5 different kinds of plastic money

Credit card

Cashless payment with a set spending limit

Payment takes place after the purchase

Great flexibility thanks to installment facility

Most well-known credit cards: American Express, MasterCard, Visa

Cashless payment without a set spending limit

Payment takes place after the purchase

No credit or installment facility

Card is directly linked to the cardholders bank account

Transaction is debited immediately from bank account

No credit or installment facility

Card with payment and credit function

Can only be used at specific retailers

Well-known customer cards: myOne, Globus, Media Markt

Card is topped up with credit before use

No credit or installment facility

Open system (American Express, Visa, MasterCard) or closed system (can only be used at specific
retailers)

Plastic money is a term that is used predominantly in reference to the hard plastic cards we use
everyday in place of actual bank notes. They can come in many different forms such as cash
cards, credit cards, debit cards, pre-paid cash cards and store cards.
Cash Cards - A card that will allow you to withdraw money directly from your bank via an
Authorised Teller Machine (ATM) but it will not allow the holder to purchase anything directly
with it.
Credit Cards - Again this card will permit the card holder to withdraw cash from an ATM, and a
credit card will allow the user to purchase goods and services directly, but unlike a Cash Card the
money is basically a high interest loan to the card holder, although the card holder can avoid any
interest charges by paying the balance off in full each month.
Debit Cards - This type of card will directly debit money from your bank account, and can

directly be used to purchase goods and services. While there is no official credit facility with
debit cards per se, as it is linked to the bank account the limit is the limit of what is in the
account, for instance if an overdraft facility is available then the limit will be the extent of the
overdraft.
Pre-paid Cash Cards - As the name suggests the user will add credit to the card themselves, and
will not exceed that amount. These are usually re-useable in that they can be 'topped up' however
some cards, usually marketed as Gift Cards are not re-useable and once the credit has been spent
they are disposed of.
Store Cards - These are similar in concept to the Credit Card model, in that the idea is to
purchase something in store and be billed for it at the end of the month. These cards can be
charged at a very high interest rate and can are limited in the places they can be used, sometimes
as far as only the store brand that issued it.

Yes, it is Plastic Money in the form of debit or credit card that you carry in your wallet
which gives you an easy access to your money. A credit card is a plastic card - same as
a debit card with a magnetic strip issued by a bank or equivalent authority or a financial
company with an option by which you can borrow funds at the point of sale.
An interest is charged by the credit card when you borrow funds through it and it is a
means of short-term financing. The interest on your credit card accrues after one month
from the date the purchase is made. The limits of how much amount you can borrow are
predetermined at the time of issuance of the card as per your paying credibility. The
credit limit also gets revised depending upon your expenditure trends.
It is generally believed that one tends to spend more if they have a credit card. This
prompts the question, whether you really need a credit card for your shopping needs or
is it just another thing that you need to go flashing around. It goes without saying that
credit cards provide you easy credit just when you need it and have none but only if
used diligently and if not it may disturb your apple cart.

Having a look at the advantages and disadvantages of credit cards will certainly help
you deciding whether to have a credit card at all?
Advantages of a Credit Card

Credit cards bring in easy cash at your disposal even when your wallet runs out of cash.
It comes handy specially when you are into a lot of travelling and carrying cash is a big
hassle. They come handy especially while you travel overseas.

Credit cards provide you with security and protection in comparison to cash. There is a
lot of risk in carrying a large amount of cash in your wallet. As for credit cards, they will
give you money as and when required and if you lose it or if it is stolen you can always
save yourself from further loss by blocking your card immediately.

As credit cards provide you with the facility to buy goods and services online they aid in
increasing your purchasing power.

Credit cards from few financial institutions are loaded with facilities like cash back which
serve as an incentive for you and few provide reward points that can be availed in form
of coupons or gifts.

In situations like job loss or health emergencies credit cards can play a vital role by
providing you with that extra money that you are desperately in need of.

Credit cards bring along easy payment options like monthly installments which help you
to write off your debit easily without asking you to shell out a lump sum amount from
your pocket that may interfere with your cash in hand needs.

You can also withhold payments with credit cards.

Credit cards also give you a facility to withdraw cash from the ATMs. It should be noted
that in such case there is no free credit period and the interest starts accumulating from
the first day itself. Interest rates may vary from 25 percent to 45 percent annually. A
cash withdrawal fee of 2 percent to 3.5 percent is also charged on the amount that is
withdrawn.
Disadvantages of a Credit Card

If you are the one who thinks you should have a credit card because all your friends
have one then think again as this may lead you to trouble. Credit cards have to be
owned only by those who can use it with care keeping in mind the billing cycle, interest
rates etc.

Owing a credit card may lead your way to a lot of impulse buying as at the back of your
mind you are aware of the fact that you have credit at your disposal even though you
have no cash in your account.

You cannot ignore the fact that frauds have been done and can be done with credit
cards.

If you think you need a credit card because you are in need of building your credit limit
then thats not true at all. In order to build your credit limit it is necessary for you to pay
your bills on time and it can be any bill not necessarily your credit card bill. Credit card
should not be interpreted as a tool that will enable you to build your credit history.

You really dont need a credit card if you think you need it only to shop online. You can
jolly well do it by using your debit card. Debit card can do everything that a credit card
can with the only difference that a debit card cannot provide you with credit when you
do not have it. So if you plan to own a credit card only for online shopping, then you
may drop the idea.

If you are not able to pay your credit card installments on time then you are charged
with late fees and interest that adds on to your debt load.

There are times when you may get so deeply caught in rolling over the balance for
several months that is becomes difficult to break the vicious cycle. It is like getting
caught in a credit trap.

If you own a good number of credit cards, the lenders may not hold a good opinion
about you.

If you go by the researches that have been made, credit cards have paved way to lot
number of consumer bankruptcies.
Credit card has undoubtedly made our lives easy but it is important that you use credit
cards in the right way so that you can make the most of it without getting caught in the
credit trap. All you have to do is to keep a track of your purchases, remember you
payment cycles, try to settle full credit card payments at the end of every month, avoid
spending in excess and carry your cards cautiously.
If handled properly, credit cards can serve to be very convenient but they can also lead
you to a huge debt if misused. So just play carefully with the tiny plastic thing that is
placed in your wallet.