Credit Cards

• A plastic card with a magnetic tape or with a micro
chip on it issued by commercial banks to their credit
worthy customers on request.
• These can be used for making payment at
selected retailers or for drawing cash from
selected ATMs upto a certain limit.
• Features:
1. Plastic Card.
2. Magnetic tape.
3. Name of card holder.
4. Card number.
5. Validity date.
• Advantages:
Advantages to Card Holder:
1. Increases purchasing power.
2. Minimum cash handling.
3. Obtain cash at ATM.
4. Can be cancelled when stolen.
5. Postponement of payment.
Advantages to Bank:
1. Interest from card holder.
2. Commission from retailer.
Advantages to Retailers:
1. More sales.
2. Competitive edge.
3. Minimum cash handling.
• Disadvantages:
Disadvantages to Card Holders:
1. Limited acceptability.
2. Interest is charged.
3. Irrational buying.
4. Every one cannot have this facility.
5. Can be misused.
Disadvantage to Bank:
1. Recovery of money from defaulters.
Disadvantages to Retailer:
1. Commission and rental to be paid to the bank.
2. Problem of limited cash.