Anatomy of a Credit Card Transaction in 10 seconds

CREDIT CARD INFOGRAPH THE ANATOMY OF A CREDIT CARD TRANSACTION ASSUME YOU ARE A SHOPPER Customer (You) Merchant's Bank Issuer iiI (Your Bank) Credit Card Company Merchant >> STORE >> VISA 1. You swipeyour 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. The credit card company contacts your bank and 4. validates that your card is valid. 3. K Upon confirmation, the credit card company notifies the merchant's bank, which approves VISA >> >> dsturgarn your transaction 4. All this happens in less than 10 Seconds Ở VISA DFRESS 5. >> WHAT HAPPENS NEXT? Credit Card Company Customer Merchant's Issuer Merchant (You) Bank (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 (PHP600 to RPHP5,000) Cash advance fee (1% to 6%) Late payment fee (3.9% to 7.5%) d. a. Avoid cash advances b. c. Excess limit fee (PHP120 to PHP500) Varying fee for card replacement e. Pay your debt by the due date 2. Interest on outstanding balance Pay more than the minimum monthly payment a. 2% to 3.5% 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? 1 YEAR, 10 MONTHS TOTAL INTEREST: PHP2,850 4 YEARS 4 MONTHS, TOTAL INTEREST: PHP25,650 PHP10,000 PHP50,000 3 YEARS, 6 MONTHS TOTAL INTEREST: PHP14,250 5 YEARS 5 MONTHS, TOTAL INTEREST: PHP54,150 PHP30,000 PHP100,000 Assuming an interest rate of and minimum payment of 5% or P500 3% WHAT TO DO IF YOU ARE IN DEBT iMoney STATS 122 ! Cut Expenses • Total Cards Compared ! Turn to Family & Friends • 3.12% Average Interest Rate ! Seek Help from Debt Counseling Agency • PHP1846 Average Annual Fee TYPES OF CREDIT CARDS CASHBACK REWARDS PETROL TRAVEL Gives you $ back when you spend. Gives you loyalty point when you spend Gives you petrol / fuel discounts when you spend. Gives you travel discounts / air miles when you spend. PREMIUM SPECIALTY Premium privileges e.g. dining, golf, lounge access. Music, sports, lifestyle & more. INFOGRAPHIC DESIGN BY iMonev.mY & spurpress .com >>