Tuesday, 29 November 2011

Usage of Credit Cards in Personal Finance

A Credit Card today , has become a very convenient way of handling Personal Finance for an individual or a family . Credit Card is also known as Plastic Money and is one of the most important inventions of the 20th Century , which is being used rampantly even in the 21st Century all over the world .
            Credit is the procedure of selling services or goods to a buyer , without the buyer having to pay in Cash . Thus , a Credit Card is a standard size smart card usually made of  plastic that consists of a machine readable code . It is a convenient way for cash , in offering credit to a customer and is issued by a financial enterprise like a bank or service provider . An internet information says that John Biggens of the Flatbush National Bank located in Brooklyn , New York was the inventor of the credit card issued by a bank way back in around 1946 . The internet also informs that the introduction of the First Credit Card in India is claimed by the Central Bank of India , in 1980 by the name of “Central Card”.
            There are various advantages of using Credit Cards for improving one’s Personal Finances . By Credit Cards a customer can make purchases of high amounts without having to carry so much of cash in hand . Credit Cards also enable a customer to withdraw cash from Automated Teller Machines known as ATMs , anytime and wherever they are located . Credit Cards also provide the facility of accurate recording of various purchases by a customer into a Single Statement .
            Apart from advantages , Credit Cards also carry some disadvantages . At times Credit Cards can turn a person into a spendthrift , resulting in over spending on redundant expenditures . If a Credit Card is lost or stolen then it may result into unwanted expenses or fraudulent charges . Thus , Credit Cards must be handled carefully .
            The procedure of using a Credit Card is stated as follows . When a purchase on any goods or services is made , the credit card user agrees to pay to the bank . The goods or service provider swipes the card over the Point of Sale or “POS” machine . The card holder agrees to make the payment by signing a receipt with a record of the card details and also indicates the amount to be paid or by entering a personal identification number also known as “PIN”. A Credit Card can also be easily used to make transactions on the internet . The goods or service provider needs the customer’s name on the card , the credit card number and the expiry date , a CVV code which is at the back of the card & signature panel's last 3 digits , in processing of an online order .

            It is very important also for an individual or a family to also see that which bank can offer the best credit card keeping in view various points like Annual Percentage Rate , Length of Grace Period , Credit Reward Points and Credit Limit to improve one’s Personal Finances through Credit Card Usage .

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