Plastic Money

Say ‘Plastic Money’ and you are received by a welcoming smile by any young adult. Plastic money is the alternative to the cash or the standard 'money' we use and is referred to the credit cards or the debit cards that we use to make purchases in our everyday life.

The pros of plastic money are far too many. It is more convenient to carry an ATM card of a bank account having thousands of rupees than to carry the same amount in your pocket. It is also much safer to carry it along or to travel with it as if it is stolen one can consult the bank whose service you are using and get it blocked hence saving your money from getting stolen or even lost.

It was a year before economic reforms kicked off in 1991 that Citibank became the first bank to launch a credit card in India. Today there are millions of plastic cards being used for monetary transactions.

However popular we might be to plastic money, there’s more to it than just credit cards and debit cars.

Different types of cards:

1.Credit Card

A credit card is plastic money that is used to pay for products and services. All you need to do is produce the card and sign a charge slip to pay for your purchases. The institution which issues the card makes the payment to the outlet on your behalf; you will pay this 'loan' back to the institution at a later date.

2. Debit Card (My favourite!)

Debit cards are substitutes for cash or check payments, much the same way that credit cards are. However, banks only issue them to you if you hold an account with them. When a debit card is used to make a payment, the total amount charged is instantly reduced from your bank balance.

A debit card is only accepted at outlets with electronic swipe-machines that can check and deduct amounts from your bank balance online.

3. Charge Card

A charge card carries all the features of credit cards. However, after using a charge card you will have to pay off the entire amount billed, by the due date. If you fail to do so, you are likely to be considered a defaulter and will usually have to pay up a steep late payment charge.

When you use a credit card you are not declared a defaulter even if you miss your due date. A 2.95 per cent late payment fees (this differs from one bank to another) is levied in your next billing statement.

4.Smart Card

A smart card contains an electronic chip which is used to store cash. This is most useful when you have to pay for small purchases, for example bus fares and coffee. No identification, signature or payment authorisation is required for using this card.

The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. No change is given. This is the very famous smart cards used for our BEST buses and Metros

5.Diners Club card

Diners Club is a branded charge card. There are a wide variety of special privileges offered to the Diners Club cardholder. For instance, as a cardholder you can set your own spending limit.

However, since this card is typically meant for high-income group categories, it may not be acceptable at many outlets. It would be a good idea to check whether a member establishment does accept the card or not in advance.

6.Photo Card?

If your photograph is imprinted on a card, then you have what is known as a photo card. Doing this helps identify the user of the credit card and is therefore considered safer. Besides, in many cases, your photo card can function as your identity card as well.

7.Global Card

Global cards allow you the flexibility and convenience of using a credit card rather than cash or travellers checks while travelling abroad for either business or personal reasons.

8.Co-branded Card

Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain exclusive benefits to the consumer.

For example, the Citi-Times card gives you all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to Times Music events, etc.

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By the way, did you know that Canada will be replacing its paper currency for plastic? Not just credit cards but actual plastic money. By the end of 2011, the Bank of Canada will replace the nation's traditional cotton-and-paper bank notes with currency made from a synthetic polymer. Canada will purchase its plastic money from a company in Australia, one of nearly two dozen countries where plastic currency is already in circulation.