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Credit Card

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What it is???

A card issued by a financial company.

Giving the holder an option to borrow funds,usually at point of sale.

Charge interest, usually begins after 1 monthafter purchase.

Borrowing limits are pre-set according to the

individual's credit rating.

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History

Concept was Introduced in 1887 by EdwardBellamy.

The first version of the credit card was used in

the 1920s, in the United States for payingpetrol charges.

The Diners Club card was the first of suchgeneral purpose charge cards and was called

a “Charga Plate” First non-US credit card was issued by

Barclays‟ Bank in the UK.

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How Credit Card is processed?

1. Authorization

2. Batching

3. Clearing

4. Funding

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Authorization

The cardholderrequests a

purchase fromthe merchant.

The merchantsubmits the

request to theacquirer.

The acquirersends a requestto the issuer to

authorize the

An authorizationcode is sent

to the acquirer ifthere is

valid credit

available.

The acquirerauthorizes thetransaction.

Thecardholderreceives the

product.

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Batching

The merchantstores all the

day‟s authorized

sales in abatch.

The merchant

sends thebatch to the

acquirer at theend of the day to

receive

payment.

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ClearingThe batch is sent

throughthe “card network“ to

requestpayment from theissuer.

The card networkdistributes each

transaction

to the appropriateissuer.

The issuer subtracts itsinterchange fees, whichareshared with the cardnetwork,and transfers the amount.( 100 – 1.5 )

The card network

routes theamount to theacquirer.( 98.5)

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Funding

The acquirer subtracts itsdiscount rate and paysthemerchant the remainder.

( 98.5 – 0.5 )

The cardholder isbilled

( -100 )

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Questions before taking CreditCard

Q 1) I have a silver/gold/platinum credit card,which charges a membership fee ofRs_______ per year.

Q2) I will pay an interest of _____% per month,which is _____% per annum.

Q3) I need a credit limit of R________ ;my card‟s credit limit is R__________.

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Q4) My card has an interest-free grace period of _______ days.

Q5) I will have to pay a minimum due amount of _____% of total debt.

Q6) If I pay only the minimum amount due of

Rs__________ on a balance ofRs__________, it will take me ______ years tosettle the entire bill.

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My card levies the following charges:

Late payment fee of R______

Cheque bouncing charge of R______

Duplicate statement charge of R______

Cash advance transaction fee of R______

Over-limit fee R______

Fees on cash payment at bank branchesR______

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Categories of Credit Card

Low Interest Credit Cards

Instant Approval Credit Cards

Balance Transfer Cards

Rewards Credit Cards

Cash Back Credit Cards

Airline Credit Cards

Secured Credit Cards

Credit Cards For Bad Credit

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Categories of Credit Card

Student Credit Cards

Business Credit Cards

Kisan Credit Cards

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Low Interest Credit Card

Offer very low interest

Reasons

1. Low interest rate is for a limited time only

2. After a set number of months, you will beginpaying higher interest rates.

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Some Popular Low InterestCards

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Instant Approval Credit Cards

Product for fast-paced society.

Once applicant fills out his application, he willbe told whether card is approved or not right

away. Very popular online.

Can apply via the internet or over the phone.

Rely heavily on applicant credit score andfinancial circumstances.

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Some popular Instant ApprovalCredit Cards

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Easy Platinum Gold Credit Card

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Balance Transfer Cards

Type of temporary low-interest card.

Help applicant consolidate his debt.

If applicant have several credit cards with a

balance, he can get a Balance Transfer Card.

Cards have high fees.

Low interest is for limited period of time.

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Work this way

Debt ofCreditCard 3

Debt ofCredit

Card 1

Debt ofCreditCard 2

Balance Transfer

Card

Since the newcard has a low

interest rate, youcan quickly

repay your bills.

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Rewards Credit Cards

Offer points, rewards, or bonuses for everypurchase made with credit card over time.

Redeem points/bonus for entertainment events,purchases, travel, and other fun prizes.

Some cards even offer customers extraautomatic-enter sweepstakes and draws.

Act as a marketing tool for card companies.

Some charge high fees to offset the costs of thebonuses.

Some also have very low points systems

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Cash Back Credit Cards

Gives money rewards.

Customers get reward points based on theamount of money he had spent.

When accumulated required points, customerget cash back.

On most cards, customers can get back about

1% of total purchase value. Good for those who are budget-conscious.

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Drawbacks

Some cards have low cash-back percentagerates.

Some of them charges high fees.

Have limits on how much money you can getback each year.

Most cards only offer cash back advantages

on purchases - not on balance.

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Airline Credit Cards

Accumulate frequent flyer points on all creditcard purchases.

Card can help accumulate points for a free trip

or for a discount ticket. Allows to gather points for every purchase.

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Drawbacks

Charges high fees.

Points will expire if customer do not use themwithin a specified time.

Some airline credit cards make use of a pointsystem that is not very user-friendly.

May have to slowly accumulate an enormous

amount of points to qualify for a trip. Not for less frequent traveler.

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Secured Credit Cards

A secured credit card is a type of credit cardsecured by a deposit account owned by thecardholder.

Uses collateral to ensure that the cardcompany will be paid back.

These cards are used by people with no credit

or bad credit.

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Person can enjoy credit card convenienceeven if he do not qualify for traditional cards.

Additional fees

These cards have low credit limits

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Credit Cards For Bad Credit

Designed for people with poor credit histories.

These cards generally have very low creditlimits and charge extra fees.

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Student Credit Cards

These cards meant to attract college anduniversity students.

Often offer sign-up bonuses for students.

Easier to apply Since students have much shorter credit

histories than the average customer.

These cards may have no reward programs.

Have fewer benefits.

Fewer bonuses and services, than other cards.

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Business Credit Cards

Created especially for business use. Offer services that can really help a business.

For example Extra cards for business employees.

Monthly reports on expenses. Services that keep personal and business expenses

separate on the same card.

The only real disadvantage of business cards is thatthere are so many of them.

Some cards offer fewer features. Some charge businesses additional fees for bonuses

and services.

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Kisan Credit Card

Started by the Government of India, RBI(Reserve Bank of India), and NABARD(National Bank for Agricultural and Rural

Development) To help farmers access timely and adequate

credit.

Repayment can be rescheduled if there is abad crop season.

Extensions are offered for up to 4 years.

Valid for 3 years and subject to annual

renewals.

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Some Innovation

HDFC Bank has recently launched the “Infinia”

ultra premium card.

No limit on spending.

Aimed at the super rich There are around 62,000 super-rich people

(more than $5 million in financial assets)

Planning to start off by issuing only 5,000Infinia cards by invitation.

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Some Innovation

Dhanlakshmi Bank had last year launched aGold and a Platinum credit card.

Offer pay-by-transaction facility.

For each transaction the card holder gets a 45-day interest-free period.

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Some Innovation

IDBI Bank recently launched the Magic Card. Basically a debit card for salary savings account

holders.

But it doubles up as a credit card once the moneyin the savings account gets exhausted.

Extended as an overdraft.

Means customer will not get any interest-free

period to repay the credit if you use up the creditlimit.

The interest rate charged on such credit is muchlower than others.

C dit d i I di

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Credit card in India

'CentralCard„ was the first credit card introduced in india.

It was introduced by central bank of india in 1980.

In India, spending through credit cards is one of thelowest in the world.

private finalconsumptio

nex enditure

Credit cardspending

2%

.

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Launch of Credit Card

Card Provider: VISA/Mastercard Card Type: Gold

Purchase Interest Rate: 2% Annual Fee: 0

Cash Interest Rate: 3.90% Rewards: Yes

Add on Card Fee: No Photo card Fee: No

Balance Transfer Fee: Yes (1.5%)Balance Transfer: Available.Eligibility: 2,20,000 per annum.

Grace Period: 45 days.Min. Payment: 4% or 300 which one is higher.Reward Program: 3.5% cash back on shopping from Future Group Outlet (1% on shopping from Big Bazaar)/3% cash back on Apollo & FortisHospitals payment.Annual Fee: No.

Joining Fee: No.

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Benefits

Get 1free ticket on purchase of 3 on Tuesdayand Wednesday (only at PVR).

5% cash back on listed restaurants.

Get 1 reward point on every mile you fly withus.

2% cash back on your stay at Ginger hotels.

100 reward points on every Rs. 1500 & abovepurchase from NIKE outlet.

Billing cycle starts on the date of firsttransaction.

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Security

Card comes with 4 digit security pin.

Insurance against theft.

Option of SMS authentication.

24*7 CUSTOMER SUPPORT.

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7 P‟s

P’s

Product Cash Back Cum Reward Credit Card

Price For Individuals: 0 Annual/Joining FeeFor Corporate: 4,000-25,000

Promotion Next slide

Place PAN INDIA (tier-1,2 cities).

People Well trained supportive staff for betterCRM.

Physical evidence National head office with small officesin every major tier-1,2 cities.

Process Process to identify expiry dates andrenewal.

Online Statement.

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Promotion

Corporate tie-ups- 15 days extended graceperiod.

On request credit limit extension on internationalvisits(for corporate sectors).

Exclusively customized for you. i.e. imprintedphotograph with 3D signature. Hiring sales-force for business development on

commission.

Print ads and online advertising on socialnetworking(pages) sites and other portals(i.e.online shopping).

Promoting through Canopies in shopping mallsand fares.

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