Presentation on : Credit Cards

Presented to :Prof. MS Thuran

Presented by :Sahil 14104002Anuj 14104009Jyoti 14104014Sumit 14104024Preety 14104030

Credit Card

Also known as plastic money, it is a means of deferred payment.

A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them.

Brief History

Franz Nesbitum Mc Namara, as American businessman founded Diner’s Card in 1950. Barclays Bank in UK introduced in 1966. Central Bank of India introduced in 1980. Now many banks issued credit cards.

Working Mechanism

Three Parties :

1. Issuing organization or bank-agreements with merchant establishments, makes payments after deducing commission.

2. Card Holders: Buys goods/services from establishments without immediate cash payment.

3. Member Establishment: Sends bills to issuing organization/bank.

Eligibility: different card are issued depending on income of person.

• Standard Card is basic without any frills.• Gold card/executive card offers higher line of credit.• Platinum Card: higher credit limit and additional perks.• Titanium Card provides higher credit limit.

Credit Card Changes

Different banks charge differently, depending on type of card. Main charges are-

• Entry charge- ranging from Rs 100 to 400• Annual fee- generally from Rs 400 to 1500 and added in bill.• Supplementary/ add on fee for additional card from Rs 125 to Rs 1000.• Cash advance (from ATM) fee- 2.5% per transaction, with minimum Rs 50 to 100.• Late payment fee- generally interest.

Types of Cards

1) Debit Card2) Smart Card3) Charge Card4) Secured Credit5) Cash Card6) Travel Card7) Supplementary or Add-on Card8) International Credit Card9) Co-branded Card10) Affinity Cards

Offers of Credit Cards

Reward Points

Discount Coupons

Insurance Cover

Baggage Cover

Advantages of credit cards

For card holders :

Purchase without immediate payment Overdraft/ credit facility Security as less cash carried Freebies and discount facility Status symbol

For issuing bank :

Source of income

New customers attracted

Reduces number of cheque transactions

Relationship with member establishments

For member establishments :

Payments guaranteed, when charge slip sent to member establishment. Speedy settlement of bills by banks Burden of credit facility taken by bank. Increase in volume of business transactions.

Disadvantages of Credit Cards

Heavy Interest Payment

Purchase Beyond Capacity

Bogus Credit Cards

Heavy Commission

Legal Frameworks (Acts related to Credit Cards)

Consumer Protection Act 1986

Income Tax Act 1961

Indian Penal Code 1860

Negotiable Instrument Act, 1861

Foreign Exchange Management Act