The benefits of the credit card system are briefly explained.
Benefits of Credit Cards for Cardholders
1. Card holders are relieved from the botheration of carrying cash or cheque book with them.
2. They can make purchase at anytime.
3. If credit cards are lost, banks may be informed about the loss of credit card. Misuse of credit cards can be prevented.
4. Payments are made later. So credit facility is available.
5. Railway ticket or air ticket reservation may be done at anytime.
6. Banking facility is enjoyed without being present in the banking premises.
7. Money can be drawn from ATM centres which are located at convenient places.
8. The card holders are given insurance cover.
9. Credit cards are symbols of prestige.
Benefits of Credit Cards for Banks
1. Customer base increases
2. As credit cards are used by customers, cash counters are not crammed.
3. Banks earn interest on credit extended to card holders.
4. Credit transactions are through banks. So, unauthorized financial intermediaries are dispensed with.
5. Use of cheque is avoided. So, clerical work of the banker is considerably reduced.
Benefits of Credit Cards for Central bank
1. The central bank can exercise a better control on the banking system.
2. Non-productive expenditure by the card holders can be known in their various dimensions. Details of purchase and sales in the country are known to the central bank.
3. Non-banking financial companies shrink in terms of their activities. Central bank’s control over NBFCs is effective.
4. By providing credit card facility to agriculturists, agricultural finance is improved.
Benefits of Credit Cards for Government
1. Sales are billed. So, revenue from indirect taxes increases.
2. It prevents the growth of unaccounted money.
3. Goods and services tax can be easily collected as proper evidences are available.
4. Data on consumption and consumer behaviour can be collected. Government can know the priorities of buyers of goods and services.
Benefits of Credit Cards for Sellers
1. Sellers are getting more orders from their customers.
2. Wholesalers and retailers can avail of bank credit to carry on their trade profitably.
3. Durable goods can be easily sold through credit card system.
4. With increased turnover wholesalers can effectively bargain with manufacturers.
Benefits of Credit Cards for Manufacturers
1. Manufacturers can increase their production. Economics of large scale production are available to them.
2. They can reduce prices of goods manufactured by them.
3. Sales are on continuous basis. So production is also continuously done.
4. With increased returns, manufacturers can diversify their production.