Credit Card Usage vs Check Usage: A World Without the Infamous Plastic Card - Research Paper Example

Credit Card Usage vs. Cheque Usage: A World without the Infamous Plastic Card of the of the Introduction Cheque and credit card is the most important thing for doing monetary transactions. Both of these things are used as convenient and safe way of making payments. Cheque is a negotiable instrument which is involved in transferring money from one bank account to another bank account. The person whose name is written in the cheque receives money from the person who writes the cheque. For doing transaction through cheque both the parties should have a bank account. Credit card is a small plastic card issued by different financial companies which gives facilities to the card holders to purchase different goods and services in credit. The card has certain limit of credit within which card holding person can do purchasing. Person issuing this card create revolving account. The objective of this research paper is to highlight the difference between credit card and cheque usage. This paper will also focus on the issues that how the world would become in the absence of infamous plastic card. Research question of this paper is “what is the difference between usage of credit card and check and how would be the world become without plastic card”? Literature review According to the authors Harcar and Kaynak, in the modern world credit card has become a very famous mode of making monetary payments. The usage of this small plastic card plays an important in daily activities of people. Different banks and other financial institutions provide credit card to people having some credit limitations. The authors states that different people have different opinion about credit cards and they use in various ways for making payments. Always carrying cash money is not safe for people. They can face many problems for this. But with the help of credit card they don’t have to carry cash. Moreover they don’t have to worry about their bank balance while purchasing anything. Credit card provides them facilities to purchase things in credit and pack back the money after some specific time. Credit card holders get highly benefited by this facility which influences them to purchase more products (Kaynak and Harcar, 2001). As per the authors Kwon and Lee, credit card is an alternative mode of making payments. Before the present of credit card cheque were used for this purpose. But now cheques are mainly used for official works. Credit card is used more by educated people. Among different financial tools this card has become most divisive product. Credit card provides different offers which attracts and benefits card holders. This card is used in making different online payments. If credit card is used properly then it works as a very safe and secure mode of payments. Now a day credit card is accepted in all the places as it makes payment process very fast (Lee and Kwon, 2002). According to the writer Thornton and White, cheques are used as making payments and settlements. It is paper based transaction. Cheques are only provided by banks. In the recent years the use of cheques has been decreases over time of the advancement of technology. The process of making payment through cheque is a bit time taking and sometimes it becomes complicated. The governments of many countries are trying to reduce usage of cheque for saving paper and making different payment system quick and easy (Thornton and White, 2001). Analysis and findings In the modern world usage of credit card has increased lot for its numerous advantages and there is a decline in cheque usage for some of its disadvantages. The main purpose of using credit card is to making payment instantly with the help of a small card. Initially money is paid by financial company of the card and after some days that money is repaid back by card holder. As a result the card holder does not have to pay money from its debit balance while making payments. Credit card also provides different offers to its customers. This card is used for getting cash back facilities by people where they can get back up to 5% cash back on their purchase. Credit card also plays a vital role in doing various online payments. It makes online payment process fast and effective (Milne, 2006). This small plastic card is used for getting different rewards on purchases. Debit card do not provide such type of rewards. But for retaining its customers credit cards of maximum companies offer significant reward on its responsive use. Cheques cannot be used in these ways. Cheque is majorly used for doing official payments. There are different kinds of cheque which are used for various purposes. Bearer cheque is used for making payment to specified person. Post dated cheque is used for doing payment which is dated some days after the resent date. Anti dates cheque is used for doing early payments. Crossed cheque is used for verifying the presence of bank account of a person. Cheque does not provide any offer to people (Thomas, Oliver and Hand, 2005). It is commonly used for paying bills, money to individuals, companies’ etc. Balance in bank account is required for using cheques. The amount mentioned in it will be added or deducted from bank account. Plastic card is gaining its importance day by day. It provides huge amount of advantage and benefits to the customers. For plastic card purchase of many products and service has increased a lot. A world without these plastic cards will create a lot of problem for people. In the present world people are more comfortable to use cards than cheque for making payments. The efficient system of card makes payment process very fast and easy (Norum, 2008). Without cards payments process of different goods and services will become very slow. More over purchase of products and services will decrease because giving instant cash money or making cheque payment is not very comfortable process. People are not willing to carry much liquid money with them as it involves a high amount of risk. But in the absence of plastic card they will be compel to carry cash with them which will lead to increase robbery and theft. Without cards 40% of necessary spending of people will get transferred to short term credits. Unlicensed and illegal lending will rise and it will influence to increase criminal activities (Hespeler, 2008). If cheque becomes only way of making payments then banks will experience a huge pressure for handling various types of payment by its different customers. Economy will experience less circulation of money. For making cheque payment a person have to go through different formalities of bank. Banks also conducts verification for doing the payment which makes the entire payment process very slow. Absences of card in this modern world will also decrease the growth of online trade. Most of online goods are purchased through cards. Cheque payment is not considered there. So the customers of online business will experience many problems regarding this (Handa, 2002). Conclusion Cheque and credit card plays an important role in making payments or receiving money. Earlier cheque was used for doing transaction. But in the modern world small plastic card has been introduced which makes payment process very fast and easy. Cheque payment is a bi9t time consuming. But card payment is very quick. For using credit card people don’t have to keep much money in their bank account. Card holders get a limit of money as credit and use the money in making purchases. So they don’t face the risk of carry cash. Anytime they can make payment. For doing card payments people don’t have to depend on banking formalities and time. Plastic cards provide many advantages which reduces the usage of cheque. References Handa, J. (2002). Monetary economics. Canada: Routledge. Hespeler, F. (2008). Electronic money and the monetary transmission process. Gottingen: Cuvillier Verlag. Kaynak, E., & Harcar, T. (2001). Consumers attitudes and intentions towards credit card usage in an advanced developing country. Journal of financial services marketing, 6(1), pp. 24-39. Lee, J. and Kwon, K. N., (2002). Consumers’ use of credit cards: Store credit card usage as an alternative payment and financing medium. Journal of consumer affairs, 36(2), pp. 239-262. Milne, A. (2006). What is in it for us? Network effects and bank payment innovation. Journal of banking & finance, 30(6), pp. 1613-1630. Norum, P. S. (2008). The role of time preference and credit card usage in compulsive buying behaviour. International journal of consumer studies, 32(3), pp. 269-275. Thomas, L. C., Oliver, R. W., & Hand, D. J. (2005). A survey of the issues in consumer credit modelling research. Journal of the operational research society, 56(9), pp. 1006-1015. Thornton, J. and White, L. (2001). Customer orientations and usage of financial distribution channels. Journal of services marketing, 15(3), pp .168-185. Read More