Money sets the world in motion. It guides, motivates, inspires and tempts. It

is the driving force for one's living or it is often the reason for death

too. The power of money cannot be explained. It can fairly be overwhelmed.

As technology made an entry in to human life, situations began to change. You

need not carry a pocket full of notes and walk around scared of theft. The other

side- you also need not demean yourself when your colleague asks for a hundred-rupee

note and you rummage around. You can very well say you don't have change

as you carry a credit card! Not a penny you are required to carry along if you

have a colorful plastic card safe in your purse, if at all you prefer the standard

shops in your city.

Credit cards made the first entry in the 1920's in the United States

first in the automobile industry. But the method of accepting credit cards by

merchants was first used in 1950, a fabulous invention of Frank X. McNamara.

The purpose behind his invention was to consolidate multiple cards.

The first universal credit card was introduced by Diners Club, Inc. which could

be used by a variety of stores and businesses. An annual fee was imposed on

the credit card holders and billing was done on a monthly or yearly basis. Then

the American Express established another universal card.

American Express was followed by Bank of America which introduced a product

that eventually evolved in to the visa system. This set its base in California

and then it was licensed to other states in 1966 and was renamed visa in 1976.

The same year witnessed the introduction of the Mastercard through Mastercharge

issued by a group of credit issuing banks.

The main uses of credit cards that attracted people were:

• The feasibilty credit cards ensured for travellers.



• The provision of moving credits to other places.



• The advantage of using credit cards when banking facility was not available.

Now different variations are available in credit cards as number of other financial

institutions are also offering credit card options along with banks. The different

variations include branded credit cards, corporate cards, store cards and so

on.

The working

The credit card issued by an authority, normally by a bank,

can be used for purchases from merchants who accept the credit card up that

goes up to the limit of purchase. Once the purchase is over, then the card holder

has to make a notice of consent to pay the respected amount. Now the electronic

verification systems help merchants to verify the credit card status, that the

respective card has enough balance and also the validity.

The credit card holder will be sent a detailed statement regarding the payments

for the month and the owed amount must be necessarily paid before the due date.

Interest will be issued by the credit provider for the user to pay and these

rates will differ from card to card.

Some allow to purchase through net or phone and these transactions are done

by giving the credit card number provided on the card.

How secure is the system?

Despite the great benefits and feasibility credit cards offer, there are great

chances for fraudulent practices especially when the card is stolen and the

money transaction happens in no time.

Most of the fraud techniques are done through the internet mainly by copying

information from retailers. There are also instances of hackers getting information

from major companies. Some employees of big companies are also reported to be

selling information regarding credit card details to people outside.

The Federal Trade Commission provides various tips for consumers to take good

care of their credit cards.

• Shop in a way that best fits your needs and not more.



• Before the real acceptance of the card, all the terms and conditions must
  
  be understood.



• Hold on to receipts to reconcile charges when the bill arrives.



• The card and account numbers should be kept safe.



• Carry only the cards that needed most.

Credit card debt

The darker side of credit cards are credit card debt which is a situation were

someone does not pay the amount already used. This is a serious concern among

the American families who owe debt over $7000 just on credit cards. If the card

charges an average of 18%, then an interest rate of $105 would strike them each

month. This explores the seriousness of the situation.

Mainly debt happens because of over expenditure. There is a common tendency

among people to spend more than what they eventually earn. This is a method

of procrastination whereby people think of meeting the financial crisis later

than worrying about it today. This rises tremendously which result in an over

burden in the future.

It is always better to avoid debt problems rather than creating more problems

in the future. The debt issues should be resolved as early as possible avoiding

the possibility of further complications and over burden of debt.

The statistics shows overwhelming results in the near future about the credit

problems in America. The U.S. National Debt clock gives a structured data on

the outstanding public debt as on the 25th of December 2005. It shows that among

the estimated population of 298,075,374, each citizen's share of debt

would come up to $27,434.84. It also shows that the national debt has continued

to increase an average of $2.83 billion per day since september 30, 2005.

Thus the future of credit cards cannot be foreseen, even when different opinions

about it clash. With the growth of technology, and newer innovations in the

field of credit cards, it would not become a rich man's tool. The pace

with which mobile phones changed our life and life styles is an instance and

a positive sign on how credit cards are going to change the next generation.

We can make assumptions- credit cards will probably change the face and pace

of the world.