Credit cards have become quite demanding among the middle-class income groups. This trend has recently increased and the credit card companies have found this form of business quite profitable. In countries where economies are highly developed, this practice of offering credit cards to middle-income groups has also increased to a great extent. This is also happening in countries are economies are emerging.
Some two or three decades ago, credit cards were restricted to a certain category of people, who were prime consumers. They had good income-levels and a credible financial history. But now, credit cards are being offered not just to the high-income groups.
People from middle-income groups become interested in credit cards because of the massive advertising campaigns they see around them from credit card companies. They find credit card deals offering the best discounts for selected products in the markets. They also find credit card deals offering cash back and even actual cash they can withdraw from the ATMs. They also find credit card deals useful for the fact that there is no need to carry any real cash in hand. They actively compare credit cards to understand the best offers available for them.
Especially, if they have multiple credit cards, they compare credit cards and take advantage of the best rates. Sometimes, it is useful to compare credit cards, but in all types of businesses, credit card issuers follow the same principles to make profit.
It is easy to apply for a credit card. In fact, there are other service providers such as airline companies, oil companies, insurance agencies which have partnered with credit card issuers in providing credit card services to consumers. If the consumer has taken the service of any of these companies, then he may be eligible for the credit card. In other cases, one can apply for a credit card through the bank.
The bank conducts some initial assessment and issues the credit card to the customer based upon the satisfaction of his financial history. Sometimes, banks have premium accounts for certain category of individuals for whom credit cards are offered for free. Earlier credit cards attracted an annual maintenance charge, however, with the boom in the credit card users, now most of the credit card companies have stopped charging customers with the maintenance charges.
Credit card is a short-term credit offered to the consumers when they purchase products and services from authorised dealers and merchant outlets. The biggest advantage of the credit card is that it offers an interest-free period. Customers can make repayments back to the credit card company on behalf of the merchant outlet from where the product or the service was purchased. The repayments will be charged with some interest only when the interest-free period gets expired. It is important to be aware about the interest-free period and credit card holders should undertake expenses based upon the financial planning they do. Poor planning can lead to accumulation of bad debt over time. The bad debt if not repaid on time only leads to higher interest, casing more difficulties for the customer.