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CREDIT CARD

Anil Masih
M.B.A 3rd
1307573

Credit Card
What is a credit card?
Pre-approved credit which can be used for the purchase of
goods and services now and payment of them later

A credit cards credit limit varies based upon

an individuals perceived creditworthiness
Credit limit is the
maximum amount
loaned

Creditworthiness is an
individuals ability and willingness
to pay the money back

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Credit Card

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Credit cards charge interest and are primarily used for short-term financing.
Interest usually begins one month after a purchase is made and borrowing
limits are pre-set according to the individual's credit rating.
It allows its holder to buy goods and services based on the holder's promise
to pay for these goods and services.
The issuer of the card creates a revolving account and grants a line of credit
to the consumer (or the user) from which the user can borrow money for
payment to a merchant or as a cash advance to the user.
Holders of a valid credit card have the authorization to purchase goods and
services up to a predetermined amount, called a credit limit.
The vendor receives essential credit card information from the cardholder,
the bank issuing the card actually reimburses the vendor, and eventually the
cardholder repays the bank through regular monthly payments.
If the entire balance is not paid in full, the credit card issuer can legally
charge interest fees on the unpaid portion.

CREDIT CARD ISSUER

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A credit card issuer is a bank or credit union that offers credit

cards.
The credit card issuer makes the credit limit available to
cardholders and is responsible for sending payments to
merchants for purchases made with credit cards from that bank.
Also called member banks. Chase and Citi are examples of
credit card issuers.
Credit card issuers can't issue credit cards all by themselves,
they need the help of payment processing networks like Visa
and MasterCard (a credit card association).
However, American Express and Discover act as both the
credit card issuers and the payment processing network.

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CREDIT CARD AGREEMENT

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A Credit Card Agreement is a contract between

a credit card issuer and the cardholder. The
credit card agreement spells out the terms,
conditions, pricing, and penalties of the credit
card.

The credit card agreement will list:XP

The annual percentage rate for each type of balance that can be carried
purchases, balance transfers, and cash advances.
Finance charge information including the minimum finance charge and the finance
charge calculation method.
Grace Period.
Credit Card Fees.
Credit Limit and information about how your credit card issuer can change it .
Details about using your credit card in another country.
Options for paying your credit card balance.
How your information is shared or kept private.
Changes the credit card issuer can make to your account.
What constitutes default and what happens if you default.
How to handle a lost credit card.
How to close your account.
How to handle disputes with the credit card issuer .
The legal body who enforces the credit card agreement.

Eligibility For Getting The Card

Person should have a savings/current account in the
bank.
His assets and liabilities on a particular date are
reported to bank.
A statement of annual or monthly income.
He is considered credit worthy up to certain limit
depending upon his income, assets and expenditure.

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How a Credit Card Issuers Makes

Money

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Credit card issuers (most often a bank or credit union) receive revenue
from fees paid by stores that accept their cards and by consumers that use
the cards, and from interest charged consumers on unpaid balances.

Credit Card Companies make money in a number of ways like :

Fees (annual fee, over limit, past due, etc)
Interest on the revolving loan if a credit card balance is not paid in
full each month.
The card Issuer [the bank that issued the card and/or the issuer
network ie: Visa, MS, American Express, JCB etc] makes a
percentage of each item you purchase from the merchant who accepts
your credit card. These rates range from 1% to 4% of each purchase.
Last, the cardholder can make additional money through other means,
such as selling your name to a mailing list or sending advertisements
in your monthly bill. (Due to regulation, this is becoming less
frequent)

Types of Credit Cards

Standard Credit Card

Premium Credit Cards
Charge Cards
Limited Purpose Card
Secured Credit Cards
Prepaid Credit Cards
Business Credit Cards
Reward Credit Cards
Student Credit Cards
Travel and Entertainment Credit Cards
Zero Percent Interest Credit Cards

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Types of Credit Cards

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Since each person's financial needs are different, it makes sense that there are
different types of credit cards. Before you apply for a credit card, become familiar
with the various kinds of credit cards to make sure you're choosing the best credit
card for you.

Standard Credit Cards

The most common type of credit card allows you to have a revolving
balance up to a certain credit limit. Credit is used up when you make
a purchase and made available again once you've made a payment. A
finance charge is applied to outstanding balances at the end of each
month. Credit cards have a minimum payment that must be paid by a
certain due date to avoid late-payment penalties.
Standard credit cards are also called "plain-vanilla" credit cards
because they offer no frills or rewards. They're also uncomplicated
and relatively easy to understand.

Types of Credit Cards

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Premium Credit Cards

These cards offer incentives and benefits beyond that of a regular credit card.
Examples of premium credit cards are Gold and Platinum cards that offer cash
back, reward points, travel upgrades, and other rewards to cardholders. Premium
cards can have higher fees and usually have minimum income and credit score
requirements.

Charge Cards
Charge cards do not have a preset spending limit and balances must be paid in
full at the end of each month. Charge cards typically do not have a finance charge
or minimum payment since the balance is to be paid in full. Late payments are
subject to a fee, charge restrictions, or card cancellation depending on your card
agreement.

Limited Purpose Card

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 are examples of limited purpose
credit cards.

Types of Credit Cards

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Secured Credit Cards

Secured credit cards are an option for those without a credit history or
those with blemished credit. Secured cards require a security deposit to be
placed on the card. The credit limit on a secured credit card is equal
typically at least the deposit made on the card, but it could be more in
some cases. You're still expected to make monthly payments on your
secured credit card balance.

Prepaid Cards
Prepaid cards require the cardholder to load money onto the card before
the card can be used. Purchases are withdrawn from the card's balance.
The spending limit does not renew until more money is loaded onto the
card. Prepaid cards do not have finance charges or minimum payments
since the balance is withdrawn from the deposit. These cards are not
actually credit cards and they don't directly help you rebuild your credit
score. Prepaid cards are similar to debit cards, but are not tied to a
checking account.

Types of Credit Cards

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Business Credit Cards

Business credit cards are designed specifically for business use. They provide
business owners with an easy method of keeping business and personal transactions
separate. There are standard business credit and charge cards available.

Rewards Credit Card

Rewards credit cards give you a bonus based on your card usage. Choosing the right
rewards credit card means picking one that gives rewards you can use. With a good
rewards card, you can out earn any costs, e.g. annual fee, without too much hassle.

Balance Transfer Credit Cards

Balance transfer credit cards are good for combining several credit card balances or
for taking advantage of a lower interest rate. Not only should you consider the
introductory balance transfer interest rate, but also how long the rate lasts and the
rate that applies once the promotional rate expires.

Types of Credit Cards

Student Credit Cards

Student credit cards are
designed for collegeaged consumers who
are just starting out
with credit. These cards
typically give credit to
college students who
lack a credit history.
Not every credit card
with "student" in the
title is actually good for
students. So, if you're
on the market for one
of these cards, make
sure you pay attention
to the credit card
terms.

Travel and
Entertainment Credit
Cards
A credit card that can
be used to cover
travelling expenses and
for your
enjoyment/entertainme
nt. An example of a
T&E card is "Diners
Club." It can only be
used at certain
restraunts which would
constitute
"entertainment.

Zero Percent Interest

Credit Cards
As the name indicates,
zero percent credit
cards do not require the
credit card owner to
make any kind of
interest on their
shopping. You could
utilize your credit card
and also purchase
anything you desire
and pay only the
monthly minimum
requirement.

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CLASSIFICATION OF CREDIT CARDS
Based on
mode of
credit
recovery

Charge
Card

Standard
Card

Based on
status of
credit
card

Revolving
credit
card

Business
Card

Based on
geographi
cal
validity

Domestic
card

Gold
Card

Based on
franchis
e/ Tie-up

International Card

Proprietary
card

Master
Card

Individual
Cards

VISA
Card

Based
on
issuer
Categor
y

Corporate Cards

Domesti
c Tie-up
Card

Based on mode of credit recoveryXP

Charge Card- A card that charges no interest but requires
the user to pay his/her balance in full upon receipt of the
statement, usually on a monthly basis. While it is similar to
a credit card, the major benefit offered by a charge card is
that it has much higher, often unlimited, spending limits.

Revolving credit card- A line of credit where the

customer pays a commitment fee and is then allowed to use
the funds when they are needed. It is usually used for
operating purposes, fluctuating each month depending on
the customer's current cash flow needs

Based on status of credit card

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Standard Card- It is a generally issued credit card

Business Card- (Executive cards ) It is issued to small
partnership firms, solicitors, tax- consultants , for use by
executives on their business trips.

Gold Card- A credit card issued by credit-card companies

to favoured clients, entitling them to high unsecured
overdrafts, some insurance cover, etc

Based on geographical validity

Domestic card- Cards that are valid only in India and
Nepal are called domestic cards.

International Card- Credit Cards that are valid

internationally are called international cards.

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Based on franchise/ Tie-up

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Proprietary Card-

A bank issues such cards under its own

brands. Eg. SBI card Cancard of canara bank.

Master Card- This card is issued under the umbrella of

MasterCard International

VISA Card It is issued by any bank having tie up with

VISA international

Domestic Tie-up Card- It is issued by any bank having tie

up with domestic credit card brands such as CanCard and
IndCard.

Based on issuer Category

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Individual Cards- Non-corporate cards that are issued to

individuals

Corporate Cards- Issued to corporate and business firms.

Credit Card In India

Major companies of India:
HDFC
ICICI Bank
SBI Bank
CITIGROUP
Axis Bank

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Major Foreign Companies in India

American Express
Standard Chartered
HSBC
Deutsche Bank

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FACTORS DETERMINING CREDIT CARD

INTEREST RATES IN INDIA

Repo rate
Reverse repo rate
Prime Lending Rate (PLR)

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VARIOUS KEY FACTOR TO CHOOSE THE

BEST CREDIT CARD

Credit Limit
Credit Time Offered
Rate of Interest
Eligibility Criteria
Acceptance of the Card
Joining fee
Annual fee

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CAREER opportunities

Skills required :

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Good Communication Skills

Confident & flare to sell
Ability to work on field
High levels of initiative, self motivation
and time management
Ability to influence and negotiate with
customers both internally and
externally and at all levels

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1. Sales Officer HDFC Bank

Fresher and Experienced from anyindustryare welcome
Graduation is a must.
(MBA preferred)

Job Location North India

Salary- 20K - 25 K Gross + monthly incentives
4,000- 12,000
Growth best in theindustry, Eligible after a
year

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2. Relationship Officer Credit Card

Sales -Bank of America
Job Location- Bangalore, Chennai,
Mumbai, New Delhi

Educational Background Required: MBA or Graduate

in any field

Salary- 15000-20000(plus Incentives)

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3. Ing Vysya Bank

Job Title : Sales Manager -CreditCards

Job Location- Chandigarh

Salary:3,00,000 - 4,50,000 P.A
Industry: Banking/Financial
Services/Broking

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Any
Questions

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Thank You