Gone are the days of carrying wallets loaded with cash every
time you stepped out. Credit Cards or Plastic Money as they are popularly known
are a must have for everyone. Credit Cards can be defined as a system of payment
that enables the user to purchase goods and services using a plastic card, the
actual payment for which could be made later than the actual purchase date.
These days it’s easy to acquire a credit card especially more if you hold a
bank account with a substantial balance. Most banks give out credit cards for
free to their account holders while some could charge a nominal annual fee.
Once a purchaser has used a credit card for purchasing a
product or service, the card is swiped in a special machine, generating a
payment slip which the customer signs. The slip he or she signs reflects the
amount charged which would be sent to the customer by the bank which has issued
the credit card after a period of time (generally a month) as a credit card
payment statement mailed to the customer. Once the customer receives the credit
card statement he or she must make the payment due as mentioned within the last
payment date printed on the credit card slip.
A credit card user can either pay off the entire
amount spent, if he or she has adequate bank balance or can pay off in
installments mentioned, which is basically the minimum payment due. However if
the user opts to pay the minimum due only, he will be charged an interest fee
and can end up paying much more than the actual purchased amount. This is
especially true as due payments have the nasty habit of incurring double
interest rate, on defaulting. Payments
can be made either via cheque or electronic money transfer. Some banks also
give the option of having the payment due debited directly from the bank
balance. Credit cards are mostly useful when you’re making a high value
purchase or when purchasing products and services online as here it’s plastic
money that talks rather than the real ones!
