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No man likes to carry cash with them these days. Credit Cards have come up as the best way of carrying “purchasing power” along with you. One may easily find men who carry two or even more credit cards with them. However, it is practically impossible to find a man with no credit card with him. According to a survey, the active users of credit cards and debit cards account to about 30 million people in the country and this is just an approximate figure which is multiplying quickly every hour.
In India, the first credit card was introduced in 1981 by the Andhra Bank. Since, 1981, the credit card Industry has come a very long way. Not only have the number of users multiplied immensely, the number of banks providing the credit card facility and as well as the different types of credit cards being provided by banks have increased too. As of 2011, there are 12 different types of credit cards being issued in India. Some of the most popular kinds of credit cards issued to consumers are- premium credit cards, cash back credit cards, Gold Credit Cards, business credit cards, balance transfer credit cards, Low interest credit cards etc.
The concept of credit card though introduced by the Andhra Bank has become quite popular with other banks as well. Not only are the private banks offering this service, some public banks have entered the industry too. This is precisely the reason why 18 different banks offered credit card services in 2010. Some of the major players in the credit card industry in India are- Axis Bank, Cit Bank, American Express, HSBC, ICICI, Standard Chartered, Amex, Barclays Bank, HDFC, Kotak Mahindra etc. However, ICICI, HSBC and Standard Chartered are the biggest name in the Indian Credit card industry and hold a major share in it.
The credit card industry is a big industry. It requires many people to run successfully. There are so many things that are to be done- making the plastic cards, making phone calls to the users, buying computers that keep all the records, hiring officials who take care of all the manual work to be done etc. Thus, the credit industry also has an operational management costs to pay. Thus, every bank that offers the credit cards and the service spends a huge deal of money in rendering those services to you. These companies also have to make out the money that they have spent as well as the profits on the investment made. This is where the concept of “hidden costs” arises in the Credit Card Industry. The hidden cost is the amount charged by a bank from its customers for rendering its credit card services. The hidden cost of credit cards is defined by the laws of a nation and thus, is different for each country. For instance, in Britain, based on the mode of payment being used, the credit card company can charge different prices from the holders. In India, the interest taken by the credit card companies on credit card usage is governed by the regulating body- Credit Information Bureau Limited.
Sometimes, people use the credit cards. However, they do not make the payment. In such cases, the credit card companies have to various methods to make the recovery of the money they had lend to the credit card use or rather the defaulters. Since at times, the banks also use rough ways to get their money out from the defaulters; strict laws have been framed in the country to deal with banks that use illegal ways to obtain the money. In India, it is strictly illegal if the banks hire a person to threaten the defaulter’s life. The best that they can do is starting a legal process against the defaulter, get your name registered with the CIBIL’s list of credit card defaulters or use your assets that the bank has safely deposited with it to get their money.
The credit card industry is a big industry and makes huge profits too. This is precisely the reason why more and more banks are entering the world of credit card services. In April 2011, the IndusInd Bank acquired the credit card business of the Deutesche Bank in India and thus, started off with a user base of 2,00,000 credit card users. Apart from these, it is believed that many new private banks are likely to enter the world of credit card Industry in 2012.
The credit Card Industry is one industry that is likely to keep growing in the coming years. According to the statistics of a survey, the credit card industry is likely to grow by 13.2% each year from 2011. In these times, when safety has become a huge concern, it is not uncomfortable but also unsafe to carry cash with you. Thus, people consider it far easier to carry credit cards along with themselves. The credit cards also make a very convenient way of carrying money with you. Since, the purchasing power parity of people is increasing day by day; it is only but obvious that the credit card industry will also continue to grow in coming years.