Introduction-

There is lots of information available on the online platform about credit cards, but we are trying to analalize it through economic, political and historical prospectives and making conclusions about how important it is for the customers. In the world economy, the debt market is very important about the growth of the market to increase the purchasing power of the customers.

From Barter system of the ancient world to today’s digital market, there was a various forms of credit system main through trade and business. Now today’s credit cards are also available to normal consumers and customers that the difference between old credit market and current credit market. The World’s powerful capitalist economy America had the first investor of plastic money i.e. Credit card after that it was used in different types of traders and businesses around the world.

The Main source of business of financial Institution and Banks is charging towards credit card services rather than interest charges by them. Those who pay the regular bills of credit card is not the prime customer of Banks and Financial Institutes but those who missed the monthly payments. Most of the regulations for banks and financial Institutions are given free hands about Interest rate charged by them and competition of  credit card market in the world is very high, but still they manage to control the interest rates through a bypass of legal regulations of authority.

What is Credit Card ? –

The Credit card is also known as the plastic money and it is plastic or metal card which is a standard size for the reason of using in  ATM machine for withdrawal of cash like Debit Card. It is a facility of credit of money provided by a bank or financial institutions against the interest and charges from the businesses or individual customers. It  enables customers to make purchase transactions on goods or services.

The credit card limit is determined by customers credit rating and income statements. After using certain credit limit by the cardholder, they have to pay the minimum amount in a  certain time otherwise bank will be charged extra charges. The customer can use this credit card for online purchase or physical shopping at any shopping center  or services.

History of Credit Card –

The credit card first used in 1920 not by any financial institution or banks, but by oil private oil companies, hotel chain to their customers and buyers in the United State of America. In the American elite society club used these credit cards to their club members  through various famous Diner’s clubs in 1950’s.

The Credit Card’s main purpose was buy now and pay later therefore this method boosted the economy of whole America and Europe, but this has few disadvantages where people got bad habits to buy goods and services which was not in their priority. The Credit Cards came in India after 1990 when American finance companies and Banks came into the Indian Market with Capitalist policy.

Now, after revolution of Anroid mobile the virtual money came into the world economy, which is used digitally therefore the Credit Cards change their identity from plastic money to virtual online transfer money where the main concept of buy now and pay later is always there. Forbes has given the Chronology in details of the history of Credit Cards.

Difference between Credit Card & Dabit Card –

The Credit card is the main purpose of buy now and pay later it means this is a loan given by a bank or financial institution to the individual or the business firm and charged by bank with interest and charges for services provided with the credit cards. In Debit card scenario the card is connected with your account either you are a business entity or the individual.

So this is not a loan it is an amount which is deposited by you. If there is no amount in your account, you cannot access any amount to buy goods or services in the market. Credit Card or Debit Card identically are the same as a 16 digit number with a plastic card with the  same standard of size card used in ATM or any other shopping machine or used through Anroid mobile.

Types of Credit Card –

• Reward Credit Cards
• Low Interest Credit Cards
• Credit Building Credit Cards
• Secured Credit Cards
• Cash back Credit Cards
• Travel Credit Cards
• Business Credit Cards
• Student Credit Cards
• Fuel Credit Cards
• Shopping Credit Cards

How to Choose best Credit Card –

It is very difficult to select the best credit card because the purpose of customer of using the credit card is a matter when selecting your Credit Cards. Low Interest and high rewards credit cards are best when the data suggest about using credit cards by customers in the market. Businessman uses the credit card for different purpose than normal individuals, therefore it is very difficult identified the best credit cards for use, it varies from customer to customers.

• Check your credit facility provided by the various finance companies or banks as per your CBIL
• Identify which type of credit card you need
• Decrease the choices by asking the various question about your requirement about credit card.
• Check the financial company or bank’s Credit card reputation in the market by their past performance.
• Check the customer care service past record of the finance company or Bank.
• Carefully check the terms and conditions provided by the banks or financial Institution.
• Carefully check the interest rates and other charges given by banks and compare it to the other banks or financial institutions.
• Area of Accebility of the credit card is very important so check it before applying it.

Minimum Payment of Credit Cards  –

The minimum amount, payment every month customer has to pay for their credit card facility if 5% of the total used credit, which is the main source of income to the banks or financial company. If you have converted your credit amount into an installment, which is considered to be as a minimum amount. If any customer not able to pay their minimum amount of credit card which is added to their next month minimum amount payment with interest.

The benefits of paying regularly your minimum amount is that you can keep active your credit card facility and this effect going to your CBIL report where your regular minimum payment effect keep your record good and you are not becoming a defaulter of the bank. When you pay only the minimum amount of your credit card the remaining amount of your credit limit and interest charges keep increasing with time goes so this payment system is good when you are not able to pay more amount used by your credit limit.

Bank Charges for Credit Cards –

There is no such things as free credit card facility, as a credit card holder there is various types of credit cards and terms and conditions for the credit cards where charges are varied from one another. Most of the card holder knows about annual credit charges, but there is various fees charged by bank, which is you must be aware of that.

• Annual Maintenance charges ( Annual Fees) 

This charge varies from credit card to credit card and some credit cards give free charge credit cards for a certain time period or for a life time.

• Cash Advance Fees –

As a part of your credit limit if a customer withdraws the total amount of their limit than 2.5% interest rate charged from the transaction executed and there is no facility of interest free period for cash advance transaction of the credit card.

• Over Limit fees –

Over limit fees is depending about your credit card type and some credit cards does not allow to use over limit cash limit or some credit cards can allow over limit cash amount. But if these credit cards charges very heavy interest charges for the over limit amount access for these credit cards.

• Late Payment charges –

If the credit card customer utilized their credit limits and not able to pay the full amount, then bank gives facility to pay minimum payment and even though card holder not paid minimum amount then company or bank charges flat interest charges to the card holder every month. This late payment charge varies by bank to bank or the financial company.

• Annual Percentage Rate –

This interest rate is charged to those card holders who fail to pay their total amount of credit limit given by banks or financial institutions which is 33% to 42% per annum. When the cardholders are paying their credit limit amount regularly per year then, their is no interest rate charged. But very few people are able to maintened this circle of the  credit limit of their credit cards.

• Goods & Services Tax (GST) –

GST is levied on annual fees, interest payment, processing fees on EMI @ 18%  therefore credit card charges are always customers have to understand and how to use the cash limit.

Credit Card and Other Loans –

As far as developed countries are concerned, the interest rate is lower than developing countries, but interest rates of credit cards in USA and European countries still higher than their other loans are concerned. In India situation is different than developed countries, and interest rate of housing loan and consumer loan are lower than credit card interest rate.

The Credit card interest rate is very high than personal loan and consumer loan but it is very crucial when there is emergency of finance to any individual or businesses when market interest is very high as per your need is concerned. So in emergency credit card is a very effective way of solving the financial problem. The purchase power of Indian are very low compared to European countries or the USA so credit card is used differently in developed countries than in India.

Approval Process of Credit Card –

India’s market is very huge compared to other countries of the world so competition of the credit card financial companies and banks are there which is a benefit to the customers. So most of the financial companies or banks try to give much better offer through their credit cards. Today’s online digital market and data availability of customers to the financial institutions and banks are very easy.

So customers very rarely need to find the best credit cards for them companies or banks always there for them with a good plan of credit cards. The Customer who wants to better credit cards requires good financial statements and credit record which is provided by CBIL though online rating with scores. So applying for credit cards is available through online or on your Android mobile.

Features of Credit Cards-

• Credit Cards is the plastic or metal money, which alternative to cash money, which has a 16 digit number with us able to online buying goods or services.
• The Interest rate is very high of credit cards as compare to other credit products of financial institutions or banks.
• The credit limit is available to the card holders through their bank statements and income status and it should from 30,000/-  to 3,00,000/-
• The credit cards is different for customer wise purpose of cardholders therefore there is various types of credit cards which is petrol card, gold card, travel card or health card etc.
• The Credit Card limit depends upon market competition and customers purpose with various plans.
• The credit cards have more disadvantages than advantages because it is product of banks and financial institutions
• The facility of payment system is available with foreign currency as well as Indian currency so the customer can use their credit cards worldwide for their buying goods or services.
• The credit cards are used specially in India for Emergency financial crises where it is very easy to any cardholder to use credit cards than borrow money from any individuals or banks.
• While using credit cards, there is normal interest charges is charged, but cash withdrawal of credit limit has higher interest charges than other charges of credit card.
• In the credit cards minimum payment available is 5% of the total credit limit used by the customers.

Disadvantages of Credit Cards –

• Most of the cardholders of credit card are not known that how to use effectively credit card cash limit and became victim of trap of interest.
• Unwanted purchase habits developed by these credit card facilities to the customers, which damage their future financial budget, America’s recession was the great example of the usage of credit card by card holders.
• The credit card interest rate is 33% to 42% with hidden charges are the highest interest rates of any other financial loan available in the market.
• The cardholders can pay the minimum payment of the total cash limit of the card so the balance amount charged with interest continuity and customer trapped with interest and other charges of credit cards.
• Availability of digital platform for credit card  comes with fraud and misuse of credit card by others through clone credit card or hacking your Anroid mobile system.
• Credit cards used mostly internally of the states, but sometimes it is used internationally and where password and other codes used very easily for buying goods or services.

Conclusion –

As there is various articles and blogs about credit cards on the internet platform, but here we tried to explain the credit cards with all the problems and advantages of it with the current situation. There is different prospectives while seeing the market of credit card in India and in developed countries like Europe and America.

The Purchase power of Indian is far behind these countries because only 2% people filling returns every year to the Income tax department in India. Which shows that the income level of the rest of the society is below than cream level society. In India while your CBIL is good, then it is very easy to get a credit card, but very few people have knowledge that how to use these credit cards.

We have seen the credit card concept first came from elite society and business cultures while using the barter system in the ancient history of the world. Today’s version of credit card is from American elite society and oil markets and hotel business used earlier in the 20th century. The credit card  depends upon customer goodwill with financial position in the market through bank statements and income. So most of the points about credit cards we have discussed here.

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