Disadvantages Of Plastic Money

Plastic money has become the order of the day. Whether it's a high-end store, a restaurant, a caf
outlet or even a grocery shop, people just buy what they like (not just what they want), proudly
taking out their cards and allowing the shopkeeper to swipe away a fortune of their hard-earned
money. You might claim that with plastic money around, you do not need to carry your cash and
there is no fear of being robbed as well. At the same time, it is easy to use. However, believe it or
not, there are a large number of disadvantages associated with using plastic money. Still, if you use it
wisely and maintain a balance between paper and plastic money, the results can be otherwise. In
the following lines, we have listed the disadvantages of using plastic money.
Underlying Evils
Though it may look all trendy and flashy to own plastic money (especially credit cards), you
may be surprised to know, owning it is extremely harmful and risky as well. Credits cards
cost much more than other forms of credit, such as a line of credit or a personal loan, in case
you are unable to pay them on time. The transaction charges added to the amount is much
more than you would have anticipated. Also, continuous late payments damage your credit
rating.

Too Much Of Credit
One of the most evident and apparent problems with plastic money, mainly credit cards, is
that it gives you unwanted freedom. As a result, you go on a shopping rampage, without even
once bothering about the consequences. Plastic money allows people to buildup more debts
than what they can handle. While you may be in high spirits after the recent shopping
expedition, be wary that cost may be too much to handle.

Terms & Conditions
Have you heard the phrase 'All that glistens is not gold'? Though debit/credit cards may have
innumerous benefits, most of them usually come with complicated terms and conditions,
which you might not understand or comprehend initially. However, with time, as you get to
know the nuances of these 'dirty' terms and conditions, it might be too late.

Risk Of Loss & Misuse
The danger of losing a debit/credit card is something, which most card owners' fear. Though
you might start thinking of the world as a good place and people living in it as angels and
seraphs, reality is not all that sweet, especially when you have lost or been robbed of plastic
money. It is seen that hefty purchases are made under the name of the account holder after the
card gets lost or stolen and you end up paying for things, which you have neither bought nor
own.

Limited Options
With so many companies in the market, chances are that the stores that you step in does not
accept card of the particular company you have. Result - you have to either pay a bulk of cash
or just walk out of the shop with no shopping bags (as most of us do not care to carry cash,
because we overtly rely on the credit card).

Less Global Availability
Debit/credit cards also limit global shopping. This is mainly because there are many
companies that do not allow their cards to be used in areas with which they have a regional
conflict. As a result, owning plastic money can be very cumbersome, not to forget the
embarrassment of coming out empty handed, after spending so much of your time trying the
gorgeous outfits.

It's Plastic After All
In the present world, we have become plastic money fanatics. Most of you would agree that
with debit/credit cards in wallets, we do not mind going out without even a single note in
hand. However, remember its plastic after all and susceptible to damage. Due to constant
use, magnetic strips of the cards get worn out. As a result, the card might not get accepted. If
during such times, plastic money is your only source of cash, you can be in a tricky situation.

ADVANTAGES OF PLASTIC MONEY
The need to transform India into a less cash handling society has been talked about time and
again. The result is there for all to see: over the years, debit and credit cards have managed to
make it to almost everyones wallet in urban India. However, the number of non-cash
transactions still stands at a dismally low level at just six per year, per person. And though
banks have been trying to increase the focus on plastic money via debit and credit cards for
many years, this list of pre-paid cards will also go a long way in making electronic payments
a more preferred way of doing such transactions.
Forex Card: While you are sightseeing abroad, the last thing you would want to focus on is
the fad wad of cash in your wallet. The convenience and the safety option that a forex card
provides make it every travellers delight. These cards work on a pre-paid basis and can be
recharged whenever the customer would like to. Customers can avail of a forex card for
leisure, business travel, education, medical and other permitted categories under the Foreign
Exchange Management Act (Fema) provision.
Earlier, customers were not very comfortable with carrying a debit card or credit card out of
the country, because it is difficult to map expenses. Also, the cost of using such cards was
high. However, a forex card works on a pre-paid principle. So, the customer knows how
much money he has while spending overseas, said Pradeep Sampath, regional sales
manager, ElectraCard Services, which provides software and third party processing services
for cards and payments management industry across the world. ElectraCard recently launched
a forex card in association with IndusInd Bank.
With forex cards, you can lock the exchange rate at the time you get the card loaded. This can
help you put the worry about depreciating rupee at bay. These cards are available in all major
currencies. And if your trip abroad is going to take you to different destinations, involving
different currencies then you can even go for a multi-currency option card.
Unlike a travellers cheque where you need to go to a money changer to get it encashed, a
forex card can be used at ATMs or any stores. If you compare forex cards to your credit and
debit cards, then they leave them also far behind.
A forex card is safe to carry as automated teller machine (ATM) withdrawals are PIN
protected and your cash is accessible easily. Free text alerts on your phone are provided for
every transaction, instantly. This prevents misuse of the card. If lost, it can be hot listed and
reissued on client request. No charges are levied if the card is used or swiped at a merchant
establishment, says Vikas Mangla, business head - emerging corporates, IndusInd Bank.
The beauty is, with this option, you can lock the exchange rate in different currencies and
shield yourself from currency fluctuations before you set out to explore the world. Several
banks also offer insurance cover on the lost card, baggage delays and flight cancellation on
the card.
These charges may also differ, depending on the currency being withdrawn. Apart from this,
you will have to pay a one-time issuance fee that can range from anywhere between Rs100-
300. You will also be charged slightly extra if you want to reload the card at any point.
To get a forex card, you will have to furnish your PAN card, passport and your tickets. If you
have set out on a holiday, then you can load your card with a maximum of $10,000 and if it is
a business trip that has taken you overseas, you can carry a maximum of $25,000.
Co-branded Airline Card: With a spurt in customers travelling internationally, using
various credit and debit cards, banks have started taking note of this segment. HDFC Bank
recently launched a co-branded credit card in association with Jet Airways, with lifestyle
benefits and rewards in the form of JPMiles. The card, which is offered on the MasterCard
platform, comes in World, Platinum and Titanium variants, allowing customers access
various benefits across the world. This is currently available to JetPrivelege customers only.
Money Card: These cards are mainly meant for parents who can use these pre-loaded cards
for their children. Though debit cards may be a better option in most cases, at times when you
want to limit spending or not hand over the debit card, you may explore this option, too. In
order to keep a tab on what your child is spending, you can even get a mobile alert activated.
This will ensure that every time a transaction is carried out, you get a message. Just like an
ATM card, these cards can be used to withdraw cash, carry out online transactions and also at
stores. Axis Bank, which offers this product, calls it a Minory Card and has a few lakh
clients using it. We have a found a lot of traction in the major cities, with parents opting for
a Minory Card rather than opening accounts and giving debit cards to their children. Ideally,
it works for pocket money, or passing money to the child studying in a different city. The
transactions are usually in the lower thousands in every card, said Jairam Sridharan, head -
consumer lending and payments, Axis Bank.
Gift Card: A gift card works on the same principle as a gift voucher. Such cards are usually
issued by a bank or a non-banking institution or even a retailer and are available at their
respective outlets. You can purchase a card from such outlets, worth a pre-denominated
amount mentioned on the card, after filling up a basic know your customer form before
instantly gifting it to the recipient concerned. Some of these gift cards may also need online
authentication before usage. Ideally, a gift card gives a wide variety of options for anyone to
purchase something they like. A card user can either use a gift card at the point of sale
terminal in a retail store if it is a participating player or use it to shop online. Most
public sector banks such Bank of Baroda, Corporation Bank, Bank of India today offer a gift
card.