credit card

Examples of credit card in the following topics:

• Credit Cards

  • A credit card is a payment card issued to users as a system of payment.
  • A credit card also differs from a cash card, which can be used like currency by the owner of the card .
  • As all credit cards charge fees and interest, some customers become so indebted to their credit card provider that they are driven to bankruptcy.
  • Merchants may charge users a "credit card supplement," either a fixed amount or a percentage, for payment by credit card.
  • A credit card is a payment card issued to users as a system of payment.

• Collection from Delinquent Payables

  • If an individual does not repay borrowed money to a credit card company and 6 months of nonpayment have passed, the credit card company may declare a "charge-off. " This means that the debt is "written off as uncollectable," so that the credit card company will get a tax exemption on that debt.
  • A charge-off is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected.
  • A charge-off is one of the most adverse factors that can be listed on an individual's credit report, greatly impacting an individual's ability to get credit in the future.
  • A charge-off is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected.
  • Explain the ramifications of failing to repay credit card and loan debts

• Short-Term Loans

  • A credit card is a payment card issued to users as a method of payment.
  • For smaller businesses, financing via credit card is an easy and viable option.
  • Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a customer.
  • The customer then need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card.
  • These loans are also sometimes referred to as "cash advances," though that term can also refer to cash provided against a credit card or other prearranged line of credit.

• Obtaining Credit

  • A credit card company, which is a type of creditor, will look at information about the potential customer, or debtor, from a credit bureau in order to determine if the company will lend to the potential customer.
  • The credit card company uses the credit report, provided by the credit bureau, to determine if the lender is likely to pay back the loan.
  • Types of credit include: bank credit, consumer credit, public credit, and investment credit.
  • In the U.S., when a customer fills out an application for credit from a bank, store or credit card company, their information is forwarded to a credit bureau.
  • This information is used by lenders such as credit card companies to determine an individual's credit worthiness; that is, determining an individual's ability and track record of repaying a debt.

• Commercial Banks

  • Commercial banks engage in the following activities: the processing of payments; accepting money on term deposit; lending money by overdraft, installment loan, or other means; providing documentary and standby letters of credit guarantees, performance bonds, securities underwriting commitments and other forms of off- balance sheet exposures; and the safekeeping of documents and other items in safe deposit boxes.
  • Some examples of unsecured loans include credit cards and credit lines.

• Credit Operations

  • Organizations that offer credit to their customers frequently employ a credit manager .
  • A line of credit is any credit source extended to a business or individual by a bank or other financial institution.
  • A line of credit may take several forms, such as overdraft protection, demand loan, special purpose, export packing credit, term loan, discounting, purchase of commercial bills, traditional revolving credit card account, etc.
  • Lines of credit can be secured by collateral or may be unsecured.
  • The use of credit is a necessity in business and should be managed wisely.

• Trade Credit or Accounts Payable

  • Trade credit is the largest use of capital for a majority of B2B sellers; Accounts Payable is money owed by a firm to its suppliers.
  • For example, Wal-Mart, the largest retailer in the world, has used trade credit as a larger source of capital than bank borrowings.
  • Trade credit for Wal-Mart is eight times the amount of capital invested by shareholders.
  • There are many forms of trade credit in common use; often industry-specific.
  • Households usually track and pay on a monthly basis manually by using checks, credit cards, or online banking.

• Credit Ratings

  • Credit ratings are determined by credit ratings agencies.
  • A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax.
  • Income is not considered by the major credit bureaus when calculating a credit score.
  • The credit bureaus all have their own credit scores: Equifax's ScorePower, Experian's PLUS score, and TransUnion's credit score, and each also sells the VantageScore credit score.
  • In addition, many large lenders, including the major credit card issuers, have developed their own proprietary scoring models.

• Cash flow forecasts

  • Prepare for adequate future financing and determine the type of financing you need (short term credit line, permanent working capital, or long-term debt).
  • Even if you have a retail business and a large percentage of your sales are cash, it is likely that you offer credit (charge accounts, charge cards, term payments, layaway, trade credit) to your customers.
  • Thus, you need to have a means of estimating when those credit sales will turn into cash-in-hand.

• Day-to-Day Needs

  • Cash inflows come from cash sales of inventory, collection of credit sales, sales of other assets, and funds obtained through credit financing.
  • Cash and cash equivalents are also used in the contexts of payments and payment transactions and refer to currency, money orders, paper checks, and stored value products, such as gift certificates and gift cards.