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1. CREDIT CARDS

2. WHAT ARE CREDIT CARDS?
PRE-APPROVED CREDIT WHICH CAN BE USED
FOR THE PURCHASE OF ITEMS NOW AND
PAYMENT OF THEM LATER.

3. 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 × 53.98 mm

4. 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.

5. 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

6. WHAT DOES 16 DIGIT MEANS

7. CLASSIFICATION OF
CREDIT CARDS
Based on
mode of credit
recovery
Based on
status of
credit card
Based on
geographical
validity
Based on
franchise/
Tie-up
Based on
issuer
Category
Charge
Card
Revolving
credit card
Standard
Card
Domestic
card
Internation
-
al Card
Individ-
ual
Cards
Corpor-
ate
Cards
Proprie-
tary card
Business
Card
Gold Card
Master
Card
VISA
Card
Domestic
Tie-up
Card

8. 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 it has 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 the customer's current cash flow needs

9. 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 credit-card companies to favoured clients,
entitling them to high unsecured overdrafts, some insurance cover, etc

10. 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.

11. BASED ON FRANCHISE/ TIE-UP
• 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.

12. BASED ON ISSUER CATEGORY
•Individual Cards- Non-corporate cards
that are issued to individuals
•Corporate Cards- Issued to corporate
and business firms.

13. 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 retailer’s
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. )

14. 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 customer’s
purchase.

15. CREDIT CARD CYCLE
Credit purchase
• Purchase of goods and
service on card
Credit card processing
• marchant delivers goods after taking an authenticated credit card
and noting the number and taking signature on certain forms.
Bill raising
• Marchant raises the bill for the purchase and sends it to
the credit card issuing bank for payment
payment
• Issuing bank pays amount to the merchant
establishment
Bill to card holder
• Issuing bank raises bill on the credit cardholder and
sends it for payment
Card payment
• Credit card holder makes the payment to
the issuing bank

16. MECHANICS OF CREDIT CARD OPERATION
Contract for credit card (1)
Issue of credit card (2)
Payment of credit card(3)
Clearing and settlements (7)
Charging of credit card Purchase of
and raising bills (4) goods and
services (3)
Submission of bill
for collection (5)
Payment for bills (6)
Card Issuing Bank
Card User /
Customer
Marchant’s bank Merchant
establishment

17. 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.

18. To Merchants/ Shopkeepers :
• Guaranteed payment
• Lessens the security risk of holding the
cash
• Overseas visitors may purchase more,
providing new market for retailer

19. To credit card companies/ Banks :
• Source of revenue
- Joining fee
- card renew fee
- services charges from retailers
- Interest charged to customer

20. 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

21. 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