Evolution of Credit Cards – Replace Your Paper Money
There was a time when people use to carry money and were afraid that might be in between someone can steal their money or might be they can be lost, but now they don’t face these types of issues as the paper money is replaced by a credit card money.
A credit card is a type of small rectangular card issue by banks to owner allows them to borrow money on credit.
Indirectly they were metal token in the shape of a coin. They then changed to metal plates to celluloid then to fiber and now plastic.
Now it contains a pic of the holder and a magnetic chip on the backside having security information like personal identity number helps card to be used at ATM.
What is meant by ‘Credit’?
Credit is the system of buying some products or services without having to pay for it at the time of the transaction. The payment is made fixed later date with attached with a fee to the billed price. This is a type of pre-loan that you get from a bank to buy something without giving them cash allow them to buy the thing they want.
When Were Credit Cards Invented?
In contradiction to the theory that ‘The Diners Club’ started the credit card system, the Encyclopedia Britannica records the origin of credit cards in the United States as far back as the 1920s.
At this time businesses like big oil companies and hotel chains started issuing credit cards to rich and regular customers to use their services and allow them to pay later.
These cards were only useful for purchasing goods and services from the companies and establishments that issued the card. However, references to credit cards have been found as early as 1890 in Europe.
Computers Promoted the Use Of Credit Cards
There were no computers to record the credit card transactions and the process of identifying the credit balance of card was done through an updated credit card directory same as a telephone directory. This system was time-consuming and tedious and provided many loopholes for credit card fraud. All one needs to do is to ‘swipe’ the card through a slot machine and the amount entered. If there is an adequate balance in the account of the holder, then the transaction is completed, and the customer billed a month later. Usually, credit cards allow for a 50-day credit free period. If the outstanding bill is paid during this time the customer does not have to pay any interest on the transactions, else there is a whopping 2.9% charge per month on the billed amount.
Who Issues Credit Cards?
Bank and other financial firms issue credit cards.
Advantages of using a credit card
- Buy now pay later on
- Cut downs your debts
- Benefits and rewards
- Interest-free loan
Disadvantages of using a credit card
- May you debt increase
- Limited usage
- Have to pay fees and charges
- Limited usage.
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