Credit Card (1)

8/2/2019 Credit Card (1)

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CREDIT CARD

SUBMITTED BY

GARIMA DIXIT-225

ARCHANA TIWARI-222AKANCHA YADAV-218


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What is a CREDIT CARD???

A credit card is part of a system of paymentsnamed after the small plastic card issued to usersof the system. It is a card entitling its holder to

buy goods and services based on theholder'spromise to pay for these goodsandservices . The issuer of the card grants a lineofcredit to the consumer (or the user)fromwhich the user can borrow moneyforpayment to a merchant or as a cashadvanceto the user.


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Credit Card

In contrast, credit cards allow the consumers

to 'revolve' their balance, at the cost

ofhaving interest charged. Most credit cardsareissued by local banks or credit unions,andare the shape and size specified by theISO/IEC 7810 standard as ID-1. This is defined

as 85.60 53.98 mm in size.


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WHAT ARE THE ADVANTAGES OF

USING A CREDIT CARD?

They allow you to make purchases on creditwithout carrying around a lot of cash.

They allow accurate record-keeping byconsolidating purchases into a single statement.

They allow convenient ordering by mail orphone.

They allow you to pay for large purchases in

small, monthly installments. Under certain circumstances, they allow you to

withhold payment for merchandise which provesdefective.


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WHAT ARE THE DISADVANTAGES

The ease of using credit cards, combined with impulsivebuying, may result in over-spending.

High interest rates, as well as other costs make creditcards a relatively expensive method of obtaining credit.

Lost or stolen cards may result in some expense ($50.00)and inconvenience.

The use of multi -credit cards can get you even furtherinto debt

Fraudulent or unauthorized charges may take months todispute,

investigate, and resolve.


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How Do one Get a Credit Card?

You must complete an application. A credit card

cannot be issued unless requested. Issuers often

acquire names of consumers with good credit

ratings from a credit reporting agency and sendthe consumers "preapproved" applications.

Card issuers are permitted to mail you an

application or a solicitation for a credit card or toask you by phone whether you want to receive a

card and to send you a card if you say yes.


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How do one get credit card???

An issuer will consider your employment, currentassets, current debts, and credit history whenyou apply for a credit or charge card. If you havehad a poor credit history, some companies will

issue you a "Secured" credit card. The issuerrequires you deposit money in an account andallows you to make credit purchases up to theamount on deposit. Consumers who wish to use

such plans to rebuild their credit record shouldmake certain that the deposits are held in aprotected escrow account


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HOW DOES A CREDIT CARD WORK?

When you have been issued a credit card you are givena line of credit. You can make purchases or receive cashadvances up to that amount with your card. When youmake a purchase, the merchant gives proof of your

purchase to the credit card company and they pay themerchant on your behalf; in effect granting you a loan.

The credit card issuer then bills you for reimbursementof the purchase or cash advance amount. You caneither pay the balance in full or make payments. The

issuer must send you periodic billing statements givingyou information on your account which includes theminimum payment due, date it is due, and the periodicinterest rate on unpaid balances.


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Monthly Payments and Finance

ChargesAdjusted balance : This system, which consumer experts say favorsthe cardholder, takes the balance from your previous statement, addsnew charges, subtracts the payment you made and then multiplies thisnumber by the monthly interest rate.

Average daily balance : This method, which is a pretty even-handed

one and the most commonly used, works like this: The company tracksyour balance day-by-day, adding charges and subtracting payments asthey occur. At the end of the period, they compute the average ofthese daily totals and then multiply this number by the monthlyinterest rate to find your finance charge.

Previous balance : This method generally favors the card issuer,

according to consumer experts. The issuer multiplies your previousstatement's balance by the monthly interest rate to find the newfinance charge. This means you're still being charged interest on yourbalance a whole period after you've paid it down!


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Late payment charges

Late fees and over-the-limit fees are a couple of newercharges that are used by pretty much all credit-cardissuers now. And increasingly, issuers are drasticallyraising interest rates (to as high as 23.99 percent) after

a set number of late payments (read the fine print andmake sure you know whether the payment isconsidered posted on its postmarked date or on thedate the bank or credit-card company gets it posted!).Unfortunately, once you have a couple of late

payments, the credit-card company can charge you theinflated interest rate for the remaining life of theaccount.


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What Credit Card Numbers Mean


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WHAT ARE CREDIT CARD

PROTECTIONS? Prompt Credit for Payments. A card issuer must credit your

account on the day the issuer receives your payment,unless the payment is not made according to the creditor'srequirements or the delay in crediting your account doesnot result in a charge.

Refunds of Credit Balances. When you return merchandiseor pay more than you owe, you have the option of keepingthe credit balance on your account or requesting a refund.To obtain a refund, write the card issuer. The card issuermust send you the refund within seven business days of

receiving your request. Also if a credit balance remains onyour account for more than six months, the card issuermust make a good faith effort to refund the credit balance.


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Errors on Your Bill. There are specific rules that the cardissuer must follow for promptly correcting billing errors.The issuer must furnish you a statement describing therules when you open a credit card account and at leastonce a year after that. Many issuers print your rights on

their monthly billing statements. You must notify the issuerin writing at the address specified for billing errors within60 days after the first bill containing the error was mailedto you. The issuer must look into the problem and eithercorrect the error or explain to you why the bill is correct

not later than 90 days after the issuer receives your billingerror notice. During that period you do not have to pay thedisputed amount or interest on that amount.


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Unauthorized Charges. If your credit card isused without your authorization, you can beheld liable for up to $50 per card. If you report

the loss before the card is used, federal lawsays the card issuer cannot hold youresponsible for any unauthorized charges. Ifyou have a lost or stolen credit card, report

the loss as soon as possible. Most issuers havea toll-free number in service 24 hours. Youshould follow-up your phone call with a letter.


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Are Debit Cards a type of

Credit Card?

Debit Cards are:

Not the same as credit cards

Not a form of credit at all

Directly linked to your bank account.

Debit cards allow payment and purchase to

happen simultaneously.


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Comparison of leading bank credit

card


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Types of Credit Cards

Cards where purchases can be made in manylocations

Bank Credit Cards

Card issued by financial institution Credit is issued by service provider (Wells Fargo Visa card)

Balance paid-off at end of month or extended over period oftime

Travel and Entertainment Credit Cards

Credit and card issued by service provider (Diners Club)

Not accepted at as many locations as bank cards

Entire balance must be repaid in 30 days


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Business Credit Cards

A business credit card offers the business owner theopportunity to keep business and personal expensesseparate. The credit card may offer special businessrewards and saving opportunities that go above and

beyond what the individual credit card owner mayhave. Since money management is essential insuccessfully running a business, the card may offer anexpense management service that will allow you tokeep track of the outgoing money. You can obtain

additional credit cards for employees who may needthem for travel expenses and such as well as have ahigher credit limit than you normally would on anindividual credit card.


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Student Credit Cards

Many credit card companies will issue student

credit cards that have lower credit limits and

fewer incentives to help keep their spending

in check. Still, take note. Many collegestudents graduate with a credit balance that

averages between $3,000 and $7,000 and

with interest rates, this can be a real problemwhen trying to pay them off.


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Prepaid Debit Cards

prepaid debit cards are one type of credit card thathas grown significantly in recent years. Although theywork like a traditional credit card when making apurchase, that is where the similarities end. With

prepaid debit cards, you have actually prepaid and setthe credit limit by depositing money onto the debitcard. Depending on how much you have deposited intothe debit card's account depends on how much credit

limit you want on that card. This is a great way to havethe convenience of a credit card without the chance ofcharging more than you can afford to pay off.


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Credit Cards For Bad Credit

It is possible, even with bad credit to obtain acredit card. These cards will come with somerestrictions not typically found on other types ofcredit cards. Your credit limit will be lower and

your interest rate higher. Some may require youto have a secured credit card, meaning you haveto maintain a savings or some other type ofaccount that will cover the expenses on the credit

card. Once you have established that you will beresponsible, some, if not all, of your restrictionsmay be lifted.


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Cash Back Credit Cards

Many credit cards will now offer you cash backincentives for using their credit cards. Dependingon how much your balance is and how often you

use the credit card, you can earn cash back foryour purchases. Some companies offer 1% offyour balance while others, like Sears, will offeryou cash off purchases made in their store. Either

way, if you are planning on using a credit card,finding one that will offer you a cash incentive is asmart choice.


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Some popular Credit Cards

ICICI Bank Preferred Gold Credit Card:

Company Name : ICICI Bank

Card Provider : Mastercard

Card Type : Gold

Card Name : ICICI Bank Preferred Gold Credit Card

Card Purpose : Preferred Gold credit card from ICICI bank.

Interest Rates

On Purchase : 3.15 % p.m Cash Withdrawal : 3.15 % p.m

Eligibility : Minimum Income: Rs. 1,20,000 p.a. (Salaried) and Rs. 1,00,000 p.a. (Self-employed)

Rewards Program : Yes ( Details: Double reward Point on every Rs. 200 spent on hotelstays,airline ticketing and dining | Travel benefits | 0% fuel surcharge across HPCL outlets )

Grace Period : 20 to 50 days

Min.Monthly Payment : 5

Features

Reward Credit Cards

Balance Transfer Cards


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SBI Platinum Credit Card

Company Name : SBI

Card Provider : Visa

Card Type : Platinum

Card Name : SBI Platinum Credit Card

Card Purpose : Platinum Card from SBI

Interest Rates

On Purchase : 3.10 % p.m

Cash Withdrawal : 3.10 % p.m

Balance Transfer : Available

Eligibility :N/ARewards Program :Yes ( Details: 0% fuel surcharge at all petrol pumps | Get 1 power point for every Rs 40 spent )

Grace Period :Upto 50 days

Min.Monthly Payment :5% of outstanding balance or Rs 200, whichever is higher

Credit Limit :N/A

Cash Limit :Upto 80% of credit limit.

Insurance Notes :Travel Insurance for Loss of baggage, flight delays, passport loss

Annual Fee : No

Foreign Currency Fee : None

Late Payment : 30% of Min amount due (Min Rs 350 - Max Rs 600)

Over Limit Fee : 2.5% of overlimit amount or Rs 500, whichever is higher

Balance Transfer Fee

Card Replacement Fee : Rs 100

Other Bank ATM Charge :2.5% of Rs 250, whichever is higher

Overseas ATM Charge : 3% of Rs 250, whichever is higher Features

Petrol Credit Cards

Reward Credit Cards


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HDFC Bank Titanium Credit Card

Company Name : HDFC

Card Provider :Mastercard

Card Type : Titanium

Card Name : HDFC Bank Titanium Credit Card

Card Purpose : Titanium card from HDFC

Interest Rates

On Purchase : 2.65 % p.m

Cash Withdrawal : 2.50 % p.m

ligibility : N/A Rewards Program : Yes ( Details: Earn 2 points per Rs 100 spent | Worldwide concierge services | 0% fuel

surcharge at all outlets | )

Grace Period : 50 days

Min.Monthly Payment : 5%

Lost Card Liability : Insurance against fruadulent transactions up to Rs. 2 lacs and zero lost card liability afterreporting card loss

nnual Fee : Variable

Balance Transfer Fee : Yes ( Details: ) Add On Card Fee : No

Photo Card Fee : No

Other fee notes : Joining Fee: Variable


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Eligibility Criteria

Bank Name Type of Credit Card Salaried

(p.a.)

Self- Employed

(p.a.)

Axis Bank Gold Credit Card 1,80,000 1,80,000

Barclays Premier League

Credit Card

6,00,000 6,00,000

HDFC Silver Credit Card 2,00,000 1,50,000

ICICI Bank HPCL Credit Card 2,40,000

ICICI Bank Titanium Credit

Card

4,80,000 4,80,000

Kotak Bank Trump Gold Card 3,00,000 3,00,000

Kotak Bank Royale Signature

Card

25,00,000 25,00,000

ICICI Bank Platinum Credit 4,80,000 4,80,000


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Cards where purchases are made in particular

location

Retail Credit Cards

Credit and card issued by particular retailer (Old Navy, The

Bon, Home Depot, Shell Oil)

Balance paid-off at end of month or extended over period

of time


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Banks offer a choice of payment methods, eitherpay the balance in full with no interest or paya minimum part or some part of the balance

with a finance charge.

Company or Retail store cards such as Sears,J.C. Penney, Shell, or Mobil. These cards are

only accepted by the specific company and donot have an annual fee. However, the termsand conditions of these cards vary widely.


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Credit Card Terms

When selecting a credit card, the following creditterms and conditions are important because theyaffect the total cost of credit:

"Annual Fee

"A flat, yearly charge similar to amembership fee, usually $25 to $50.

"Annual Percentage Rate"The APR is themeasure of the cost of credit expressed as ayearly rate.

"Finance ChargeThe dollar amount you pay touse credit, includes interest costs and all chargesassociated with the transaction.


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"Grace Period"The grace period is the numberof days you have before a credit card companystarts charging interest on new purchases. Not allcredit cards have a grace period.

"Periodic Rate"The interest rate the card issuerapplies to your outstanding account balance tofigure the finance charge for each billing cycle.

"Transaction FeesA fee for a cash advance, a

late payment, or going over your credit limit.Sometimes there is a monthly fee if you did notuse the card.


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EVALUATING CREDIT CARDS

When you evaluate various credit card options,consider the following factors as well:

Compare the credit card interest rates. Look for a

low interest rate card but remember the interestrate is not fixed so it can be adjusted eitherquarterly or by written notice by the bank orcompany. You may be able to negotiate with yourbank for a lower interest rate.

Compare how finance charges are calculated tohelp determine the total cost of credit.


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Look at all charges for each card. Some

companies add other fees, such as late-

payment fees if your payment arrives after the

due date, or transaction fees every time youuse the card. Grace periods vary as well.

Companies generally start the grace period at

the time the purchase is posted to youraccount. However with some cards, the grace

period can start on the day of purchase.


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Decide what credit limit is appropriate for you.Determine the amount of money you can chargeeach month based on your income.

The credit card you choose should be widely

accepted. Fewer credit cards will make it is easierto keep track of your credit spending.

Compare services and features, such as travelinsurance, rebates, purchase protection plans,

cash-back incentives, or extended warranties.Evaluate these features in terms of the extracredit costs.


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Make sure the annual fees are reasonable. Not allcredit cards require an annual fee. It is worthshopping around to get the lowest fee or no fee,especially if you pay off your balance eachmonth.

Read each contract carefully before you sign sothat you understand all the costs and conditions.

Shop for a credit card the same way you wouldshop for any goods or service. Try to negotiate forthe options and conditions you want at thelowest cost available.


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User Responsibilities

A credit card user, has the following responsibilities:

Assess your financial situation and determinehow much you can repay monthly.

Understand the contract's costs and conditions sothat you know the total cost of credit purchases.

Keep copies of credit transactions and compare

with your monthly statement. Remove carbons from credit card receipts and

destroy them.


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Do not give your credit card numbers to anyoneyou do not know and trust

Pay your bill on time.

Inform the creditor of any billing errors promptly. Notify the creditor if you cannot make your

payments.

Make a list of all credit card account numbers andthe issuer's telephone number to use if yourcard(s) are lost or stolen.


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Opening a Credit Account

1. Applicant completes a credit application

2. Lender conducts a credit investigation

3. Applicant is given a credit rating

4. Lender accepts or denies the credit request

5. If accepted, applicant evaluates the credit

card details.6. Applicant accepts or refuses credit terms


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Understanding the Bill

Minimum Payment Due: minimum amount to bepaid

If this amount is paid and a balance is left on the account,additional finance charges will be included in the following

months balance Past Due Amount: the previous amount due which

was not paid before the due date

Due Date: the day by which the company requires a

payment to be made New Balance: the total amount owed on a credit

card


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Credit Line: the maximum amount of chargesallowed to an account

Closing Date: last day for transactions to be

reported on the statement Charges, Payments, and Credits: the

transactions which occur with the use of acredit card

Finance Charge: charges assessed for creditcard use


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Eligibility for a credit card

Residence:-

You have to give your residential address,where you are living for the last 2-3 years. This

proof has to be either ration card, passport orelectricity bill. If you are staying in a rentedplace you should have a rent receipt signed bythe landlord.

Telephone number:-A telephone number whether landline ormobile is mandatory for applyling a credit card.


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Contd..

Age:- The age of the applicant is crucial whileapproving the credit card. Minors whose ageis less than 18 years are not allowed to avail

the service of the credit card. Criminal record:-

The credit card issuer do not want to bedragged into the court for the crimes theyhave not committed. Thus they check eachand every legal aspect of the applicant.


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Place of work:-

While issuing a credit card the place of work is of

utmost importance. The place of work shows the

probability of risk that the applicant may befacing during working hours. It also reveals the

designation or post of the applicant.

Annual Salary should be more than :- 2,00,000It can be change according to different banks rules.


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Fees charged to customers

The major fees are for:-

Late payments or overdue payments

Charges that result in exceeding the credit limit

on the credit card ( whether done deliberately orby mistake), called overlimit fees.

Returned cheque fees or payment processing fees(eg phone payment fee)

Cash advances and convenience cheque(often 3%of the amount).


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Contd..

Transaction in a foreign currency ( as much as 3%

of the amount). A few financial institutions do

not charge a fee for this.

Membership fees(annual or monthly),sometimes

a percentage of the credit limit.

Exchang rate loding fees(these may sometimesnot be reported on the customers statement,

even when they are applied)


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Interest charges

Credit card issuers waive interest charges if the balance ispaid in full each month, but typically will charge full interst

on the entire outstanding balance from the date of eachpurchase if the total balance is not paid.

Example:-

If a user had a $1000 transaction and repaid it in full within

this grace period, there would be no interest charged. If,however even $1.00 of the total amount remained unpaid,interst would be charged on the $ 1,000 from the date ofpurchase until the payment is received.


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Grace period

A credit cards grace period is the time thecustomer has to pay the balance before interst

is assessed on the outstanding balance. Graceperiods vary, but usually range from 20 to 50days depending the type of credit card on theissuing bank.

Some policies allow for reinstatement aftercertain conditions are met.


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How credit card work

Credit cards are issued after an account has been approvedby the credit provider , after which cardholders can use it tomake purchases a customer accepting that card.

When a purchase is made, the credit card user agrees to paythe card issuer. The cardholder indicates consent to pay bysigning a receipt with a record of the card details andindicating the amount to be paid or by entering a personal

identification number (PIN). Also, many merchants now acceptverbal authorizations via telephone and electronicauthorization using the Internet, known as a 'Card/CardholderNot present (CNP) transaction.

'


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Benefits to customers

The main benefit to each customer isconvenience. Compared to debit cards andchecks, a credit card allows small short- termloans to be quickly made to a customer whoneed not calculate a balance remaining beforeevery transaction , provided the total charges donot exceed the maximum credit line for thecard.

Credit cards also provide more fraud protectionthan debit cards.


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Using a Credit Card Properly

Only use when there is no doubt about ability

to pay-off the charges at the end of the billing

cycle

Record all expenses and keep receipts

Check credit statement for errors

Always pay off balance completely and

timely

S f t Ti


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Safety Tips

Sign card with signature and Please See ID

Do not leave cards lying around

Close unused accounts in writing and by phone,

then cut up the cardDo not give out account number unless making

purchases

Keep a list of all cards, account numbers, andphone numbers separate from cards

Report lost or stolen cards promptly


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Documents

Credit Card (1)