Story of credit card
What does that number mean?
Check your credit card. If it starts with a '3' it is Amex, if with '4' it is Visa and if '5' it is Mastercard. There are many other rules to create a 16(or 15) digit number.
What is it with the Stripe on the back of the card?
It functions like a audio tape which stores magnetic data. One thing to keep in mind - Never take your card near a powerful magnet (such as demagnetizers in electronic stores). You may lose the data.
How do credit card companies make money?
You don't want to know them all, Do you? They are really smart people, smarter than customers for sure. Else, how can they run the business on your money? The money they handle is YOUR money. All you get back from them is facility of 'no need to carry cash'.
Firstly, lets talk about US market. Sources say, US credit card debt is around $2.5 trillion. Nearly 1 billion credit cards were issued in US in the year 2006 alone. These numbers surely gives an estimate as to how big the credit card industry is!
Credit card companies get loan from banks at a very low interest rate (usually at 5%) and in turn charge a 15% (or more) interest rate to their customers. This is the first place they make money.
Annual fee, late payment and overlimit charges - Annual fee is a trick. They might not charge it once year, but, charge around $5.00 every month. One should be careful with such cards (just think $5.00 for 12 months is $60.00!). With nearly billion cards, atleast few people are sure to forget the due dates. For such a reason, $15-$30 late fees is collected. Same is the case with Overlimit charges.
It is also said, 7 out of 10 card holders in the US don't make full payment of their monthly statement. This is true. People buy cars, furniture, electronics, etc. using their cards - this means they plan to pay off the balance amount in stages. This adds interest rate to their future bills.
Do rewards and gift certificates help the customers?
Yes and No. Yes because, they atleast get something back (They would have paid for it already - now, they get a bit in return; just be happy). You now know why 'No'.
Now I think, "is credit card a real necessity?" Is India not running on cash and checks? I don't see a booming business of cards in India. There is no need. More than the need, there is the fraud tag attached to it. If I really think, the only place I need credit card is online shopping. That is it!
Check your credit card. If it starts with a '3' it is Amex, if with '4' it is Visa and if '5' it is Mastercard. There are many other rules to create a 16(or 15) digit number.
What is it with the Stripe on the back of the card?
It functions like a audio tape which stores magnetic data. One thing to keep in mind - Never take your card near a powerful magnet (such as demagnetizers in electronic stores). You may lose the data.
How do credit card companies make money?
You don't want to know them all, Do you? They are really smart people, smarter than customers for sure. Else, how can they run the business on your money? The money they handle is YOUR money. All you get back from them is facility of 'no need to carry cash'.
Firstly, lets talk about US market. Sources say, US credit card debt is around $2.5 trillion. Nearly 1 billion credit cards were issued in US in the year 2006 alone. These numbers surely gives an estimate as to how big the credit card industry is!
Credit card companies get loan from banks at a very low interest rate (usually at 5%) and in turn charge a 15% (or more) interest rate to their customers. This is the first place they make money.
Annual fee, late payment and overlimit charges - Annual fee is a trick. They might not charge it once year, but, charge around $5.00 every month. One should be careful with such cards (just think $5.00 for 12 months is $60.00!). With nearly billion cards, atleast few people are sure to forget the due dates. For such a reason, $15-$30 late fees is collected. Same is the case with Overlimit charges.
It is also said, 7 out of 10 card holders in the US don't make full payment of their monthly statement. This is true. People buy cars, furniture, electronics, etc. using their cards - this means they plan to pay off the balance amount in stages. This adds interest rate to their future bills.
Do rewards and gift certificates help the customers?
Yes and No. Yes because, they atleast get something back (They would have paid for it already - now, they get a bit in return; just be happy). You now know why 'No'.
Now I think, "is credit card a real necessity?" Is India not running on cash and checks? I don't see a booming business of cards in India. There is no need. More than the need, there is the fraud tag attached to it. If I really think, the only place I need credit card is online shopping. That is it!
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