Independent research Essay Example | Topics and Well Written Essays - 2000 words

Independent research - Essay Example The credit cards involve much risk such as theft, fraud, misuse of personal information, etc. however these risks can be managed by paying just a little attention to once financial position and the purchasing power. The card holder must communicate his rights and obligations to the issuing authority which strengthens their relationship and reduces risks (Anderson & Schroder, 2010). Credit cards offered by the Banks Credit cards are offered by the Banks to their customers, through whom they can make payments for online products, in shops, products available with the telemarketers, for paying bills of hotels and resorts, for paying fare, etc. As indicated by name they are based upon the credit system, the user of the card would have to pay interest to the bank whenever he makes payments through the credit card. The issuer of the card is the Bank itself which allows the consumers a continuous balance of debt with the interest payments. The idea of a credit card was emerged somewhere in 1887. The concept of the modern credit card was based on the idea of merchant credit schemes which were used among the companies to make payments. Later the horizon of the card become wide and it became available to the local public. Initially these cards were made of celluloid plastic but these days mostly polyvinyl chloride (PVC) is used. The credit card holder does not require having an account in the bank. Since the whole process revolves around the concept of credit therefore it is better to say that the card owner borrows some amount from the bank to make purchases which are later paid with an additional amount of interest. People often make purchases without considering their payback power that either they would be able to pay the credited amount to bank or not. Just in case if they are unable to pay their credits then they face the consequences of credit card debt. Whenever a purchase is made the card holder enters the personal identification number (PIN) on the basis of whi ch he will pay the Bank in future (Crouhy, Galai & Mark, 2010). Credit cards are often attached with lots of free goods and services that the consumers enjoy on their side whenever they make payments. These services are provided by the banks and different companies. For instance, if you use a credit card of the certain bank, then it will give you several transactional benefits and also easy payment methods. While on the other hand the companies give discounts or additional services to purchase their product. But to enjoy the extra services customers need to make purchases up to the required limit (Carrol, 2010). Now there are electronic devices available to check the balance and the purchasing power of the card holder instantly. The purchasing power of the card holder can also be analyzed by the security code printed on the card. This is usually done in online purchases or the one that are made over the telephone where the sales person verifies that either the customer is able to ma ke the payment or not. Every month the card holder receives a bill indicating all of his purchases and the final amount that he has to pay to the Bank. If the card holder is also having an account in the same bank then the unpaid balance is deducted from their otherwise he can choose to make the payment later with a late fee or additional interest amounts. Regulatory aspect of credit cards: In 2009, President Barrack Obama signed the credit card