CREDIT CARD
Anil Masih
M.B.A 3rd
1307573
Credit Card
What is a credit card?
Pre-approved credit which can be used for the purchase of
goods and services now and payment of them later
Creditworthiness is an
individuals ability and willingness
to pay the money back
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Credit Card
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Credit cards charge interest and are primarily used for short-term financing.
Interest usually begins one month after a purchase is made and borrowing
limits are pre-set according to the individual's credit rating.
It allows its holder to buy goods and services based on the holder's promise
to pay for these goods and services.
The issuer of the card creates a revolving account and grants a line of credit
to the consumer (or the user) from which the user can borrow money for
payment to a merchant or as a cash advance to the user.
Holders of a valid credit card have the authorization to purchase goods and
services up to a predetermined amount, called a credit limit.
The vendor receives essential credit card information from the cardholder,
the bank issuing the card actually reimburses the vendor, and eventually the
cardholder repays the bank through regular monthly payments.
If the entire balance is not paid in full, the credit card issuer can legally
charge interest fees on the unpaid portion.
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Credit card issuers (most often a bank or credit union) receive revenue
from fees paid by stores that accept their cards and by consumers that use
the cards, and from interest charged consumers on unpaid balances.
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Since each person's financial needs are different, it makes sense that there are
different types of credit cards. Before you apply for a credit card, become familiar
with the various kinds of credit cards to make sure you're choosing the best credit
card for you.
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Charge Cards
Charge cards do not have a preset spending limit and balances must be paid in
full at the end of each month. Charge cards typically do not have a finance charge
or minimum payment since the balance is to be paid in full. Late payments are
subject to a fee, charge restrictions, or card cancellation depending on your card
agreement.
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Prepaid Cards
Prepaid cards require the cardholder to load money onto the card before
the card can be used. Purchases are withdrawn from the card's balance.
The spending limit does not renew until more money is loaded onto the
card. Prepaid cards do not have finance charges or minimum payments
since the balance is withdrawn from the deposit. These cards are not
actually credit cards and they don't directly help you rebuild your credit
score. Prepaid cards are similar to debit cards, but are not tied to a
checking account.
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Travel and
Entertainment Credit
Cards
A credit card that can
be used to cover
travelling expenses and
for your
enjoyment/entertainme
nt. An example of a
T&E card is "Diners
Club." It can only be
used at certain
restraunts which would
constitute
"entertainment.
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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
geographi
cal
validity
Domestic
card
Gold
Card
Based on
franchis
e/ Tie-up
International Card
Proprietary
card
Master
Card
Individual
Cards
VISA
Card
Based
on
issuer
Categor
y
Corporate Cards
Domesti
c Tie-up
Card
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Proprietary Card-
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Repo rate
Reverse repo rate
Prime Lending Rate (PLR)
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Credit Limit
Credit Time Offered
Rate of Interest
Eligibility Criteria
Acceptance of the Card
Joining fee
Annual fee
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CAREER opportunities
Skills required :
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Any
Questions
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Thank You