Different types of credit card associations Essay
In this modern era with the rising of e-commerce in the world, the usage of credit card is getting popular among the world nowadays - Different types of credit card associations Essay introduction. The usage of credit card has actually spread towards the college student and has increasing visibility. Meanwhile, this is the best chance for the credit card companies to put on target at college students because college students are expected to have higher of earning power and this makes the credit card companies believe that as a desirable market.
Credit card can be best defined as a small plastic card issued by the bank to the consumers to purchase goods and services in advance with a credit limit on the spending. With a credit card, the users are able to purchase goods without using cash. Users will have the ability to use it as online payment in internet and uses it as monthly installment for large volume goods and services. However, interest charges are applied to the credit cards. There are many different types of credit card associations nowadays.
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For example, American Express, Dinner Club, MasterCard, Visa and many more. Each month, the credit card user is sent a statement by bank that indicated their purchases for previous month. After the cardholder received the statement, he or she must pay the amount of their purchases otherwise may choose to pay a higher amount when the credit issuer charges interest on the amount owed. Even credit cards have higher interest rates than most consumer loans; many people still prefer to use it yet.
This is because almost every store that we can see allows for payment of goods and services through credit cards today. The increasing number of banks that provides credit card has eventually increases the competition between banks in attracting the customers. Every bank has tried their own way to persuade the customers to apply the credit customers. The worst part is, they even attract college students by having promotion in the college. Historically, the bank actually started to bump into student credit card market in the late of 1980-an (Manning, 2000).
In the long run, this will cause many problems to the college students. This is because most of the college students does not how to plan their money effectively. According to Henry, Weber, and Yarbrough (2001), most of the students will have the credit problems is because college students do not practice to have a written budget. The researchers also expected college students are “vulnerable to financial crisis” (Henry, Weber & Yarbrough, 2001). The incredible increase of the usage of credit card actually has demonstrated the crisis among the college students.
The increased number of credit cards among college has seen a major growth since the past decade (So, Grable & Bagwell, 2003). Based on a research, 70% of all undergraduates at four-year colleges have at least one credit card today (So, Grable& Bagwell, 2003). Advantages and Disadvantages of using Credit Card Credit Card is an Automatic advanced card which people can use it to get the goods without paying the cash. Credit cards are widely use by people all around the world as a source of convenient to get what their needs. But, there are many advantages and disadvantages of using it.
One of the advantages of credit card is that with credit card can eliminate the need to carry large sums of cash wherever we go. For example, if we are away from home for vocation, we don’t need to take large amount of cash in pocket. Besides, credit cards may also offer us additional protection if goods that we bought is lost, damaged, or stolen. This is where the credit card company can know that the fact that we have made a purchase. In addition, we can also see that some credit card companies offer insurance for the customers on large purchases.
By this way, the companies can protect their customers and give their customers the security of using the card. With a credit card can also assist us build a credit line. By having a good credit history is very vital, which meant that making payments on time and in full month, it help us not only applying a credit card, but also when applying for the loans, rental, or even some jobs will more easily. In conjunction to that, credit cards can also be useful in times of emergency as well.
For example, students with a credit card can take the necessary actions by helping parents when they falls ill, a car is damaged, or trying to buy a higher cost books in the university. Some credit cards also offer some extra benefits for their customers, such as discounts from particular stores or companies, bonuses such free airline miles or travel discounts. All of these benefits is helpful for us as long as we bear in mind that out spending limits. On the other hand, the disadvantage of credit cards is that they encourage people to spend money that they don’t have.
The customers can spend any time as they want even they have less money. Indirectly, the customers cannot pay for the bill statements that what they had spent. By this way, the more money the customers owe the credit card companies, and yet they will charge the customers on interest each month on their spending. The other disadvantages of credit card is that the credit card companies will charge the customers on high amount of interest on each balance that the customers don’t pay off at the end of the month.
This is how the credit card companies make their money and this is how many of credit card users will get into big troubles. And, credit card fraud also is one of the disadvantages. This is where the credit card also same as a cash, it also can be stolen sometimes. They maybe be physically stolen from customers’ wallet or credit card number and use as to swap the money. The good news is that, when we realize our credit card is stolen, quickly we can report to the credit card companies.
This is to avoid us by not being charged for any purchases that someone else has made. As conclusion, credit cards can make life easier and convenient to the users as they utilize it wisely. But, if we use it wrongly, it will become huge financial burden for us. If we decide to use the credit cards, we must know some simple rules such as limit our purchases, don’t spend outside our budget, pay off the balance at the end of each month, and most importantly is don’t give credit card information to anyone else as the safety methods.