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A credit card is a plastic in form of a
small card used to purchase goods or services on credit,
from different retail stores, department stores,
wholesale stores and even from the Internet. Most credit
cards have the same shape. They just differ in
appearance.
The card bears the following information: name of the
card holder, the card issuer, card type, card number,
magnetic stripe or sometimes security chip, signature of
cardholder, card type’s logo, issuer’s logo, issue date,
expiry date,
The card number, magnetic stripe or the security chip,
and signature of cardholder serve as the card’s
essential security features.
The cardholder may be the one who applies for a credit
card or a supplementary.
The card type is usually Visa or Master card, JCB,
American express or Diners club international. |
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| Card issuers are mostly banks.
All banks offer credit cards. Payment terms, credit
limit, yearly fees, charges, interest rates, freebies,
promos, differ among these issuers. These matters are
the primary concerns of individuals and non-individuals
wanting to have a credit card. Thus these items also are
the primary factors of competition among issuers or
banks.
In a credit card process there are three parties
involved. One is the cardholder who applies and or uses
the credit card. Second is the issuer, usually a bank
who lends out funds to the cardholder through the use of
card at establishments. The third party is the
establishment, or Internet from which items, goods and
or services come from.
Example, when an individual pays an item using a credit
card, the credit card’s issuer will pay the
establishment from which the item is purchased. Then,
after the purchase has been settled between the issuer
and establishment, the obligation now for paying the
item goes to
the cardholder. The monthly credit card
statement serves as the list of items, or transactions
that the cardholder purchased or availed for a certain
period. The specified transactions stated in the credit
card statement typically cover certain period of time or
duration. This duration is called cut-off.
Credit card’s use usually has two cut-offs. The purchase
cut-offs and payment cut-offs. Cut-offs depend on the
issuer’s policies. Purchase
cut-offs depend on the date
the card has been issued. Usually the issue date is also
the purchase cut-off date. On the other hand, payment
cut-offs range from less than a month to a month.
Payment cut-offs also depend upon the issuer. It is most
beneficial to the cardholder if the credit card’s issuer
has longer payment cut-off.
Almost all individuals want to have a credit card
because of its many features. It is fast and easy.
Anyone can purchase anything with just the swipe of the
card at card terminals available in most department
stores and establishments. For Internet transactions, a
person can easily purchase goods and avail services with
just typing the credit card details. Not all
establishments accept credit card payments though, but
most of them do. Just look for the sign:
Credit card is very useful. In the Internet for
example, how can a person hand the payment for an item
if they are countries apart?
Even if they are not, it
still helps if both the merchant and purchaser need not
to meet in person just to hand the payment. Credit card
is handy and convenient. Because you will only need the
card, it can be placed anywhere, inside the wallet, or a
space inside a bag. Credit card promotes cashless
culture not only for it to be an everyday use but for
security of individuals as well. Because there is no
need to bring cash,
no harm or fear that the cash might
be lost or stolen. Plus credit cards come with perks,
freebies and rewards too! Almost all credit card issuers
has something exciting to offer to their card holders.
Examples are: free item for a minimum amount purchase on
a specific store or item; Discounts on selected
establishments; Balance transfer from one credit card to
another; Installment plans on big ticket items and many
more. Also credit card purchases has equivalent points
that the user can accumulate in exchange for a price or
reward. Credit cards also increase the consumer’s value
for money. Because of long payment terms, consumers have
more options where to put their money.
Well for businesses and establishments, credit card
increases their sales. They cannot get very far because
not everyone has cash on hand. Their customers need to
use credit cards to purchase what they need now and pay
on later when salary or income arrives. Especially
high-ticket items, not all people have readily available
cash for purchase of high-ticket items, so they use
credit cards instead. That is why also in the Internet,
merchants invest in credit card payment software to also
increase their sales.
For credit card issuers or banks, credit card is big
business. That is why they offer promos, rewards, and
freebies because they also get something from their
cardholders. Credit card’s annual fee is a universal
income for banks. Annual fee ranges from one thousand
pesos to two thousand pesos plus, depending on the
credit card’s issuer and the type of credit card. In
addition there are finance charges and interest for late
payments and other credit card charges. Interest ranges
from three percent (3%)to three and half percent (3.5%).
Finance charges range from five percent (5%) to six
percent (6%). Other credit card charges include but are
not limited to credit card replacement charge, credit
card cancellation charge. Though some credit card
issuers waive annual fees and other charges if the
cardholder is a good payer.
Credit card’s use today is ever expanding, as more and
more card issuers are being innovative and cardholders
increasingly reliant on its use. From all parties’ view,
the use of credit cards as another form of credit
instruments is beneficial.
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