Plastic money: Credit cards, debit cards, charge cards and smart cards

Friday,10th August 2007

Mention cards and most people will think of credit cards. Yet, popular as they are, credit cards, which are accepted as a payment device at over 20 million shops worldwide, really represent just one type of card. Other cards include debit cards, smart cards and charge cards. Credit card users get a free period of credit before they repay the credit card company. When you use a credit card, you have the option to pay only a part of the total amount spent and carry forward the balance, for which you pay interest. A smart card is used to store cash in an electronic form. A charge card carries all the features of credit cards, except that you cannot defer your payment to the card company. A debit card is simply used as substitute for cash or check payments. Not surprisingly then, it is the credit card that guarantees a free period of credit and allows customers to defer total payment of bills as well, which has made it highly popular. At the heart of the credit card business is a mutually beneficial arrangement between card issuers and a host of businesses called merchant establishments. With a credit card, one can take care of emergencies without bothering about immediate cash availability. Besides, credit cards also come with additional services and benefits like insurance, anytime cash and flexible payment plans. All credit cards have built-in safety features like signatures and personal identification numbers. There are a host of specialised credit cards too. For instance, international credit cards are designed to give you financial flexibility when you travel abroad on personal and business trips.