.

Revolving credit card- A line of credit where thecustomer pays a commitment fee and is then allowed touse the funds when they are needed. It is usually usedfor operating purposes, fluctuating each monthdepending on the customer's current cash flow needs

Based on status of credit card

Standard Card- It is a generally issuedcredit card.

Business Card(Executive cards)- It isissued to small partnership firms,solicitors, tax- consultants ,for use byexecutives on their business trips.

Gold Card- A credit card issued by creditcard companies to favoured clients,entitling them to high unsecuredoverdrafts, 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/ Tie-up

Proprietary card- A bank issues such cardsunder its own brands. Eg. SBI card, Cancard ofcanara bank.

Master Card- This card is issued under the umbrellaof “MasterCard International”

VISA Card – It is issued by any bank having tieup with “VISA international”

Domestic Tie-up Card- It is issued by anybank having tie up with domestic credit card brands

such as CanCard and IndCard.

Based on issuer Category

Individual Cards- Non-corporate

cards that are issued to individuals.

Corporate Cards- Issued to

corporate and business firms.

Credit card cycle

Credit purchase

• Purchase of goods and service on card.

Credit card processing

• Merchant delivers goods after taking an authenticated credit card and noting the number and taking signature on certain forms.

Bill raising

• Merchant raises the bill for the purchase and sends it to the credit card issuing bank for payment

Payment

• Issuing bank pays amount to the merchant establishment

Bill to card holder

• Issuing bank raises bill on the credit cardholder and sends it for payment

Card payment

• Credit card holder makes the payment to the issuing bank

Grace period

A credit card's grace period is the time

the customer has to pay the balance

before interest is assessed on the

outstanding balance.

Grace periods may vary, but usually

range from 20 to 55 days depending on

the type of credit card and the issuing

bank.

Advantages

To Cardholders :

Simple, convenient and can be substituted for cash.

Convenient method of payment.

Quick way to borrow.

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 credit card companies/ Banks :

Source of revenue

- Joining fee

- Card renew fee

- Services charges from retailers

- Interest charged to customer

DISADVANTAGES

Hidden costs.

A debt trap for the cardholder.

Cases of fraud are extremely common today.

Credit cards can be used at ATM cards, but

considerable processing fee required.

THANK You..!!

HAPPY DIWALI