Credit cards were first introduced in the United States by hotels and oil companies. This happened during the 1920s, when the hotels and oil companies wanted their customers to make purchases of the products through the cards they offered and can make the repayments later. The card at that time was mostly a form of identifying the customers who are regular in using the services of the hotel or the oil company.
During the Second World War, the practice became popular and as well as professional. Various finance companies began to get involved in providing credit cards and over time, they became a highly competitive business for banks and other financial institutions.
For a long time, credit cards were limited to premium consumers only. Premium consumers were from high-income groups, who also demonstrated large expenditure in buying items and goods in the market. However, for past 20 to 30 years, the trend changed to a great extent. With the growth of international players offering credit cards and recording booming economies in developed as well as developing countries, credit cards began to be offered to middle-income groups as well.
Although the credit limit was offered at lower level, yet it became quite popular for the consumers from middle-class to make purchases through credit cards. Banks worked as intermediary agencies in many countries offering credit cards to their customers. Banks had huge network with direct links to the customers and their offer of credit cards was extensive that even opening simple bank accounts could make one eligible for taking credit cards.
All types of credit card holders find credit card deals. They find credit card deals quite attractive, encouraging them to spend money on goods and items at shopping malls or hire services. They find credit card deals in discounted air tickets and at restaurants and hotels. If they compare credit cards, there are host of offers available at some point or the other. They can also compare credit cards for other features as well. They can compare credit cards for the rate of interest offered in addition to the finance charges.
The interest-free period is an advantage that works to the favor of the credit card holder. Almost all credit cards offer this interest-free period or the grace period after a purchase has been undertaken using the credit card at an authorized merchant outlet. The merchant outlet benefits from the credit transaction since the amount gets almost immediately transferred to its bank account. There is lesser need for managing cash.
For the credit card holder, he can take time to make the repayment after a period of time. However, once the interest-free period ends, then the credit card company can start charging the rate of interest. The rate of interest varies from one credit card holder to another. The credit card company also takes into account the credit repayment practice of the credit card holder. If there has been continuous late repayment, the credit card company can charge a higher rate of interest in addition to other finance charges.
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