This is no different then going to eat at McDonalds every day, they charge you a huge markup to give you that burger, but you dont care because it is convenient or you need food. Even if the USPS took a modest loss on the practice, the positive externalities probably outweigh it. They do so by saying that the service is expensive and that the customers are often risky. Thenthey hit me with a negative balance fee for being negative more more than two days - before they ever even notified me of the overdraft fee. Feels too good to be true. Corporate Debenture Government Municipal. I have a lot of friends that work in bank services, and it costs your bank for you to be online as well.
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· A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a small, short-term unsecured loan, "regardless of whether repayment of loans is linked to a borrower's payday."premiumwebtheme.tk The payday loan industry, which is vilified for charging exorbitant interest rates on short-term loans that many Americans depend on, could soon be gutted by a set of rules that federal regulators plan to unveil on premiumwebtheme.tk://premiumwebtheme.tk · A Short History of Payday Lending. Tweet Share Share. carried an article recently stating that one in ten British consumers were planning to take out a payday loan in the next six the payday-lending industry would be significantly less lucrative than it currently is in the UK. It is worth somewhere between £ billion, up from a mere premiumwebtheme.tk
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A full month has now past since you asked it. Automatic update in Peer comments on this answer and responses from the answerer. Return to KudoZ list. View Ideas submitted by the community. Post Your ideas for ProZ. Vote Promote or demote ideas. There are now countless variations on the basic concept of revolving credit for individuals as issued by banks and honored by a network of financial institutions , including organization-branded credit cards, corporate-user credit cards, store cards and so on.
Although credit cards reached very high adoption levels in the US, Canada and the UK during the latter 20th century, many cultures were more cash-oriented or developed alternative forms of cashless payments, such as Carte bleue or the Eurocard Germany, France, Switzerland, and others.
In these places, adoption of credit cards was initially much slower. Due to strict regulations regarding bank overdrafts, some countries, France in particular, were much quicker to develop and adopt chip-based credit cards which are seen as major anti-fraud credit devices. Debit cards and online banking using either ATMs or PCs [ clarification needed ] are used more widely than credit cards in some countries.
It took until the s to reach anything like the percentage market penetration levels achieved in the US, Canada, and UK. In some countries, acceptance still remains low as the use of a credit card system depends on the banking system of each country; while in others, a country sometimes had to develop its own credit card network, e. UK's Barclaycard and Australia 's Bankcard.
Japan remains a very cash-oriented society, with credit card adoption being limited mainly to the largest of merchants; although stored value cards such as telephone cards are used as alternative currencies , the trend is toward RFID -based systems inside cards, cellphones, and other objects. The design of the credit card itself has become a major selling point in recent years. This has led to the rise of Co-Brand and Affinity cards, where the card design is related to the "affinity" a university or professional society, for example leading to higher card usage.
In most cases a percentage of the value of the card is returned to the affinity group. A growing field of numismatics study of money , or more specifically exonumia study of money-like objects , credit card collectors seek to collect various embodiments of credit from the now familiar plastic cards to older paper merchant cards, and even metal tokens that were accepted as merchant credit cards.
Early credit cards were made of celluloid plastic, then metal and fiber , then paper, and are now mostly polyvinyl chloride PVC plastic.
However the chip part of credit cards is not made from plastic but from metals. A credit card issuing company, such as a bank or credit union, enters into agreements with merchants for them to accept their credit cards. Merchants often advertise which cards they accept by displaying acceptance marks — generally derived from logos — or this may be communicated in signage in the establishment or in company material e.
Merchants may also communicate this orally, as in "We take brands X, Y, and Z " or "We don't take credit cards". The credit card issuer issues a credit card to a customer at the time or after an account has been approved by the credit provider, which need not be the same entity as the card issuer. The cardholders can then use it to make purchases at merchants accepting that card. When a purchase is made, the cardholder agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number PIN.
Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a card not present transaction CNP.
Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the cardholder has sufficient credit to cover the purchase, allowing the verification to happen at time of purchase.
The verification is performed using a credit card payment terminal or point-of-sale POS system with a communications link to the merchant's acquiring bank.
Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland , and is implemented as an EMV card. For card not present transactions where the card is not shown e. Each month, the cardholder is sent a statement indicating the purchases made with the card, any outstanding fees, and the total amount owed. In the US, after receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect see 15 U.
The cardholder must pay a defined minimum portion of the amount owed by a due date, or may choose to pay a higher amount. The credit issuer charges interest on the unpaid balance if the billed amount is not paid in full typically at a much higher rate than most other forms of debt. In addition, if the cardholder fails to make at least the minimum payment by the due date, the issuer may impose a late fee or other penalties. To help mitigate this, some financial institutions can arrange for automatic payments to be deducted from the cardholder's bank account, thus avoiding such penalties altogether, as long as the cardholder has sufficient funds.
Many banks now also offer the option of electronic statements, either in lieu of or in addition to physical statements, which can be viewed at any time by the cardholder via the issuer's online banking website. Notification of the availability of a new statement is generally sent to the cardholder's email address.
If the card issuer has chosen to allow it, the cardholder may have other options for payment besides a physical check, such as an electronic transfer of funds from a checking account. Depending on the issuer, the cardholder may also be able to make multiple payments during a single statement period, possibly enabling him or her to utilize the credit limit on the card several times.
Credit card advertising regulations in the US include the Schumer box disclosure requirements. A large fraction of junk mail consists of credit card offers created from lists provided by the major credit reporting agencies. Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.
The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. Divide the result by and then take this total and multiply by the total number of days the amount revolved before payment was made on the account.
Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as a residual retail finance charge RRFC. Thus after an amount has revolved and a payment has been made, the user of the card will still receive interest charges on their statement after paying the next statement in full in fact the statement may only have a charge for interest that collected up until the date the full balance was paid, i.
The credit card may simply serve as a form of revolving credit , or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, to encourage balance transfers from cards of other issuers.
In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances.
Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument , or even if the issuing bank decides to raise its revenue. A credit card's grace period is the time the cardholder has to pay the balance before interest is assessed on the outstanding balance.
Grace periods may vary, but usually range from 20 to 55 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met. Usually, if a cardholder is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement i.
However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions. The flow of information and money between these parties — always through the card associations — is known as the interchange, and it consists of a few steps. A credit card register is a transaction register used to ensure the increasing balance owed from using a credit card is enough below the credit limit to deal with authorization holds and payments not yet received by the bank and to easily look up past transactions for reconciliation and budgeting.
The register is a personal record of banking transactions used for credit card purchases as they affect funds in the bank account or the available credit. In addition to check number and so forth the code column indicates the credit card.
The balance column shows available funds after purchases. When the credit card payment is made the balance already reflects the funds were spent.
In a credit card's entry, the deposit column shows the available credit and the payment column shows total owed, their sum being equal to the credit limit. Each check written, debit card transaction, cash withdrawal, and credit card charge is entered manually into the paper register daily or several times per week. As well as convenient credit, credit cards offer consumers an easy way to track expenses , which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes.
Credit cards are accepted in larger establishments in almost all countries, and are available with a variety of credit limits, repayment arrangements.
Some have added perks such as insurance protection, rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or cashback. Some countries, such as the United States , the United Kingdom , and France , limit the amount for which a consumer can be held liable in the event of fraudulent transactions with a lost or stolen credit card.
Business credit cards are specialized credit cards issued in the name of a registered business, and typically they can only be used for business purposes. Their use has grown in recent decades. Business credit cards offer a number of features specific to businesses. They frequently offer special rewards in areas such as shipping, office supplies, travel, and business technology.
Most issuers use the applicant's personal credit score when evaluating these applications. In addition, income from a variety of sources may be used to qualify, which means these cards may be available to businesses that are newly established. Business credit cards are offered by almost all major card issuers—like American Express, Visa, and MasterCard in addition to local banks and credit unions.
Charge cards for businesses, however, are currently only offered by American Express. A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. In some cases, credit card issuers will offer incentives even on their secured card portfolios. This deposit is held in a special savings account. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid.
The cardholder of a secured credit card is still expected to make regular payments, as with a regular credit card, but should they default on a payment, the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. This allows building a positive credit history.
Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be debited simply for missing one or two payments. Usually the deposit is only used as an offset when the account is closed, either at the request of the customer or due to severe delinquency to days. This means that an account which is less than days delinquent will continue to accrue interest and fees, and could result in a balance which is much higher than the actual credit limit on the card.
In these cases the total debt may far exceed the original deposit and the cardholder not only forfeits their deposit but is left with an additional debt. Most of these conditions are usually described in a cardholder agreement which the cardholder signs when their account is opened. Secured credit cards are an option to allow a person with a poor credit history or no credit history to have a credit card which might not otherwise be available.
They are often offered as a means of rebuilding one's credit. Fees and service charges for secured credit cards often exceed those charged for ordinary non-secured credit cards. For people in certain situations, for example, after charging off on other credit cards, or people with a long history of delinquency on various forms of debt , secured cards are almost always more expensive than unsecured credit cards.
Sometimes a credit card will be secured by the equity in the borrower's home. A "prepaid credit card" is not a true credit card,  since no credit is offered by the card issuer: However, it carries a credit-card brand such as Discover , Visa , MasterCard , American Express , or JCB and can be used in similar ways just as though it were a credit card. An exception are prepaid credit cards with an EMV chip. After purchasing the card, the cardholder loads the account with any amount of money, up to the predetermined card limit and then uses the card to make purchases the same way as a typical credit card.
Prepaid cards can be issued to minors above 13 since there is no credit line involved. With prepaid credit cards purchasers are not charged any interest but are often charged a purchasing fee plus monthly fees after an arbitrary time period. Many other fees also usually apply to a prepaid card. Prepaid credit cards are sometimes marketed to teenagers  for shopping online without having their parents complete the transaction.
Prepaid cards can be used globally. The prepaid card is convenient for payees in developing countries like Brazil, Russia, India, and China, where international wire transfers and bank checks are time consuming, complicated and costly. Because of the many fees that apply to obtaining and using credit-card-branded prepaid cards, the Financial Consumer Agency of Canada describes them as "an expensive way to spend your own money".
A digital card is a digital cloud-hosted virtual representation of any kind of identification card or payment card, such as a credit card. The main benefit to the cardholder is convenience. Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a cardholder who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card.
Different countries offer different levels of protection. Credit cards can also offer a loyalty program , where each purchase is rewarded with points, which may be redeemed for cash or products.
Research has examined whether competition among card networks may potentially make payment rewards too generous, causing higher prices among merchants, thus actually impacting social welfare and its distribution, a situation potentially warranting public policy interventions.
The table below contains a list of benefits offered in the United States for consumer credit cards. Benefits may vary in other countries or business credit cards. Low introductory credit card rates are limited to a fixed term, usually between 6 and 12 months, after which a higher rate is charged.
As all credit cards charge fees and interest, some customers become so indebted to their credit card provider that they are driven to bankruptcy.
Some credit cards often levy a rate of 20 to 30 percent after a payment is missed. In some cases universal default may apply: This can lead to a snowball effect in which the consumer is drowned by unexpectedly high interest rates. Further, most card holder agreements enable the issuer to arbitrarily raise the interest rate for any reason they see fit.
First Premier Bank at one point offered a credit card with a Complex fee structures in the credit card industry limit customers' ability to comparison shop, help ensure that the industry is not price-competitive and help maximize industry profits. Research shows that a substantial fraction of consumers about 40 percent choose a sub-optimal credit card agreement, with some incurring hundreds of dollars of avoidable interest costs. Several studies have shown that consumers are likely to spend more money when they pay by credit card.
Researchers suggest that when people pay using credit cards, they do not experience the abstract pain of payment. Merchants that accept credit cards must pay interchange fees and discount fees on all credit-card transactions.
For merchants , a credit card transaction is often more secure than other forms of payment, such as cheques , because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card payment except for legitimate disputes, which are discussed below, and can result in charges back to the merchant.
In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees and reduce the amount of cash on the premises. Prior to credit cards, each merchant had to evaluate each customer's credit history before extending credit.
That task is now performed by the banks which assume the credit risk. Credit cards can also aid in securing a sale especially if the customer does not have enough cash on hand or in a checking account. Extra turnover is generated by the fact that the customer can purchase goods and services immediately and is less inhibited by the amount of cash in pocket and the immediate state of the customer's bank balance.
Much of merchants' marketing is based on this immediacy. For each purchase, the bank charges the merchant a commission discount fee for this service and there may be a certain delay before the agreed payment is received by the merchant.
The commission is often a percentage of the transaction amount, plus a fixed fee interchange rate. Merchants are charged several fees for accepting credit cards. The merchant is usually charged a commission of around 1 to 4 percent of the value of each transaction paid for by credit card. Merchants with very low average transaction prices or very high average transaction prices are more averse to accepting credit cards.
In some cases merchants may charge users a "credit card supplement" or surcharge , either a fixed amount or a percentage, for payment by credit card. Most retailers have not started using credit card surcharges, however, for fear of losing customers. Merchants in the United States have been fighting what they consider to be unfairly high fees charged by credit card companies in a series of lawsuits that started in Merchants charged that the two main credit card processing companies, MasterCard and Visa, used their monopoly power to levy excessive fees in a class-action lawsuit involving the National Retail Federation and major retailers such as Wal-Mart.
Some large retailers, such as Wal-Mart and Amazon , chose to not participate in this settlement, however, and have continued their legal fight against the credit card companies. Merchants are also required to lease or purchase processing equipment, in some cases this equipment is provided free of charge by the processor. Merchants must also satisfy data security compliance standards which are highly technical and complicated.
In many cases, there is a delay of several days before funds are deposited into a merchant's bank account. Because credit card fee structures are very complicated, smaller merchants are at a disadvantage to analyze and predict fees.
Finally, merchants assume the risk of chargebacks by consumers. Credit card security relies on the physical security of the plastic card as well as the privacy of the credit card number.
Therefore, whenever a person other than the card owner has access to the card or its number, security is potentially compromised. Once, merchants would often accept credit card numbers without additional verification for mail order purchases. It's now common practice to only ship to confirmed addresses as a security measure to minimise fraudulent purchases.
Some merchants will accept a credit card number for in-store purchases, whereupon access to the number allows easy fraud, but many require the card itself to be present, and require a signature for magnetic stripe cards. A lost or stolen card can be cancelled, and if this is done quickly, will greatly limit the fraud that can take place in this way. European banks can require a cardholder's security PIN be entered for in-person purchases with the card.
This data security standard is used by acquiring banks to impose cardholder data security measures upon their merchants. The goal of the credit card companies is not to eliminate fraud, but to "reduce it to manageable levels". Internet fraud may be by claiming a chargeback which is not justified " friendly fraud " , or carried out by the use of credit card information which can be stolen in many ways, the simplest being copying information from retailers, either online or offline.
Despite efforts to improve security for remote purchases using credit cards, security breaches are usually the result of poor practice by merchants. For example, a website that safely uses TLS to encrypt card data from a client may then email the data, unencrypted, from the webserver to the merchant; or the merchant may store unencrypted details in a way that allows them to be accessed over the Internet or by a rogue employee; unencrypted card details are always a security risk.
Even encrypted data may be cracked. Controlled payment numbers also known as virtual credit cards or disposable credit cards are another option for protecting against credit card fraud where presentation of a physical card is not required, as in telephone and online purchasing. These are one-time use numbers that function as a payment card and are linked to the user's real account, but do not reveal details, and cannot be used for subsequent unauthorised transactions.
They can be valid for a relatively short time, and limited to the actual amount of the purchase or a limit set by the user. Their use can be limited to one merchant. If the number given to the merchant is compromised, it will be rejected if an attempt is made to use it a second time. A similar system of controls can be used on physical cards. Technology provides the option for banks to support many other controls too that can be turned on and off and varied by the credit card owner in real time as circumstances change i.
Apart from the obvious benefits of such controls: In this eventuality a thief stealing the details will be prevented from using these overseas in non chip and pin EMV countries.
Similarly the real card can be restricted from use on-line so that stolen details will be declined if this tried. Then when card users shop online they can use virtual account numbers. In both circumstances an alert system can be built in notifying a user that a fraudulent attempt has been made which breaches their parameters, and can provide data on this in real time.
Additionally, there are security features present on the physical card itself in order to prevent counterfeiting. For example, most modern credit cards have a watermark that will fluoresce under ultraviolet light. Older Visa cards have a bald eagle or dove across the front. In the aforementioned cases, the security features are only visible under ultraviolet light and are invisible in normal light.
Immigration and Customs Enforcement , and U. Postal Inspection Service are responsible for prosecuting criminals who engage in credit card fraud in the United States. Three improvements to card security have been introduced to the more common credit card networks, but none has proven to help reduce credit card fraud so far.
First, the cards themselves are being replaced with similar-looking tamper-resistant smart cards which are intended to make forgery more difficult. Second, an additional 3 or 4 digit card security code CSC is now present on the back of most cards, for use in card not present transactions.
Stakeholders at all levels in electronic payment have recognized the need to develop consistent global standards for security that account for and integrate both current and emerging security technologies. The operator then asks the merchant a series of YES or NO questions to find out whether the merchant is suspicious of the card or the cardholder. The merchant may be asked to retain the card if it is safe to do so. The merchant may receive a reward for returning a confiscated card to the issuing bank, especially if an arrest is made.
Banks generally borrow the money they then lend to their customers. As they receive very low-interest loans from other firms, they may borrow as much as their customers require, while lending their capital to other borrowers at higher rates.
This is the cost of running the credit card portfolio, including everything from paying the executives who run the company to printing the plastics, to mailing the statements, to running the computers that keep track of every cardholder's balance, to taking the many phone calls which cardholders place to their issuer, to protecting the customers from fraud rings.
Depending on the issuer, marketing programs are also a significant portion of expenses. When a cardholder becomes severely delinquent on a debt often at the point of six months without payment , the creditor may declare the debt to be a charge-off. It will then be listed as such on the debtor's credit bureau reports.
Equifax , for instance, lists "R9" in the "status" column to denote a charge-off. A charge-off is considered to be "written off as uncollectable". To banks, bad debts and fraud are part of the cost of doing business. However, the debt is still legally valid, and the creditor can attempt to collect the full amount for the time periods permitted under state law, which is usually three to seven years. This includes contacts from internal collections staff, or more likely, an outside collection agency.
Many credit card customers receive rewards, such as frequent flyer points, gift certificates, or cash back as an incentive to use the card. Rewards are generally tied to purchasing an item or service on the card, which may or may not include balance transfers , cash advances , or other special uses. Depending on the type of card, rewards will generally cost the issuer between 0. Networks such as Visa or MasterCard have increased their fees to allow issuers to fund their rewards system.
Some issuers discourage redemption by forcing the cardholder to call customer service for rewards. On their servicing website, redeeming awards is usually a feature that is very well hidden by the issuers.
Unlike unused gift cards, in whose case the breakage in certain US states goes to the state's treasury, unredeemed credit card points are retained by the issuer.