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[N319]No More Credit Card

by Richard Greenwood, Ric

Through constant innovation, credit card technology made sure that plastic would continue to make paying for transactions more convenient and more secure. The plastic acquired the familiar magnetic stripe and, for a while, it seemed like credit cards were set to become smart cards with embedded chips. Although the concept of smart credit cards were not well accepted, current credit card technology is aiming for an even daring wave of the future: touchless or contactless credit cards.

Contactless technology in credit cards means you pay for purchases simply by tapping your card on a special card reader. You no longer have to wait in a queue to have your card swiped and sign a receipt. The MasterCard PayPass is one example of this contactless credit card technology. Your transaction time: less than a second.

Issuers of credit cards are hoping that contactless payments will be readily accepted by consumers. The realisation of the card industry's vision of the future rests on this crucial interim step. For the industry and many others, there is the belief that contactless payments made through credit cards will lead eventually to the time when devices like cell phones will be used as electronic wallets, carrying consumers' credit cards, keys to home and office, coupon offers and many more.

Ironically, this vision of the future of credit cards may mean the end of credit cards as you know them. Your contactless credit cards could now be built into credit-enabled mobile phones. This opens up diverse uses, such as:

- Paying for usual purchases at stores and merchants

- Purchasing, storing, and exchanging electronic tickets at various live events

- Purchasing and exchanging electronic tickets to buses, subways, and other mass transit systems.

Your entry and exit will be shown on the display; saved travel details lets you review the information. - Phone-to-phone payments in lieu of cash or cheque for services of your doctor, handyman or the babysitter can be made.

Banks and issuers of credit cards could offer electronic coupons, bank promotions, advertisements (say, about special interest offers on certain deposit certificates), and rewards programs.

The primary value to you for using contactless credit card technology on your mobile phone is the ability to use a single, easy-to-use device for your transactions ? all done at faster speeds.

There are security issues to be resolved, but these are minor obstacles. Only the basic personal information are carried by the current versions of contactless credit cards, just enough for a transaction to be completed.

There is also the need to have a critical mass of contactless terminals. In the U.S., for instance, there are 400,000 units over 80,000 locations. This comprises only 1 percent of the whole merchant locations in the country. Korea has a much more widespread network.

These obstacles will have to be overcome to make this future of credit cards materialise. Contactless credit cards become useless if you cannot make transactions regardless of where you are.

For example if you swap cards repeatedly so as to keep within 0% interest offers, you risk being penalised by the credit agencies and eventually you will no longer be able to get any cards at any interest rate, or qualify for mortgages or loans.

One essential piece of advice is to ONLY use credit cards for cash-back provided you are not charged any interest. The temptation to use the credit card to gain cash from a cash point can be high, yet by not paying back the card in full at the end of each month, this can be an extremely expensive method of borrowing.

Some advice sources will tell you that cash-back on a credit card, paid off monthly in full is the same as cash-back on a debit card, but that simply is not true; no debit card charges you for getting cash back with your purchases ? with a debit card you are accessing YOUR money not money that essentially belongs to the lender.

There are other theories that state that since many credit cards lend new customers money at 0%, you can easily borrow this money and put it into a savings account with as high a rate of interest as is available.

The theory is that you will then be earning interest on money you have acquired effectively for nothing and is similar to the idea that you can borrow money as an overdraft from the bank and swap large amounts between accounts in different banks to look as if you have a large income going in and going out.

This is supposed to boost your credit rating - but beware: when considering further credit, lenders are primarily concerned with whether or not payments were made on time rather than the size of transaction moving to an from accounts.

In general it is inadvisable to see interest free credit or 0% interest offers as free loans - these offers do not last forever and if you miss a payment you will actually accrue more interest than if you had a standard rate of interest in the first place!

With many card providers offering incentives to spend you can expect, with normal usage, to receive some reward for your spending - however, spending vast amounts of cash in order to qualify for free gifts, air miles or other similar incentives is not a good investment!

As with any type of credit, borrowing on a credit card can give you access to funds when you need them most ? as long as spending is kept within affordable limits it can be an extremely useful way of taking care of your outgoings but it needs to managed carefully.

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Both Richard Greenwood & Peter Spyr are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Richard Greenwood has sinced written about articles on various topics from Debit Credit Card, Credit Card Offers and American Express Card. Richard Greenwood runs website Click4Credit.com.au which compares offers from leading banks on credit. Richard Greenwood's top article generates over 135000 views. to your Favourites.

Peter Spyr has sinced written about articles on various topics from Leadership, Insurance and Poor Credit. Check out the new Natwest which offers 0% on balance transfers for 13 months and other benefits at. Peter Spyr's top article generates over 60500 views. to your Favourites.