What is a credit card? A credit card is more than a simple piece of plastic, it is first and foremost a flexible payment tool accepted at 30 million locations worldwide, and if the card balance is paid off every month, then no interest is charged on purchases made so, essentially, short-term credit is granted without the consumer paying any interest. Credit cards are a popular form of payment for in-person and online purchases. People use them every day without thinking very much about their specific benefits. Credit cards offer a wide range of advantages to consumers, allowing them to shop without carrying cash and to buy expensive items. They offer protection from certain problems and may even let users rack up rewards. Credit cards can be defined as a payment card issued to a person for purchasing goods and services and obtaining cash against a line of credit established by a bank or a financial institution. There are different types of credit cards like standard credit cards, promotional and reward programs, bad credit and/or credit repair and specialty credit cards. Progress in civilisation in its turn has brought out radical changes in the manner of trading. The need for something intrinsically useful and easily applicable in everyday dealing is clearly felt. Cash in the form of currency notes and coins makes up just one form of the payment system. Development in banking while also giving inputs to the further development of cash brought about a second phase in payment namely paper instructions such as cheques and credit transfers. The requirement for greater flexibility and convenience has led to electronic payments, and this is where plastic cards have proved their worth. It allows the card issuers to limit the sum of money the card-holders wish to spend. The spending of card-holders who have defaulted on payments or who are over their credit limit can be restricted until the balances are cleared. Credit was first used in Assyria, Babylon and Egypt 3,000 years ago. The Bill of Exchange – the forerunner of bank notes - was established in the 14th century. Debts settled by one-third cash and two-thirds bill of exchange paper money followed only in the 17th century.The first advertisement for credit was placed in 1730 by Christopher Thornton who offered furniture that could be paid off weekly.From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments; they were called “tallymen” because they kept a record of tally of what people had brought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s shopper’s plate – “buy now, pay later” system – was introduced in USA. It could only be used in shops which issued it.In 1950, Diners Club and American Express launched their charge cards in USA, the first ‘plastic money’. In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants. With the magnetic strip in 1970, the credit card became a part of the information age.The origins of the bank credit card have been traced to John C. Biggins, a consumer credit specialist at the Flatbush National Bank of Brooklyn, New York. In 1946, Biggins launched a credit plan called Charge-It. The programme featured a form of scrip that was accepted by local merchants for small purchases. After the sale was completed, the merchant deposited the scrip in a bank account, and the bank billed the customer for the total scrip issued.
There are lots of advantages credit cards have.
A credit card can:
1. Offer free use of funds, provided you always pay your balance in full, on time. 2. Be more convenient to carry than cash.
3. Help you establish a good credit history.
4. Provide a convenient payment method for purchases made on the Internet and over the telephone. 5. Give you incentives, such as reward...