The Anatomy of A Credit Card Transaction

CREDIT CARD INFOGRAPH THE ANATOMY OF A CREDIT CARD TRANSACTION ASSUME YOU ARE A SHOPPER Merchant's Bank Credit Card Company Customer Issuer (You) Merchant iiI (Your Bank) >> STORE >> VISA 1. You swipe your card at the cashier 2 The credit card reader sends key information to the shop owner's bank (i.e. the merchant's 1. bank). The merchant's bank verifies the transaction, 3. and sends the purchase information to the BANK relevant credit card company. 4. The credit card company contacts your bank and validates that your card is valid. 3. K Upon confirmation, the credit card company notifies the merchant's bank, which approves VISA >> >> urgar your transaction 4. All this happens in less than 10 Seconds Ở VISA DFRESS 5. >> WHAT HAPPENS NEXT? Merchant's Bank Credit Card Company Customer Issuer Merchant (You) (Your Bank) STORE >> >> 6. 6 On payment due date, the shop owner gives his bank all the transaction receipts STORE 7 The bank pays the shop owner the total receipt 7. amount, and at the same time, sends a payment request to the credit card company Q The credit card company pays the shop owner's bank, and concurrently sends a payment request to your bank. O Your bank pays the credit card company, and proceeds to charge you for the amount you owe on your purchases. 8. BANK BANK BANK 9. >> >> >> HOW BANKS & CREDIT CARD COMPANIES MAKE MONEY YOUR CREDIT CARD FEES HOW TO MINIMIZE 1. Fees Shop around for the best deal Annual fee (s$0 to S$250) Cash advance fee (5% to 8%) Late payment fee (S$55) Fee for overseas transactions (1%) a. b. Avoid cash advances C. e. Pay your debt by the due date 2. Interest on outstanding balance Pay more than the minimum monthly payment a. 20% to 24% Transaction fee (charged to merchants) a. 1% to 5% 4. Customer list monetization (e.g. rent / sale of mailing list) IF YOU ONLY PAY THE MINIMUM HOW LONG DOES IT TAKE TO PAY OFF YOUR CREDIT CARD? 5 YEARS 2 MONTHS. TOTAL INTEREST: S$1,623 8 YEARS 6 MONTHS. TOTAL INTEREST: S$6,290 S$3,000 S$10,000 6 YEARS 7 MONTHS. TOTAL INTEREST: S$2,957 13 YEARS. TOTAL INTEREST: S$32,956 S$5,000 S$50,000 Assuming an interest rate of 24% WHAT TO DO IF YOU ARE IN DEBT iMoney STATS SINGAPORE ! Cut Expenses • 85 Total Cards Compared ! Turn to Family & Friends • 23.78% Average Interest Rate • S$122 ! Seek Help from a Debt Average Annual Fee Counseling Agency TYPES OF CREDIT CARDS IN SINGAPORE REWARDS CASHBACK TRAVEL Gives you loyalty point when you spend Gives you $ back when you spend. Gives you travel discounts / air miles when you spend. INFOGRAPHIC DESIGN BY iMoney & spurpress SINGAPORE >>