Read Here Advantage and disadvantage of Credit Cards .Credit cards are provided by the banks to those customers whose credit rating is higher and satisfactory as per the slabs maintained by them. Credit card is a source of plastic money in India and you need tot carry currency and cash with you but it is easier and convenient to carry the credit cards with you. Candidates who are preparing for the banking examination need to learn the important details about credit cards. Here the advantage and dis advantage has been covered and candidates can learn it easily. Credit cards Acts as a document of credit worthiness of card-holder and minimizes the use of hard cash in setting the day to day transactions. It acts as a medium of exchange. At many transactions it can be used to swap the card and transaction is done automatically without the need to any currency notes. It also Helps to buy whenever the cardholder likes to buy and can pay whenever he likes. In India, credit card interests are typically charged at a rate of 3.35 – 3.49% per month.
Some important points to know about Credit cards
The cardholder has to pay an initial annual deposit.
Credit cards are mostly used by elite corporate executives, businessmen, middle income group to buy consumer durables and certain services from railways hospitals etc.
Now a days almost all banks are providing credit card facilities
Bankers bears the cost of issuing credit cards
Banks also bears the risk of non payment by the card holders.
Credit limit is specified on every card basing on the income level and type of the card.
Advantages of having credit cards
- Useful in Emergencies : They can purchase goods and services at large number of merchant outlets upto inbuilt ceiling credit limit amount without cash or cheque. This is generally useful in emergencies.
- Interest free period :
- Card holder has the period of interest free credit depending upon the issuing bank and card scheme.
- Cash withdrawal from ATMs
- Need to carry liquid cash
- Benefit of free accident Insurance Cover
- Useful for other purposes
Disadvantages of having credit cards
- Over Spending :Credit Card facility often results in over purchasing and over spending unintentionally.
- Possibility of Frauds : There is possibility of frauds due to loss of cards in the intervening periods.
- Possibility of forged signatures