Aadvantages and disadvantages of plastic money
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PLASTIC MONEY Plastic money is a term that is used predominantly in reference to the hard plastic cards we use everyday in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, pre-paid cash cards and store cards.
The Seven Advantages of plastic money called as the Credit Card. Their popularity is clear: More than 80% of U.S. households have at least one credit card. And we certainly give our cards a workout. ... You won't get socked with a late fee or have your credit report marked with a delinquency.
Plastic money has become the order of the day. Whether it's a high-end store, a restaurant, a café outlet or even a grocery shop, people just buy what they like (not just what they want), proudly taking out their cards and allowing the shopkeeper to swipe away a fortune of their hard-earned money. You might claim that with plastic money around, you do not need to carry your cash and there is no fear of being robbed as well. At the same time, it is easy to use. However, believe it or not, there are a large number of disadvantages associated with using plastic money. Still, if you use it wisely and maintain a balance between paper and plastic money, the results can be otherwise. In the following lines, we have listed the disadvantages of using plastic money.
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The Seven Advantages of plastic money called as the Credit Card. Their popularity is clear: More than 80% of U.S. households have at least one credit card. And we certainly give our cards a workout. ... You won't get socked with a late fee or have your credit report marked with a delinquency.
Plastic money has become the order of the day. Whether it's a high-end store, a restaurant, a café outlet or even a grocery shop, people just buy what they like (not just what they want), proudly taking out their cards and allowing the shopkeeper to swipe away a fortune of their hard-earned money. You might claim that with plastic money around, you do not need to carry your cash and there is no fear of being robbed as well. At the same time, it is easy to use. However, believe it or not, there are a large number of disadvantages associated with using plastic money. Still, if you use it wisely and maintain a balance between paper and plastic money, the results can be otherwise. In the following lines, we have listed the disadvantages of using plastic money.
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Convenience of Plastic Money
Peter, a young MBA graduate joins a large software firm as a Business Development Executive. His job involves frequent travelling and meeting with leads and clients to develop business for the organization. This requires him to spend a lot on travel, food, stay, etc and keep track of his expenses.
Since he may require a lot of cash for inter-city travel which can span a few days or weeks he preferred to use his debit card or credit cards.
For instance he could use his card to pay for hotel stays where cards were commonly accepted. Similarly for travel he could book tickets online, while for food he had to rely on cash.
However, with his debit card he could withdraw cash whenever required which made his life easier. Even if he forgets to carry cash he can use his debit card to withdraw funds whether required.
Advantages of Plastic Money
There are several advantages of plastic money as seen in the above illustration. The advantages include
Eliminates the need for carrying huge cash: This eliminates the need for carrying huge load of cash which is risky and inconvenient too.Risk of Loss or Theft minimized: In case of cash there is a high risk of losing cash and a chance of cash getting stolen. However, in case of debit/credit card you can report the matter to the bank and block the card to avoid misuse.Anytime/Anywhere Access Using cards you have the unique advantage and convenience of using it anywhere in the country or even abroad.Credit Facility: In case of credit card you have the option of buying on credit or paying later. Although the charges are high, it helps you in case of emergencies and contingencies.Online Payments: You can use cards for online payments, fund transfers and various other transactions.
These are the key benefits which I can easily remember, but there could be various other good features too that are specific to certain cards.
Disadvantages of Plastic Money
So far I’ve been sounding like a nice, pleasant Bank Executive who is convincing you to open an account. Please note a few points before we look at the disadvantages of plastic money
Cards/plastic money is not a complete replacement for cashUse of cards can also be risky in some cases
Note: I’m not saying that cards are not useful because of these drawbacks. The disadvantages are just to make you aware of any risks, threats, etc so that you can use it carefully.
Some of the drawbacks or risk related to cards are
1. Non-Acceptance at Small Retail Outlets
Unless you are a person who shops only in supermarkets and hypermarkets you will be forced to use cash
2. Cannot be used for all daily needs
You cannot pay your milkman, servant, paper wala (newspaper guy), etc by card.
3. Loss & Misuse
Once a card is lost you have to immediately report it and get the card blocked to avoid misuse. Sometimes when you are not aware that you lost the card….the chances of misuse is higher.
Mr. Dev, who was on a vacation returned home after 10 days. He was not aware of his card (which he lost during the trip). One fine day when he checked his bank account he found that Rs.75,000 worth of purchases have been made on his credit card. Too late. But this case is a little old.
Today lot of checks and balances have been put in place. For instance for debit card the customer has to key in the PIN for offline purchases, and additional passwords/authentication for online transactions. Even then taking precautions is absolutely necessary.
4. Low Value Transactions
As discussed above already there are cases where small and medium sized retailers don’t accept cards for low value transactions (say less than Rs.200 or other criteria). You may have noticed this even in case of outlets like petrol bunks or restaurants.
5. Service Charges
In some cases the outlets charge additional service charges for cards. So this can be another burden on your pocket.
6. Damage to Card
Sometimes the card’s magnetic strip gets damaged or scratches or cuts can render the card unusable. So keeping it safe and secure is very important.
7. Carrying or Keeping the Card
Keeping the card and cash in the wallet together is like “inviting trouble”. This is the way everyone (including me) used to carry cash and cards. But this means once you lose your wallet you lose everything.
So here the card doesn’t come to your rescue after losing cash. The best practice is to keep cash and cards separately so that if you lose one you have the other to bank upon.
By the way, nowadays I don’t carry cards in my wallet. Its mostly in the bag or sometimes in a different pocket. You can try this or other methods but ensure that you don’t keep everything in one place and lose it all.
Now that we have a clear idea of some of the drawbacks of credit and debit cards lets also look at some key points on how to strike a balance between use of cash, cards and
Peter, a young MBA graduate joins a large software firm as a Business Development Executive. His job involves frequent travelling and meeting with leads and clients to develop business for the organization. This requires him to spend a lot on travel, food, stay, etc and keep track of his expenses.
Since he may require a lot of cash for inter-city travel which can span a few days or weeks he preferred to use his debit card or credit cards.
For instance he could use his card to pay for hotel stays where cards were commonly accepted. Similarly for travel he could book tickets online, while for food he had to rely on cash.
However, with his debit card he could withdraw cash whenever required which made his life easier. Even if he forgets to carry cash he can use his debit card to withdraw funds whether required.
Advantages of Plastic Money
There are several advantages of plastic money as seen in the above illustration. The advantages include
Eliminates the need for carrying huge cash: This eliminates the need for carrying huge load of cash which is risky and inconvenient too.Risk of Loss or Theft minimized: In case of cash there is a high risk of losing cash and a chance of cash getting stolen. However, in case of debit/credit card you can report the matter to the bank and block the card to avoid misuse.Anytime/Anywhere Access Using cards you have the unique advantage and convenience of using it anywhere in the country or even abroad.Credit Facility: In case of credit card you have the option of buying on credit or paying later. Although the charges are high, it helps you in case of emergencies and contingencies.Online Payments: You can use cards for online payments, fund transfers and various other transactions.
These are the key benefits which I can easily remember, but there could be various other good features too that are specific to certain cards.
Disadvantages of Plastic Money
So far I’ve been sounding like a nice, pleasant Bank Executive who is convincing you to open an account. Please note a few points before we look at the disadvantages of plastic money
Cards/plastic money is not a complete replacement for cashUse of cards can also be risky in some cases
Note: I’m not saying that cards are not useful because of these drawbacks. The disadvantages are just to make you aware of any risks, threats, etc so that you can use it carefully.
Some of the drawbacks or risk related to cards are
1. Non-Acceptance at Small Retail Outlets
Unless you are a person who shops only in supermarkets and hypermarkets you will be forced to use cash
2. Cannot be used for all daily needs
You cannot pay your milkman, servant, paper wala (newspaper guy), etc by card.
3. Loss & Misuse
Once a card is lost you have to immediately report it and get the card blocked to avoid misuse. Sometimes when you are not aware that you lost the card….the chances of misuse is higher.
Mr. Dev, who was on a vacation returned home after 10 days. He was not aware of his card (which he lost during the trip). One fine day when he checked his bank account he found that Rs.75,000 worth of purchases have been made on his credit card. Too late. But this case is a little old.
Today lot of checks and balances have been put in place. For instance for debit card the customer has to key in the PIN for offline purchases, and additional passwords/authentication for online transactions. Even then taking precautions is absolutely necessary.
4. Low Value Transactions
As discussed above already there are cases where small and medium sized retailers don’t accept cards for low value transactions (say less than Rs.200 or other criteria). You may have noticed this even in case of outlets like petrol bunks or restaurants.
5. Service Charges
In some cases the outlets charge additional service charges for cards. So this can be another burden on your pocket.
6. Damage to Card
Sometimes the card’s magnetic strip gets damaged or scratches or cuts can render the card unusable. So keeping it safe and secure is very important.
7. Carrying or Keeping the Card
Keeping the card and cash in the wallet together is like “inviting trouble”. This is the way everyone (including me) used to carry cash and cards. But this means once you lose your wallet you lose everything.
So here the card doesn’t come to your rescue after losing cash. The best practice is to keep cash and cards separately so that if you lose one you have the other to bank upon.
By the way, nowadays I don’t carry cards in my wallet. Its mostly in the bag or sometimes in a different pocket. You can try this or other methods but ensure that you don’t keep everything in one place and lose it all.
Now that we have a clear idea of some of the drawbacks of credit and debit cards lets also look at some key points on how to strike a balance between use of cash, cards and
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