DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : Raja Sekhar Koduru
Designation : Lecturer In CCP
Branch : DCCP
Institute : GPW,Kakinada
YEAR/SEMSTER : VI SEMSTER
Subject : Banking II
Subject Coce : CCP-604(B)
Topic : Customer Facilities Offered By Bank
Duration : 50 Mts
Sub Topic : ATM
Teaching Aids : Power Point & Pictures
CCP.604(B).25 1
Objectives:

On completion of this period, you would

be able to
 Explain the features of Credit card
 List the Advantages of credit card

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Recap

 In the previous lesson, we have learned the

various features and advantages of Automated
Teller Machines( ATMs).

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Credit card

 What is a credit card?

 Credit card is a plastic card
which is issued by a bank as
the most widely used
payment device

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Credit card

 It is a form of consumer loan

 It is a revolving credit account that has
a credit limit
 Credit limit can be availed in part or full

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Credit card

 Once the outstanding balance is paid, the

limit is restored for use again.
 Credit cards can be used at merchant
locations by the credit card holders to make
payment for the goods or services that the
card holder has purchased.

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Credit card

 The credit cards can also be used to

obtain cash through ATMs.

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Credit card

 When a person applied for a credit card,

he will be asked to supply details of his
financial status.

 Subject to satisfactory reference, the card

can be given with an appropriate credit
limit.

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Credit card

 Many card holders obtain credit card

not in order to obtain credit
 but as a means of postponing
payment for goods
 And, as an alternative to cash or
cheque

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Credit card

 The card holder need only make the

minimum payment specified on
statement against the full amount.
 the balance remains owing to card
issuer.
 Interest is then charged on the balance
amount outstanding

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Credit card

 The bank issuing credit card is able to

make increasing earning by way of
commission from dealers.
 and interest from the card holders, if the
payment is not made within stipulated
time

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Advantages to cardholders

Convenient
 A card is convenient method of payment
as an alternative to cash or cheque
 It is simple to operate and convenient to
carry

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Advantages to cardholders

Credit facility
 Banks may offer credit to the consumer’s
conveniently
 There is no need for the customer to go to
the bank for applying a loan
 The customer can either repay the amount
of credit in full or opt for repaying in flexible
monthly installments

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Advantages to cardholders
Safety and security
 Credit card offers a safe means of
conducting transaction
 Credit card holders need not carry large
amounts of cash thus avoiding the risk of
theft

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Advantages to cardholders

Easy record keeping

 Credit card facilitate the bankers in proper
record keeping.
 The transactions are printed on the
monthly statements that can be reconciled
with the sale receipt.
 The accumulated transactions are easy to
account for every month.

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Advantages to cardholders

Universal acceptance
 The card issued under the reputed
associations like VISA and ‘Master Card’ are
now universally accepted by merchants
 It is an aid to business and holiday travel

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Advantages to Merchants

Guarantee of Payment
 By accepting a credit card, the merchant has
a guarantee of payment
 and his account is immediately credited with
the cleared funds as payment of the
vouchers into his bank.

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Benefits to Merchants

No bad debts
 Merchants can use the card system as
an alternative to other means of
allowing credit and thus avoid bad
debts.

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Benefits to Merchants

Boost sales
 A merchant accepts credit card and
expects to increase turnover as more
and more people accept the practical
advantage of credit card
 and turn to those traders who accept
cards in settlement.

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Benefits to Merchants

No risk
 A credit card system permits the merchant
to offer his customer the facility of taking
credit
 without involving himself in the expense,
administration or risk of setting up his own
credit arrangement.

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Benefits to Merchants

Convenience
 The credit card of sales is
convenience for book keeping
 The merchant also have the support
of the credit card company in
advertising campaigns and other
promotional activities.

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Benefits to Bankers

Boost credit
 Credit card an easy way to extend
credit and a convenient way for
customer to borrow.
 Moreover, credit once granted, keeps
revolving which result in the bank
earning interest/income.

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Benefits to Bankers

Market Expansion
 Credit card does not requires physical
presence of a branch or a bank
 Banks can use this remote feature to
expand their market areas
 For instance an ATM, which could be
established in a place like supermarkets,
can be accessed by the consumer directly
for carrying out financial transactions

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Benefits to Bankers

Cross – Selling of Products

 Banks will have an additional avenue
for cross-selling of other banking
products and services to its existing
and potential card holders..

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Benefits to Bankers

New source of Income/Funds

 Merchants pay discounts to banks for
handling card holder’s purchases
 Merchants also make additional
deposits to the bank

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Summary
 The customer can use his
magnetic stripe plastic cards -
Credit Card and get instant cash.
 It is like a short-term loan.
 If the customer wants, he can
postpone the payment

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Summary

 However, interest has to be paid

on the delayed – postponed
payment.
 Major public sector banks and a
few private sector banks have
introduced their own credit card.

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Quiz

1. Credit cards enable the customer to

withdraw money from his account ?
 True
 False
4. Credit card holder must be account
holder in the bank
 True
 False

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Quiz

1. Credit card allows the customer a short

term loan
 True
 False
4. If the payment is delayed on credit card the
customer need to pay interest
 True
 False

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Frequently Asked Questions

2. Briefly explain the term credit card.

(4marks)
3. What are the benefits of credit card to the
cardholder (customer) (4marks)
4. List out the advantages of credit card to the
merchants .(4 marks)
5. Explain the advantages of credit card to the
bankers

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