Define Credit Cards

Credit Cards Origin

Credit is a method of selling goods or services without the buyer having cash in hand. The concept of the credit card is “buy now, pay later” and it is a way of offering credit to a consumer. Credit card carries an identifying number that speeds shopping transactions.

According to Encyclopedia Britannica, “the use of credit cards originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers.” In olden days, Credit cards were issued by merchants to their customers on credit sales. These cards were accepted only by the issuer himself not by any other person and the seller would not accept the others’ card. Around 1938, companies started to accept each other’s cards. Today, credit cards allow making purchases with countless third parties.

The Shape of Credit Cards

Long ago, credit cards were made from metal coins, metal plates, celluloid, metal, fiber, and paper. Now-a-days, credit cards are mostly made of plastic.

First Bank Credit Card

The Flatbush National Bank of Brooklyn, New York was the first bank started issuing credit cards in 1946. The card was invented by John Biggins in the program namely “Charge-It” conducted between bank customers and local merchants. Merchants deposited sales slips into the bank and the bank billed the customer who used the card.

Diners Club Credit Card

In 1950, the Diners Club issued their credit card in the United States. Diners’ Club founder Frank McNamara invented the Diners Club credit card and introduced to his customers intended to pay restaurant bills. The card holder of diners club could eat without money at any restaurant which would collect money from Diners’ Club. Diners’ Club would settle the restaurants’ bill first and later they collect the bill amount along with some charges from the customer (card holder). So, the Diners Club card was called as charge card. In 1958, the first credit card was issued by American Express. Later bank of America also issued America bank credit card which is popularly known as Visa card.

The Popularity of Credit Cards

During 1960s, more companies offered credit cards, advertising them as a time-saving device rather than a form of credit. American Express and Master Card became popular overnight.

Standard Credit Cards

Standard credit cards are otherwise called as “plain-vanilla” credit cards which offer no additions or rewards. This is a common kind of credit cards which allows the card holder to have a revolving balance up to a certain credit limit. Card holders can use the card according to his needs and they have to settle their account before the due date. If he fails to pay before the due date interest is charged on outstanding balances at the end of each month.

Premium Credit Cards

Many incentives and benefits are offered by premium credit cards e.g. Gold and Platinum cards which offer cash back, reward points, travel upgrades, and other rewards to cardholders. The card holder of premium cards are charged higher fees and the card is issued to the person who has prescribed higher income and credit score requirements.

Charge Cards

Charge card is a type of credit card that requires the cardholders to pay their balance in full at the end of each billing cycle instead of making payments on the balance over several months. Charge cards do not have spending limit and finance (interest rate) charge. Late payments are subject to a fee, charge restrictions, or card cancellation depending on the card agreement.

Limited Purpose Cards

Limited purpose credit cards can only be used at specific locations. Limited purpose cards are used like credit cards with a minimum payment and finance charge. Store credit cards and gas credit cards, petro card are examples of limited purpose credit cards.

Secured Credit Cards

Instead of assessing credit worthiness, some money is to be deposited to get a secured credit card. The credit limit on a secured credit card is limited up to the amount deposited. The credit limit may be extended in some cases. Cardholder must make monthly payments on their secured credit card balance.

Prepaid Cards

Prepaid cards are similar to debit cards. The cardholder can use the card after payment of some money in advance. The spending limit is limited up to the amount paid in advance by the cardholder. If the cardholder wants more credit limit, he has to load more money into the card. Prepaid cards do not have finance charges or minimum payments since the balance is withdrawn from the deposit.

Business Credit Cards

A card which is designed specifically for business use is called as business credit card. It is an easy method for business people to maintain business and personal cash transactions separately. There are 12 major types of credit cards provided by banks and financial institutions in India. These cards provide a wide variety of financial benefits to holders.

Major India Credit Card Types

Following are various types of credit cards available in India:

Premium Credit Cards

Cash Back Credit Cards

Gold Credit Cards

Airline Credit Cards

Silver Credit Cards

Business Credit Cards

Balance Transfer Credit Cards

Co-branded Credit Cards

Low Interest Credit Cards

Lifetime Free Credit Cards

Rewards

There are some additional credit cards that are available in India as well. Rewards credit cards available in India can be subdivided into six categories – Points, Hotels and Travels, Retail, Auto and Fuel.

Premium Credit Cards

There are 33 various premium credit cards available in India:

ABN AMRO Make My Trip Go Credit Card

ABN AMRO Platinum Credit Card

ABN AMRO Titanium One Credit Card

American Express Kingfisher First Credit Card

American Express Platinum Credit Card

Axis Bank Visa Platinum Credit Card

Bajaj Allianz Super Value Titanium Credit Card

Citibank Platinum Credit Card

Deutsche Bank Landmark Platinum Credit Card

Deutsche Bank Miles & More Platinum Credit Card

Deutsche Bank Miles & More Signature Credit Card

Deutsche Bank Platinum Credit Card

HDFC Bank Platinum Plus Credit Card

HDFC Bank Platinum Plus Credit Card

HDFC Bank Titanium Credit Card

HDFC Bank Visa Signature Credit Card

HSBC Platinum Credit Card

ICICI Bank Ascent American Express Credit Card

ICICI Bank Platinum Credit Card

ICICI Bank Platinum Identity Credit Card

ICICI Bank Platinum Premiere Credit Card

ICICI Bank Thomas Cook Titanium Credit Card

ICICI Bank Titanium Credit Card

ICICI Signature Credit Card

Jet Airways Citibank Platinum Credit Card

Kotak Mahindra League Platinum Credit Card

Kotak Mahindra Royal Signature Credit Card

SBI (State Bank of India) Platinum Credit Card

Standard Chartered Emirates Platinum Credit Card

Standard Chartered Emirates Titanium Credit Card

Standard Chartered Platinum Credit Card

Standard Chartered Super Value Titanium Credit Card

Yare Barclaycard Platinum Credit Card