Birth Of A Credit Card

The credit card supported payment methods such as replacement of money .By and large a credit card is used at any time for the transaction of goods or services or to ensure the legality of the check that was provided to places that could accept the credit card (the dealer). The credit card could also to carry out the withdrawal of cash at the bank or the publisher network (cash advance).

Consequently, the credit card was the instrument of payment in the form of a card which was made from a kind of plastic on the surface of which was embossed the name, the membership code number and was supported by the member’s signature behind it. It was a replacement for payment through legal documents like paper money and coins or commercial documents such as check or drafts.

Prior to the usage of credit card as a payment instrument in carrying out transactions, Edward Bellamy wrote a book in 1887 and released it a year later with the fresh title which still claims to be one of best-sellers of that phase.

Based on the method of payment, the credit card was divided as follows:

1. Credit card

It is a type of card that could be used as an implement in the payment of goods or services of the transaction, wherein the pay off or payment by credit card could be done simultaneously or may also be done in simplified installments amounting to bare minimum amounts.

The number of pay off installments was determined by the value of the bill to balance along with the supplementary monthly interest. The earlier month’s bill including interest was the subject of the loan next month.

The typical characteristics of the credit card was in the limit that applied to all member which depended on the kind of card (gold, regular or classic), also a minimum 10% - 20% of the balance of the bill was paid not later than the due date was to be determined. In case the amount was paid after the due date, a fine would be charged which was a little more than the minimum amounting due.

2. Charge card

The charge card customer is the card that could be used as a tool to pay a transaction product or service. In this case the customer will have to pay the whole amount due at the end of the month or next month with or without supplementary outlay.

Normally, though the credit card did not have the provisions of the limit, the payment was full on all transactions (the bill) before the next bill and used the percentage interest, but when payment was not made entirely on the bill it was charged a penal amount for the delay.

3. Debit Card

The debit card is the used for transactions that involve any product or service wherein it can be used. In principle, the transaction using this kind of by credit card was similar to using cash. Under this principle the money is taken directly from the cardholder’s account. It is debited directly and is transferred to the merchant’s account of sale by crediting it.

The cardholder must have debit account at the bank, because this transaction is as good as using cash. The transaction could be done only if this debit cardholder has enough balance in his account to cover the cost of transaction. Subsequently after this, the payment will be made with the debit balance of the account holders to the credit card merchant account.

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