Merits And Demerits Of Plastic Money (Essay Sample)

When we think of Plastic Money the first thing we think about are credit cards. In general, plastic money is defined as reference to plastic cards used instead of the usual bank notes and it may come in different forms: cash, credit, debit, pre-paid cash, and in-store cards.

By definition, a cash card allow you to withdraw money, which you have deposited into your bank account, via an Automated Teller Machine (ATM) or over-the-counter. In some parts of the world, a cash card or ATM card are defined differently wherein a debit card will allow you to purchase and make refunds or any other transactions online as well as directly and in-store cards purchased directly from stores will not allow you to have a refund with the ATM card since you must be there in person to validate your identity. In some countries, the functions of ATM cards or cash cards and debit cards are combined into the debit card and will allow you to withdraw money from ATMs and make a direct transaction using your assigned PIN (though in some countries, a single swipe is alright without having the need to input the PIN).

Credit cards, much like a debit card, allows the owner to withdraw money from an ATM and allow them to purchase products and services via directly and online; however, the use of credit card is typically on high loan, which means that though the person can purchase, he or she must pay the full balance of the item they purchased (to avoid interest charges) or part by part each month. Credit cards also allow the user to grant credits to the consumer in borrowing money for paying a merchant or cash advancing to the owner. In some countries, a credit card has a certain credit limit which means that you can only purchase goods and services along that limit and you are unable to purchase any other products until you are able to pay off your credit or debt.

There are certain merit and demerits of using plastic card, in this part it is credit cards, for the customers. The first of them is convenience since plastic cards are highly portable and will allow you to carry them anywhere and do transaction anytime so as long as there are visible ATMs or transact directly when purchasing. Plastic cards allow short term credit to customers which in its own allows the customer to avoid full payment so should there any be trouble to the product, they can avoid scam or false warranty. A credit card allows more security than debit cards since bank tellers or anyone associated with handling your account will call you should there be suspicious purchases done in your account. Certain banks offers myriads of bank rewards and benefits packages so availing their credit card has a lot of perks.

The use of credit cards have demerits much like debit cards and these are the high interest you need to pay at the end of each month should you fail to pay the full price which often leads to the declaration of bankruptcy of the owner. The pricing are also inflated since purchased goods and services via card tend to have a different price. The use of credit cards will eventually destroy the person’s self-regulation since they will not be able to control their purchasing because of the card’s ability to give you freedom in doing so.

Having a debit card gives you a lot of advantages such as the customer who is not able to avail a credit card will due to poor creditworthiness may avail them. The transactions are finalized on a single purchase only unlike a credit card which has to be paid on a monthly basis. The identification during transaction is less interrogating wherein you can purchase fast. Additionally, a debit card allows you to withdraw money from an ATM or any PIN-based transaction without any interest or other extra charges. The only real disadvantage posed by using debit cards is that the amount of goods and services you can purchase is based on the amount of cash your card holds so if you run out of dough, you are not able to purchase anything anymore unlike a credit card.

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