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
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 concept of using a card for was first
described in 1887 by Edward Bellamy in
his utopian novel Looking Backward.
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
geographi
cal
validity

Domestic
card

Gold
Card

Based on
franchis
e/ Tie-up

Internatio
nal Card

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 abnk having

tie up with VISA international

Domestic Tie-up Card- it is issued by any

abnk 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 Crds- 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 holder makes the

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

Card payment

Bill to card holder

payment

Bill raising

Credit card processing

Credit purchase

Credit card cycle

Mechanics of Credit Card Operation

Contract for credit card (1)
Issue of credit card (2)

Card Issuing
Bank

Card User /
Customer

Payment of credit card(3)

Clearing and settlements (7)

Charging of credit card
Purchase of
and raising bills (4)
goods and
services (3)

Marchants
bank

Submission of bill
for collection (5)
Payment for bills

(6)

Merchant
establishment

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