The word credit comes from Latin, meaning "trust".In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.

The first use of magnetic stripes on cards was in the early 1960's, when the London Transit Authority installed a magnetic stripe system.

1. Credit Card - A credit card is a financial instrument, which can be used more than once to borrow money or buy products and services on credit. Banks, retail stores and other businesses generally issue these.

2. Credit limit- The maximum amount of charges a cardholder may apply to the account.

3. Annual fee - A bank charge for use of a credit card levied each year, which ranges depending upon the type of card one possesses. Banks usually take an initial fixed amount in the first year and then a lower amount as yearly renewal fees.

4. Revolving Line Of Credit - An agreement to lend a specific amount to a borrower and to allow that amount to be borrowed again once it has been repaid. Most credit cards offer revolving credit.

5. Personal Identification Number (PIN) - As a security measure, some cards require a number to be punched into a keypad before a transaction can be completed. The number can usually be changed by the cardholder.

6. Teaser Rate - Often called the introductory rate, it is the below-market interest rate offered to entice customers to switch credit cards.

7. Joint Credit - Issued to a couple based on both of their assets, incomes and credit reports. It generally results in a higher credit limit, but makes both parties responsible for repaying the debt.

• MasterCard - MasterCard is a product of MasterCard International and along with VISA are distributed by financial institutions around the world. Cardholders borrow money against a line of credit and pay it back with interest if the balance is carried over from month to month. Its products are issued by 23,000 financial institutions in 220 countries and territories. In 1998, it had almost 700 million cards in circulation, whose users spent $650 billion in more than 16.2 million locations.

• VISA Card - VISA cards is a product of VISA USA and along with MasterCard is distributed by financial institutions around the world. A VISA cardholder borrows money against a credit line and repays the money with interest if the balance is carried over from month to month in a revolving line of credit. Nearly 600 million cards carry one of the VISA brands and more than 14 million locations accept VISA cards.

• Affinity Cards - A card offered by two organizations, one a lending institution, the other a non-financial group. Schools, non-profit groups, pro wrestlers, popular singers and airlines are among those featured on affinity cards. Usually, use of the

• Standard Card - It is the most basic card (sans all frills) offered by issuers.

• Classic Card - Brand name for the standard card issued by VISA.

• Gold Card/Executive Card - A credit card that offers a higher line of credit than a standard card. Income eligibility is also higher. In addition, issuers provide extra perks or incentives to cardholders.

• Platinum Card - A credit card with a higher limit and additional perks than a gold card.

• Titanium Card - A card with an even higher limit than a platinum card.

• Secured Card - A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.

• Smart Card - Smart cards, sometimes called chip cards, contain a computer chip embedded in the plastic. Where a typical credit card's magnetic stripe can hold only a few dozen characters, smart cards are now available with 16K of memory. When read by a special terminals, the cards can perform a number of functions or access data stored in the chip. These cards can be used as cash cards or as credit cards with a preset credit limit, or used as ID cards with stored-in passwords.

• Charge Card - Falls between a debit and credit card. Works like the latter and you don't have to be an accountholder. Just pay up in full when the bill arrives with the mail. No outstanding are allowed, in other words, no revolving credit facility either. American Express and Diners are providers.

• Rebate Card - This is a card that allows the customer to accumulate cash, merchandise or services based on card usage.

• Co-Branded Card - This is a marriage of convenience between two service providers who want a trade-off with the other's strengths. Specific facilities are made to members through these tie-ups. So, TimesBank and Citibank have a co-branded card that allows concessional rates for add-on cards or telephone banking. Stanchart and Hindustan Lever Limited have a co-branded card to sell Aviance beauty products. SBI-GE Capital has a co-branded card for retail loans.

• Cash Card - Cash cards, similar to pre-paid phone cards, contain a set amount of value, which can be read by a special cash card reader. Participating retailers will use the reader to debit the card in increments until the value is gone. The cards are like cash -- they have no built-in security, so if lost or stolen, they can be used by anyone.

• Travel Card - These work mostly as debit cards for the limited purpose of travel. Citibank Dollar Card, American Express, Bobcard Global and Hongbank Bank Thomas Cook International Card are among the players in this section.

• Debit Card - It is the accountholder's mobile ATM. Open an account with a bank that offers a debit card, and payments for purchases are deducted from your bank account. The retailer swipes the card over an electronic terminal at his outlet, you enter the personal identification number on a PIN pad and the money is immediately debited at the bank. Citibank and a few domestic banks like Times Bank offer this.

[Source - http://www.indiainfoline.com/pefi/crca/glos.html[

• Visa International has the largest global ATM network in over 113 countries.

• Mastercard International has over 23,000 member financial institutions serving consumers in 220 countries and territories and has over 3,50,000 ATM locations around the globe.

• The first card was issued in India by Visa in 1981.

• The country's first Gold Card was also issued from Visa in 1986.

• The first international credit card was issued to a restricted number of customers by Andhra Bank in 1987 through the Visa program, after getting special permission from the Reserve Bank of India.

Source: 'The Sunday Observer' -19th May, 2000

1. Easy & Safe to carry compared to Currency Notes

2. Wide acceptance by several establishments. Thus it is a better means for settlement of transactions than a cheque issued on your bank account

3. Another attractive feature of a credit card is the interest free credit period offered to cardholders. The interest free credit period is generally 40 to 50 days (varies for different cards). When you make a purchase through your credit card, you have taken a loan. It's how you repay that loan i.e. if you maintain enough balance in your account when the debit is to be raised by the Bank in your account, the money is free for 40 to 50 days. But if you carry forward the debit balance, the Bank charges usually a higher rate of interest on the balance overdrawn. The most common feature among the cardholders is they carry forward their payment. Postponing of payment multiplies bills that too at a whopping rate of over 36%-40% per year effectively pushing you in a huge 'debt trap'.

4. If the creditcard is lost, the card-holder is put to severe hardship. According to an estimate, globally about 250 cards are lost daily. What ever be the claim made by the card issuing company it's a fact that at least for 24 to 48 hours, nothing can be done to block the system to stop misuse of the card by an unwanted person. If you inform about the loss of card your liability is restricted to a fixed amount, otherwise it's unlimited.

"Credit Cards have finally arrived in India. The card industry which is growing at the rate of 20% per annum is flooded with cards ranging from gold, silver, global, smart to secure�.the list is endless. From just two players in early 80s, the industry now houses over 10 major players vying for a major chunk of the card pie.

Currently four major bishops are ruling the card empire---Citibank, Standard Chartered Bank, HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million card users, is expected to double by the fiscal 2003. According to a study conducted by State Bank of India, Citibank is the dominant player, having issued 1.5 million cards so far. Stanchart follows way behind with 0.67 million, while Hongkong Bank has 0.3 million credit card customers. Among the nationalized banks, SBI tops the list with 0.28 million cards, followed by Bank of Baroda at 0.22 million.

The credit card market in India, which started out in 1981, is on the verge of an unprecedented boom. Between 1987 and 2000, the market has virtually grown to over 3.8 million cards with almost 25-30 % growth in new cardholders."

[Source - http://finance.indiainfo.com/creditcards/cdttut1.html]

The latest innovation in credit cards is the introduction of a magnetic slip in the card for use in withdrawing cash at the automatic teller machine (ATM), of which about 60000 are already in existence in the world. In India also ATMs have made late appearance, but now spreading very rapidly. A brief note on ATM is included in the article on Swadhan ATM Schme of IBA. As per statistics published by RBI there are 895 ATMs in India as at the end of the year 2001. But it is also regularly increasing.