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Thursday, May 28, 2009
Hidden Payments
Merchants who accept credit cards must pay a processing fee ranging from 1- 6 % of the purchase price. These hidden costs and hidden payments are transferred to the consumer in various ways.
The first method is the most commonly accepted one of a surcharge on the payment, leading to the price being higher than the marked price. The problem has been compounded in India, where the credit card companies have not asked for “merchant agreements”, which provide that the processing charges will not be added on by the merchant. This has led to credit cards being used less frequently than they might be, a disadvantage to the issuer as well as the merchant.
A second method is simply marking up of the prices of all items in the shop, leading to the surcharge being hidden in the retail price. While the MRP does restrict this to some extent, the net result is that people who pay in cash are paying as if they were using a credit card. Thus, a part of the revenue earned by the credit card companies comes from people who do not even own a credit card!
The flip side is, with the boom in the credit card market in India, greater volume of credit card sales allow the merchants to keep their existing price structure, and still not lose any profit on paying the processing fee, since the credit card companies have relaxed their rates, as a measure to boost sales and increase the acceptability net. . Credit cards also allow for convenience in repeat sales, and the processing fee is greatly offset by the increased convenience. Also, the processing fee is simply an equivalent payment to the costs incurred in counting, transporting and depositing the cash payments.
Whichever way you look at it, using a credit card can entail certain hidden payments consequences of which must be closely examined before using a credit card.
Source:
Wikipedia
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/08/AR2007030802178.html
Statutory Instrument 1990 No. 2159: The Credit Cards (Price Discrimination) Order 1990
http://rbifinance.com
http://kingcreditweb.com
The first method is the most commonly accepted one of a surcharge on the payment, leading to the price being higher than the marked price. The problem has been compounded in India, where the credit card companies have not asked for “merchant agreements”, which provide that the processing charges will not be added on by the merchant. This has led to credit cards being used less frequently than they might be, a disadvantage to the issuer as well as the merchant.
A second method is simply marking up of the prices of all items in the shop, leading to the surcharge being hidden in the retail price. While the MRP does restrict this to some extent, the net result is that people who pay in cash are paying as if they were using a credit card. Thus, a part of the revenue earned by the credit card companies comes from people who do not even own a credit card!
The flip side is, with the boom in the credit card market in India, greater volume of credit card sales allow the merchants to keep their existing price structure, and still not lose any profit on paying the processing fee, since the credit card companies have relaxed their rates, as a measure to boost sales and increase the acceptability net. . Credit cards also allow for convenience in repeat sales, and the processing fee is greatly offset by the increased convenience. Also, the processing fee is simply an equivalent payment to the costs incurred in counting, transporting and depositing the cash payments.
Whichever way you look at it, using a credit card can entail certain hidden payments consequences of which must be closely examined before using a credit card.
Source:
Wikipedia
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/08/AR2007030802178.html
Statutory Instrument 1990 No. 2159: The Credit Cards (Price Discrimination) Order 1990
http://rbifinance.com
http://kingcreditweb.com
Common Credit Card Mistakes
The following article highlights some common mistakes made by credit card holders before, after and during getting a credit card issued. Before getting the card: Procuring multiple cards An extremely common mistake made by most inexperienced cardholders, lured by the attractive initial rates of an add-on card or a special discount scheme offered during peak season, they often find themselves in twice as much debt as before.
Not shopping around for the best interest rate
Credit card rates and terms vary greatly. Always ask your issuing bank for all the credit card rates they charge like fuel surcharge, late fees, revolving credit charge etc. The bank’s website or customer care service can be used for this function. Choosing a card for the wrong reasons
Cardholders often get a card issued because of the fringe benefits and reward schemes on offer, even though the rates are higher. A credit card is there to make purchases, not to earn reward points. They should be treated as a bonus, after getting a card with the best rates.
Being misled by introductory rates
Some credit cards, especially of the low-end variety, often have a low or waived initial fee and a modest annual fee for the initial period. However, after the period is over, the rates spiral and increase significantly. The paperwork and forms must be scrutinized carefully by the cardholder for such tricks.
Not reading the SMALL print
Before you sign up, be sure you know the card's interest rate and how it is calculated, the grace period, fee schedule, and other terms. After getting a card issued, pay attention to any updates or notifications sent to you by the bank or the card company.
After getting the card:
Applying for a card and limit you cannot afford to repay and paying the minimum repayment
The most publicized feature of the credit card is that of the minimum amount due. What is not advertised is that interest is charged on the amount spent, not the amount outstanding. So use this feature only as a last resort.
Maxing out the card
This implies that the holder has overspent, and the debt becomes crippling. Often the cardholder is stuck paying off the interest alone, and cannot make any inroads into the principal.
Using the cash advance function
Check on the terms and conditions of the cash advance function very carefully. The interest rates are often steep and there is no interest-free period. If you must use it, repay the money at the earliest.
Late payments
Late payments subject you to extortionate interest rates and set fees. The charge is extremely high and proportional to your bill. The late payments are one of the main revenue-earners of the companies.
Not checking your statement and not keeping your receipts
A common error when we start to feel the pressure of a debt burden is to start to ignore the fact that the debt exists in the first place. A downward trend starts that will leave you hopelessly in debt. Also keep your receipts from purchases to cross-check with your monthly bill.
Adding a secondary user
Although some may not consider this a mistake, if you add a secondary user to your credit card account you’ve suddenly lost control over the spending on your card. The interest rates and payments you will have to make will also increase, and the fraud risk multiplies.
Using your card overseas
Overseas purchases are charged with a large fee and a higher exchange rate than the current one. It’s much safer and cheaper to carry travellers’ cheques or cash. There are also special deals which certain global banks offer, one among them being the offer to convert your card to the foreign country’s currency, provided the bank does business there.
http://rbifinance.com
Not shopping around for the best interest rate
Credit card rates and terms vary greatly. Always ask your issuing bank for all the credit card rates they charge like fuel surcharge, late fees, revolving credit charge etc. The bank’s website or customer care service can be used for this function. Choosing a card for the wrong reasons
Cardholders often get a card issued because of the fringe benefits and reward schemes on offer, even though the rates are higher. A credit card is there to make purchases, not to earn reward points. They should be treated as a bonus, after getting a card with the best rates.
Being misled by introductory rates
Some credit cards, especially of the low-end variety, often have a low or waived initial fee and a modest annual fee for the initial period. However, after the period is over, the rates spiral and increase significantly. The paperwork and forms must be scrutinized carefully by the cardholder for such tricks.
Not reading the SMALL print
Before you sign up, be sure you know the card's interest rate and how it is calculated, the grace period, fee schedule, and other terms. After getting a card issued, pay attention to any updates or notifications sent to you by the bank or the card company.
After getting the card:
Applying for a card and limit you cannot afford to repay and paying the minimum repayment
The most publicized feature of the credit card is that of the minimum amount due. What is not advertised is that interest is charged on the amount spent, not the amount outstanding. So use this feature only as a last resort.
Maxing out the card
This implies that the holder has overspent, and the debt becomes crippling. Often the cardholder is stuck paying off the interest alone, and cannot make any inroads into the principal.
Using the cash advance function
Check on the terms and conditions of the cash advance function very carefully. The interest rates are often steep and there is no interest-free period. If you must use it, repay the money at the earliest.
Late payments
Late payments subject you to extortionate interest rates and set fees. The charge is extremely high and proportional to your bill. The late payments are one of the main revenue-earners of the companies.
Not checking your statement and not keeping your receipts
A common error when we start to feel the pressure of a debt burden is to start to ignore the fact that the debt exists in the first place. A downward trend starts that will leave you hopelessly in debt. Also keep your receipts from purchases to cross-check with your monthly bill.
Adding a secondary user
Although some may not consider this a mistake, if you add a secondary user to your credit card account you’ve suddenly lost control over the spending on your card. The interest rates and payments you will have to make will also increase, and the fraud risk multiplies.
Using your card overseas
Overseas purchases are charged with a large fee and a higher exchange rate than the current one. It’s much safer and cheaper to carry travellers’ cheques or cash. There are also special deals which certain global banks offer, one among them being the offer to convert your card to the foreign country’s currency, provided the bank does business there.
http://rbifinance.com
Credit Cards for Students
The credit card market today is expanding to include undergraduate and post-graduate students under its umbrella. There aren’t many options for this type of card at present; many of the banks have been adapting their low-interest and lower-end cards for students’ use. The student credit card market is a fledgling one at present, with banks using models from the USA for their own adapted cards.
Features:
The most important feature of a student credit card is that there is no lower income eligibility limit, which allows even a person who doesn’t earn money to obtain a credit card.
Such credit cards are simpler to obtain than normal credit cards, with no income tax returns required. The only documents required are proof of residence and proof of enrollment at any institute.
A second major feature of most student credit cards is that they offer a lower cash limit and revolving credit limit, along with a lower service charge on the revolving credit limit.
Finally, there is no joining or annual fee, and the car is generally valid for a period of 5 years, and eligible to students who are 18 and above.
Warning:
A problem with student credit cards that has arisen in the USA, and which we would do well not to emulate is when credit card companies encourage students to use the student card to pay off their student loans. This plunges them deeper into debt, and often students are unable to pay back the loans on the credit card. The credit card companies compensate for a low monthly interest fees with an unusually high annual percentage rate, so the bills on a student card should be paid on time and in full.
NextGen Gold Visa Card:
A good example of a student credit is the Bank of Baroda’s NextGen Gold Visa Card, which is a card exclusively for students offering low interest rates as well as the primary features of their standard Gold card. The card is a prime example of a characteristic student credit card; 1.5% revolving credit service charge as opposed to 2.5%, and a higher APR.
Reminder:
Three things that a student must remember before obtaining a student card:
The card should be used for small purchases, not for any extravagant items.
The bill should be paid in full before the end of the year, otherwise the high APR kicks in.
The details and offers of the card should be studied in full before a card is purchased, with special emphasis on the APR and the late payment charge.
Features:
The most important feature of a student credit card is that there is no lower income eligibility limit, which allows even a person who doesn’t earn money to obtain a credit card.
Such credit cards are simpler to obtain than normal credit cards, with no income tax returns required. The only documents required are proof of residence and proof of enrollment at any institute.
A second major feature of most student credit cards is that they offer a lower cash limit and revolving credit limit, along with a lower service charge on the revolving credit limit.
Finally, there is no joining or annual fee, and the car is generally valid for a period of 5 years, and eligible to students who are 18 and above.
Warning:
A problem with student credit cards that has arisen in the USA, and which we would do well not to emulate is when credit card companies encourage students to use the student card to pay off their student loans. This plunges them deeper into debt, and often students are unable to pay back the loans on the credit card. The credit card companies compensate for a low monthly interest fees with an unusually high annual percentage rate, so the bills on a student card should be paid on time and in full.
NextGen Gold Visa Card:
A good example of a student credit is the Bank of Baroda’s NextGen Gold Visa Card, which is a card exclusively for students offering low interest rates as well as the primary features of their standard Gold card. The card is a prime example of a characteristic student credit card; 1.5% revolving credit service charge as opposed to 2.5%, and a higher APR.
Reminder:
Three things that a student must remember before obtaining a student card:
The card should be used for small purchases, not for any extravagant items.
The bill should be paid in full before the end of the year, otherwise the high APR kicks in.
The details and offers of the card should be studied in full before a card is purchased, with special emphasis on the APR and the late payment charge.
Debit Cards vs Credit Cards
This article highlights the differences and comparative advantages and disadvantages of the two types of popular plastic money on offer in India.
The basic difference between the two is the fact that a credit card takes the form of a personal loan from the issuing bank to the consumer, while a debit card is more like a cheque: money is directly deducted from a person’s bank account to pay for transaction.
Some advantages of a credit card over a debit card are:
With a flexile spending limit, a cardholder can take advantage of the easy loan facility of a credit card, and can use it to purchase items or spend money that he expects in the near future, not just money that he presently has in his account.
Most of the major features of a debit card such as withdrawal of cash from ATMs are available on credit cards as well.
A credit card has a wider acceptance and recognition, especially in online transactions.
A credit card has greater security measures ad checks than a debit card.
Credit cards allow for cash back and bonus points schemes that a debit card is not eligible for.
A credit card can be used as a convenient way to check and record your spending.
Since there is a fixed credit limit, a cardholder cannot overstretch his purchases.
The disadvantages of using a credit card: Following are the disadvantages of Credit card
The major one is the hidden costs of a credit card in the form of late payments, transaction fees, fuel surcharge. The consumer must take all of this into account before getting a card issued.
It is not compulsory for the entire balance to be paid, but the interest is charged on the entire amount, regardless of the part paid. This causes a debt trap for the cardholder.
The security of a card is not total and cases of fraud are extremely common even today.
Credit cards can be used at ATM cards, but there is a considerable processing fee required.
All in all, a credit card should be used responsibly and the amount due should be paid in full.
Debit cards provide access to ready money in a more convenient and less invasive form than cheques, and allow for a faster withdrawal of cash.
They can be used by people who do not qualify for a credit card, and the major advantage is that a person spends money that he actually possesses from his bank account.
A debit card can be used to withdraw money from an ATM with no processing charge. A debit card is a more convenient way of carrying cash around.
The disadvantages of the debit card:
There are almost no security measures and a person can use a debit card to clean out the cardholder’s account, if he knows the PIN.
A debit card does not prevent the account from being overdrawn, and has less affordability than a credit card.
A debit card also has a narrower acceptable area in India, with many merchants not accepting it since they are charged a fee every time they do.
The major problems of a debit card are negated by instant notifications of transactions via sms and emails. A credit card or a debit card are both useful tools that must be used carefully and sparingly to maximize your advantage.
The basic difference between the two is the fact that a credit card takes the form of a personal loan from the issuing bank to the consumer, while a debit card is more like a cheque: money is directly deducted from a person’s bank account to pay for transaction.
Some advantages of a credit card over a debit card are:
With a flexile spending limit, a cardholder can take advantage of the easy loan facility of a credit card, and can use it to purchase items or spend money that he expects in the near future, not just money that he presently has in his account.
Most of the major features of a debit card such as withdrawal of cash from ATMs are available on credit cards as well.
A credit card has a wider acceptance and recognition, especially in online transactions.
A credit card has greater security measures ad checks than a debit card.
Credit cards allow for cash back and bonus points schemes that a debit card is not eligible for.
A credit card can be used as a convenient way to check and record your spending.
Since there is a fixed credit limit, a cardholder cannot overstretch his purchases.
The disadvantages of using a credit card: Following are the disadvantages of Credit card
The major one is the hidden costs of a credit card in the form of late payments, transaction fees, fuel surcharge. The consumer must take all of this into account before getting a card issued.
It is not compulsory for the entire balance to be paid, but the interest is charged on the entire amount, regardless of the part paid. This causes a debt trap for the cardholder.
The security of a card is not total and cases of fraud are extremely common even today.
Credit cards can be used at ATM cards, but there is a considerable processing fee required.
All in all, a credit card should be used responsibly and the amount due should be paid in full.
Debit cards provide access to ready money in a more convenient and less invasive form than cheques, and allow for a faster withdrawal of cash.
They can be used by people who do not qualify for a credit card, and the major advantage is that a person spends money that he actually possesses from his bank account.
A debit card can be used to withdraw money from an ATM with no processing charge. A debit card is a more convenient way of carrying cash around.
The disadvantages of the debit card:
There are almost no security measures and a person can use a debit card to clean out the cardholder’s account, if he knows the PIN.
A debit card does not prevent the account from being overdrawn, and has less affordability than a credit card.
A debit card also has a narrower acceptable area in India, with many merchants not accepting it since they are charged a fee every time they do.
The major problems of a debit card are negated by instant notifications of transactions via sms and emails. A credit card or a debit card are both useful tools that must be used carefully and sparingly to maximize your advantage.
Credit Card Hijacking by Identity Theft
Identity theft is the stealing of another person’s identity and using it as your own. Personal information is stolen by identity thieves through various sources, and used to make credit cards and other identity documents. Fraudulent credit cards are the most common result of identity theft. There are various ways in which thieves gather details of someone’s identity. The most common methods are listed below:
Retrieving information from redundant equipment which has been disposed of carelessly, e.g. at public dump sites, information given away without proper sanitizing etc.
Stealing payment or identification cards, either by pick-pocketing or surreptitiously by skimming through a compromised card reader
Eavesdropping on public transactions to obtain personal data
Stealing personal information in computer databases
Advertising bogus job offers (either full-time or work from home based) to which the victims will reply with their full name, address, CVs, telephone numbers, and banking details
Browsing social network sites, online for personal details that have been posted by users.
These methods allow thieves to gather a surprising amount of information and get a credit card issued in your name. The net results of such a measure are disastrous. Vigilance and discretion must be exercised in keeping personal details from being stolen.
Credit Card Hijacking by Cancellation Barrier
Another common form of credit card hijacking is used by subscription companies, the payments for whom are routed through a credit card. The organization creates certain barriers that make it difficult for a credit card user to cancel his subscription easily, and as such continue to charge him for services he no longer desires or needs. This is in direct contrast to the traditional method of subscriptions, where the subscriptions have to be proactively renewed, and are cancelled or suspended if payments are not on time. The credit card makes the user’s money more easily accessible to the subscription company, and the liability resulting from inactivity falls on the user’s shoulders, rather than the company that is providing the service.
Also, since the general monthly cost is low, such practices can go unnoticed for months at a time. Hence, the user must maintain a close eye on his monthly bills.
Credit Card Hijacking by Negative Option Billing
Negative option billing is a business practice in which goods or services are provided automatically, and the customer must either pay for the service or specifically decline it in advance of billing. Thus, if the user makes no response to the bill sent by the company, he is assumed to have agreed with the transaction and the amount is debited from his credit card. This is a practice which is not illegal yet, and many credit card users have been exploited because of such tactics.
Sources:
http://en.wikipedia.org/wiki/Credit_card_hijacking
http://en.wikipedia.org/wiki/Identity_theft
Retrieving information from redundant equipment which has been disposed of carelessly, e.g. at public dump sites, information given away without proper sanitizing etc.
Stealing payment or identification cards, either by pick-pocketing or surreptitiously by skimming through a compromised card reader
Eavesdropping on public transactions to obtain personal data
Stealing personal information in computer databases
Advertising bogus job offers (either full-time or work from home based) to which the victims will reply with their full name, address, CVs, telephone numbers, and banking details
Browsing social network sites, online for personal details that have been posted by users.
These methods allow thieves to gather a surprising amount of information and get a credit card issued in your name. The net results of such a measure are disastrous. Vigilance and discretion must be exercised in keeping personal details from being stolen.
Credit Card Hijacking by Cancellation Barrier
Another common form of credit card hijacking is used by subscription companies, the payments for whom are routed through a credit card. The organization creates certain barriers that make it difficult for a credit card user to cancel his subscription easily, and as such continue to charge him for services he no longer desires or needs. This is in direct contrast to the traditional method of subscriptions, where the subscriptions have to be proactively renewed, and are cancelled or suspended if payments are not on time. The credit card makes the user’s money more easily accessible to the subscription company, and the liability resulting from inactivity falls on the user’s shoulders, rather than the company that is providing the service.
Also, since the general monthly cost is low, such practices can go unnoticed for months at a time. Hence, the user must maintain a close eye on his monthly bills.
Credit Card Hijacking by Negative Option Billing
Negative option billing is a business practice in which goods or services are provided automatically, and the customer must either pay for the service or specifically decline it in advance of billing. Thus, if the user makes no response to the bill sent by the company, he is assumed to have agreed with the transaction and the amount is debited from his credit card. This is a practice which is not illegal yet, and many credit card users have been exploited because of such tactics.
Sources:
http://en.wikipedia.org/wiki/Credit_card_hijacking
http://en.wikipedia.org/wiki/Identity_theft
Credit Cards for Small Businesses
Small business owners who need a quick cash inflow, but are unsure where to borrow from, should consider using a credit card. Business credit cards represent an easily accessible source for a loan, although the availability is offset by the high risk incurred in doing so. However, despite the dangers, there are countless examples of a credit card being used as a financing source.
Larry Page and Sergey Brin's start up of Google was financed by credit cards to buy the necessary computers and office equipment and a terabyte of memory, to start the search engine. Filmmaker Robert Townsend and Director Kevin Smith have used credit cards to finance various movies. Famed hedge fund manager Bruce Kovner began his career (and, later on, his firm Caxton Associates) in financial markets by borrowing from his credit card.
Taking note of such trends, credit card companies offer business credit cards that can be used for financing various projects, and also for the day-to-day running of the business. Visa and MasterCard both offer credit cards that allow business expenses to be charged to them, and easy access to secondary and add-on cards with the same features. Such cards offer reward points, air miles and other fringe benefits as an incentive for using them. They have low-interest rates, to increase sales and offer small businesses a way to cut down on operating costs, as well as providing a speedy method of emergency cash injection.
Another advantage of business cards is that they allow the owner to track his employees’ spending, and also makes his accounting more efficient and easier to manage.
However, business owners who borrow on plastic should strive to use their business credit card for monthly expenses and pay off their balance in full each month. Also, they should make sure to check their account summaries regularly. They should also generally use only one business card at a time, as it sometimes becomes difficult to pay off several balances.
Business owners and administrators should consult issuing banks or financial institutions about the feasibility of a credit card for their business.
Source
http://www.businesscreditcardsite.com/why-business-credit-cards-are-useful-to-your-business/
http://www.businesscreditcardsite.com/10-valuable-tips-about-business-credit-cards/
www.creditorweb.com/categories/business-credit-cards.html
Larry Page and Sergey Brin's start up of Google was financed by credit cards to buy the necessary computers and office equipment and a terabyte of memory, to start the search engine. Filmmaker Robert Townsend and Director Kevin Smith have used credit cards to finance various movies. Famed hedge fund manager Bruce Kovner began his career (and, later on, his firm Caxton Associates) in financial markets by borrowing from his credit card.
Taking note of such trends, credit card companies offer business credit cards that can be used for financing various projects, and also for the day-to-day running of the business. Visa and MasterCard both offer credit cards that allow business expenses to be charged to them, and easy access to secondary and add-on cards with the same features. Such cards offer reward points, air miles and other fringe benefits as an incentive for using them. They have low-interest rates, to increase sales and offer small businesses a way to cut down on operating costs, as well as providing a speedy method of emergency cash injection.
Another advantage of business cards is that they allow the owner to track his employees’ spending, and also makes his accounting more efficient and easier to manage.
However, business owners who borrow on plastic should strive to use their business credit card for monthly expenses and pay off their balance in full each month. Also, they should make sure to check their account summaries regularly. They should also generally use only one business card at a time, as it sometimes becomes difficult to pay off several balances.
Business owners and administrators should consult issuing banks or financial institutions about the feasibility of a credit card for their business.
Source
http://www.businesscreditcardsite.com/why-business-credit-cards-are-useful-to-your-business/
http://www.businesscreditcardsite.com/10-valuable-tips-about-business-credit-cards/
www.creditorweb.com/categories/business-credit-cards.html
Hidden Payments
Merchants who accept credit cards must pay a processing fee ranging from 1- 6 % of the purchase price. These hidden costs and hidden payments are transferred to the consumer in various ways.
The first method is the most commonly accepted one of a surcharge on the payment, leading to the price being higher than the marked price. The problem has been compounded in India, where the credit card companies have not asked for “merchant agreements”, which provide that the processing charges will not be added on by the merchant. This has led to credit cards being used less frequently than they might be, a disadvantage to the issuer as well as the merchant.
A second method is simply marking up of the prices of all items in the shop, leading to the surcharge being hidden in the retail price. While the MRP does restrict this to some extent, the net result is that people who pay in cash are paying as if they were using a credit card. Thus, a part of the revenue earned by the credit card companies comes from people who do not even own a credit card!
The flip side is, with the boom in the credit card market in India, greater volume of credit card sales allow the merchants to keep their existing price structure, and still not lose any profit on paying the processing fee, since the credit card companies have relaxed their rates, as a measure to boost sales and increase the acceptability net. . Credit cards also allow for convenience in repeat sales, and the processing fee is greatly offset by the increased convenience. Also, the processing fee is simply an equivalent payment to the costs incurred in counting, transporting and depositing the cash payments.
Whichever way you look at it, using a credit card can entail certain hidden payments consequences of which must be closely examined before using a credit card.
Source:
Wikipedia
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/08/AR2007030802178.html
Statutory Instrument 1990 No. 2159: The Credit Cards (Price Discrimination) Order 1990
The first method is the most commonly accepted one of a surcharge on the payment, leading to the price being higher than the marked price. The problem has been compounded in India, where the credit card companies have not asked for “merchant agreements”, which provide that the processing charges will not be added on by the merchant. This has led to credit cards being used less frequently than they might be, a disadvantage to the issuer as well as the merchant.
A second method is simply marking up of the prices of all items in the shop, leading to the surcharge being hidden in the retail price. While the MRP does restrict this to some extent, the net result is that people who pay in cash are paying as if they were using a credit card. Thus, a part of the revenue earned by the credit card companies comes from people who do not even own a credit card!
The flip side is, with the boom in the credit card market in India, greater volume of credit card sales allow the merchants to keep their existing price structure, and still not lose any profit on paying the processing fee, since the credit card companies have relaxed their rates, as a measure to boost sales and increase the acceptability net. . Credit cards also allow for convenience in repeat sales, and the processing fee is greatly offset by the increased convenience. Also, the processing fee is simply an equivalent payment to the costs incurred in counting, transporting and depositing the cash payments.
Whichever way you look at it, using a credit card can entail certain hidden payments consequences of which must be closely examined before using a credit card.
Source:
Wikipedia
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/08/AR2007030802178.html
Statutory Instrument 1990 No. 2159: The Credit Cards (Price Discrimination) Order 1990
History of the Credit Card
The concept of using a card for purchases was invented in 1887 by Edward Bellamy and described in his utopian novel Looking Backward. The first version of the credit card was used in the 1920s, in the United States, as an alternate means of paying for petrol. In 1938 several companies started to accept each other's cards. It was not until 1950 that Ralph Schneider and Frank X. McNamara suggested that credit could be used for variegated transactions, in order to consolidate multiple cards. The Diners Club card, which was created partially through a merger with Dine and Sign, was the first of such general purpose charge cards and was called a Charga Plate. It was different to contemporary cards in that it required the entire bill to be paid with each statement; it was followed shortly thereafter by American Express and Carte Blanche. Bank of America created the BankAmericard in 1958, a product which eventually evolved into the Visa system ("Chargex" also became Visa). MasterCard was inaugrated in 1966 when a group of banks started the MasterCharge scheme. It was also the year when the first non-US credit card was issued by Barclays’ Bank in the UK.
At the time, there was no rapid method of communication between banks in different regions, and credit cards allowed travelers to procure credit, even when they were far from their local bank facilities. Credit cards became very poplar in the USA, UK and Canada.
In contrast, many cultures were much more cash-oriented and had developed alternative forms of cash-less payments, like Carte bleue, or the EC-card (Germany, France, Switzerland, among many others). In these places, the uptake of credit cards was initially much slower. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US, Canada or UK. Till date, In many countries credit card acceptance still remains poor due to the lack of trust in the banking system of the country.
There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on. The credit card has had a rapid and eventful history, and is fast replacing paper money as the most popular means of payment in our cities today.
Source
En.wikipedia.org
PBS Documentary “Secret history of the credit card”
At the time, there was no rapid method of communication between banks in different regions, and credit cards allowed travelers to procure credit, even when they were far from their local bank facilities. Credit cards became very poplar in the USA, UK and Canada.
In contrast, many cultures were much more cash-oriented and had developed alternative forms of cash-less payments, like Carte bleue, or the EC-card (Germany, France, Switzerland, among many others). In these places, the uptake of credit cards was initially much slower. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US, Canada or UK. Till date, In many countries credit card acceptance still remains poor due to the lack of trust in the banking system of the country.
There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on. The credit card has had a rapid and eventful history, and is fast replacing paper money as the most popular means of payment in our cities today.
Source
En.wikipedia.org
PBS Documentary “Secret history of the credit card”
Wednesday, May 27, 2009
Do it Yourself Credit Repair Or Hire a Credit Repair Service By Ron Lerman
People commonly choose to repair their own credit because they feel it will save them money. The only costs involved will be for postage to credit reporting agencies, credit card companies, and collection agencies along with the cost for copies of your credit reports. While everyone is eligible to receive one free copy annually, you will also want a copy of your 3 credit scores. Since free copies of credit reports do not include your credit scores, you will need to pay each credit reporting agency for a copy of their report with your score included.
Remember that fixing your own credit can be time-consuming, especially if you have never done this before. You must do your homework! There are laws you must follow to ensure that you are repairing your credit legally and making appropriate demands on the credit reporting agencies. If you do not understand the laws, you won't be able to use them to your advantage.
Keep in mind that credit/collection agencies can be difficult for people to deal with, especially without the proper knowledge base. It doesn't serve the credit agencies interests for you to fix your bad credit. Without collecting money from you, they are out of business!
Many credit repair agencies are well-versed in handling issues as they arise. Your decision as to whether to hire a credit repair agency should be based on how much time, patience, and money you have at your disposal. Many people have been successful at repairing their credit both by hiring someone to do it for them, and by doing it themselves. Each method has advantages and disadvantages. If you have good information on how to do the credit repair yourself, you can save much time and money. However, if you prefer to pay for convenience and can afford the monthly fee, hiring a credit repair agency may also be an option. If you decide to hire a credit repair agency, please investigate any prospective company carefully beforehand to ensure that it is legitimate and reputable.
| For more information on Credit Repair, visit us at Unsecured Biz Credit.com a web site that provides individuals and small businesses with information to build their credit. Article Source: Ron Lerman, Business Credit Advisor |
What is a Cash Back Credit Card? By Tom Tessin
A cash card is one of the most preferred credit cards on the open market today. Many consumers are looking to get something for the use of credit. The cash credit card is available with secured cards, unsecured credit cards, and with prepaid credit cards. The debit card user who normally has one of the major company logos like Visa, MasterCard, or Discover expects cash back rewards on their card.
A card is vital for most consumers because they are so use to getting rewards from manufacturers in the form of rebates and coupons it only stands reasonable for them to get rewards for using the credit card. A good reward program will not cost the consumer an arm and a leg to maintain. It is often part of the package deal that gives you a low APR% and late fee charges. One of the important parts of having a good cash back card is the fact that you earn no matter what you use your credit card for when spending. You should be able to make hotel reservations, airline reservations or on merchandise and still get cash back for all your expenditures.
The normal consumer and the business consumer are all looking for the same good package deal. The college student expects to be able to use the card while in college and have cash rewards when they graduate. A cash back credit card is highly acceptable by one and all in the economic world today, since it can save you so much money if you use it right.
| Find the best cash back cards that give you back as much as 5%, and more of Tom's work all at FINDcashbackcards. |
Understanding the Insane Math Behind Your Credit Cards By Tracey J Smith
Think back to that exciting day when you were approved for your first credit card. Perhaps your parents co-signed for you or perhaps you managed to get one with a small credit limit on your own. Either way, you were on your way to adulthood!
BUT, did you ever stop to think about what you were getting yourself into? Did you even look into the credit card's interest rate and service fees before you applied? Most credit card interest rates are between 15 and 25% these days. Have you done the math to determine what that means? Let's go through an example.
So, you're in the store looking at that brand new digital camera which retails for $349 and is on sale for $299. You absolutely LOVE it! You don't have the cash in the bank to pay for it right now so you decide that brand new shiny credit card in your wallet will do the trick. After all, you can't miss this sale, can you?
Within a few weeks, your credit card statement arrives. On the statement is the $299 for the camera (ignoring the fact that you really would have paid taxes on that as well). You still don't have the money, so you decide to make the minimum payment this month and carry the balance forward. Another month goes by and here comes another statement. Strangely, you still owe them $299 for the camera? How can that be? Didn't you pay them something last month? Yes, you did. But have you ever stopped to wonder what the minimum payment is based on? It's the interest on the amount you owe them, such that paying the minimum amount means you have paid them money but are absolutely no further ahead than when you started! That camera is getting more expensive by the day isn't it? Not really worth it, is it?
Now think of those people that are carrying thousands of dollars as a balance on their credit card. They're paying between 15 and 25% and racking up the charges each month. Let's think about this. What is the interest rate on a loan at the bank? Single digits, isn't it? And hard enough to pay off, isn't it? So why would you EVER carry a balance on a credit card knowing that they're so much higher in interest? Insanity indeed!
And now, one of the craziest questions I have ever been asked. You're carrying a balance on your credit card which we have now discovered is likely at 15%. You get paid a bonus at work for doing a good job and they give you $500. You wonder, should I pay down the credit card balance or invest in a bond? Oh my goodness people, look at the math! If you buy a bond, you might get 2% interest. You're being charged 14% on the credit card. Easy decision...pay down that credit card!
In over 40 years, I have never ONCE carried a balance on a credit card. I have never purchased anything without having the money already in the bank to pay for it. A credit card to me is just a way for me not to carry around cash. If you don't have the discipline to do this, then cut up the credit card and live off cash for a while. You'll find budgeting to be much easier.
I hope this helps our debt-filled society.
| Click below to view another article by this author on personal spending: This author is the owner of http://www.numericalinsights.com |
Prepaid Credit Cards For Free By Tom Tessin
When you open up a bank account you can request a debit card that works like a prepaid credit card and usually there is no fees attached. Most banks like having you as a customer and are more than glad to give you a prepaid debit card. The advantage of course is that you already have a committed amount of money in your checking account that secures your prepaid credit card.
People who have their payroll check automatically deposited usually find that it is very easy for them to obtain a credit card. People who are on a pension, social security or other controlled income often get a prepaid card in order to pay their bills, buy what they need, and make reservations when necessary. The prepaid credit card is one of the best types of credit cards because it is secured with funds already available, provides the consumer an available amount of cash, and protects the lender from losing any money.
The use of a free prepaid card for most consumers has been the answer to their spending problems. It seems that the cost of a secured or non secured credit card has been so high that most consumers shudder at the thought of having to use one for any purpose. The government is trying to put in sanctions that will help the consumer but the lending institutions may cancel the lending procedures in order to stay in business. While the government is coming up with their plan to help the consumer the lenders are also working on a plan to help govern their lending programs it should be interesting to see how it all comes out in the end for everyone concerned.
| Check out some of the best prepaid credit cards on the market today, as well as more of Tom's work all at FINDsecuredcards. |
Credit Cards For People With No Credit - How it Works By Court Tuttle
You might be surprised but even people who have a poor credit rating can also qualify for a brand new credit card. Now before you quality for a credit card with your poor history you need to first make yourself familiar with all the options open to you. You definitely don't want to get the wrong card and you want to make sure that you are protected against fraud and other inaccuracies that can come up with the use of credit.
The first thing you should know is that these credit cards often have high interest rates. This is a simple fact that you are going to have to simply live with. You also need to remember that trust is a big part of the credit card business so once the company trusts you, you will be able to ask for an interest rate that is lower. In order to do so you need to be able to pay off your credit card regularly. These credit cards also offer a balance transfer facility. This essentially means that your credit rating will improve and you can get right on track with improving your credit.
You are probably already anxious to know how you can get your hands on one of these credit cards? Your first step is to do some research about the different cards that are offered to people who have a bad credit history. You an start by applying for a few of them online, you can also printout their application form. If you have really bad credit or if you start to get denied by a lot of companies, I can recommend looking for a secured card. This will help you to get started.
Facts About Credit Cards of This Type
1. You can work towards a better credit rating by using them and paying them off.
2. You still have a level of security when you are having financial difficulty.
3.You can convert a poor credit card into a regular one if you pay off your cards regularly.
Issues With Using These Cards
1. High interest rates.
2. Low limits.
3. High fees.
| If you want to effectively use credit cards for no credit, make sure to pay them off completely each month. Combine this strategy with Bank One signature loans for maximum credit building effectiveness. |
Plan to Use Credit Cards By Teeny Ingberg
Credit cards have become almost a part of everyday life for most people, since they are small and very convenient to carry and make payments. Especially, if you are traveling, carrying cards may be a great choice than carrying cash for personal security reason. Credit cards have been around for a long time and gradually became very popular for many countries and places. There are a few things we will need to pay attention for using the cards wisely and correctly.
You can apply for a credit card from institutes like banks and retailer stores. There are a few things about credit cards that you should do the research to choose the best ones for your requirement and budget. Things like Annual Percentage Rate, which is the annual finance charge for using the card, Annual Fee, which is flat yearly payment for using the card, Cash Advance Charge is a charge for advancing cash to use from the card. Also look at the Grace Period, which is a period for using the credit card without paying the finance charge. The issuer also will offer Introductory Rate for a period of time for using their card with a special lower interest rate as an incentive. There are also Fixed Rate and Variable Rate to think about, Fixed Rate is a fixed annual charge for using the card, while Variable Rate is an interest rate that can vary. Do the research online on the web will be very convenient, just search with the search engine websites. Compare the best offers and plans from the various issuers, consider at least the few things about credit cards we just mentioned.
After obtaining the card, you should also create a plan to use the card. A correct and well-planned usage would save you money and expenses in the future. You should pay the card on time, and it is better to pay at least a little more than the minimum payment. The software such as Outlook ® will include a calendar and reminder for you to enter a reminder to pay the card on time. Spend within the credit card limit is always an advised way to avoid extra charges from the issuers. You could also try to consolidate the card payments to lowering the monthly payment. Credit cards are just like many other tools in life, they will be a convenient and useful tool if we use them correctly and with planning.
| Teeny is a writer for finance, computer, travel, cars, shopping and other subjects for many years, please visit http://www.fidetips.com/finance for more information. |
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