Jan
18
Consumer Credit - All About It!
Filed Under Credit
Abhishek Agarwal asked:
Consumer credit is really nothing new. It existed in an informal fashion in the earlier days, where your neighborhood grocer would give you your requirements and you paid up at a particular time. That was based on his instinct of what you were and how you behaved.
In its modern form, it began sometimes between the 1946 and 50s when two people went to dinner and found they had no cash to pay at the restaurant. Thus began the Diners Club, exclusively for use in resturants. Just like plants, hybrids have grown to where it is now.
Obviously, given the lucrative nature of the market,loan sharks, so called, for their high rates of interest, and arm twisting tactics to get their money back,had a field day, till Government/s were forced to step in.
You don’t carry cash; you pay by credit card. The merchant gets his sum instaneously, and you pay the credit issuer after 30 days or so. The cost of the transaction is covered by its usage by multi milion people across the world, and through the annual charge for possessing it. If you are late in payment after the stipulated date, you pay an additional surcharge. Based on the volume of business that is now driven by credit cards, multibillion dollar industry has been created.
You have options too. You can ask for a staggered payment plan for expensive items that you wish to purchase, but don’t have the immediate wherewithal, and the issuer steps and guarantees it to the dealer, and the issuers charges a fee through which the cost of money is recovered.
The other part is handled by banks themselves, in cases of high values, like house mortgages, cars, expensive equipment for small and medium businesses, etc.
Used wisely, it is a great boon for everybody;unwisely leads to trouble. Further, because of its flexibility, it drives the national economy, creating demand for industry for its high value goods and services. But yet there is danger, which we have just seen in the crash of the sub prime mortgage markets. The financial institutions and the debt market have become so inter-twined that the crisis is rocking the foundations of the American banking system.
Not surprisingly, even bad credit has thrown up a whole array of specialists, experts, mediators, intermediaries, who help re-finance and restructure debt.
There is a slew of legislation, both Federal and State, to protect the consumer, and at the same time maintaining the balance between the fiduciary relationship between the cardholder and the finance provider.
The Uniform Consumer Credit Code
Caffeinated Content
Consumer credit is really nothing new. It existed in an informal fashion in the earlier days, where your neighborhood grocer would give you your requirements and you paid up at a particular time. That was based on his instinct of what you were and how you behaved.
In its modern form, it began sometimes between the 1946 and 50s when two people went to dinner and found they had no cash to pay at the restaurant. Thus began the Diners Club, exclusively for use in resturants. Just like plants, hybrids have grown to where it is now.
Obviously, given the lucrative nature of the market,loan sharks, so called, for their high rates of interest, and arm twisting tactics to get their money back,had a field day, till Government/s were forced to step in.
You don’t carry cash; you pay by credit card. The merchant gets his sum instaneously, and you pay the credit issuer after 30 days or so. The cost of the transaction is covered by its usage by multi milion people across the world, and through the annual charge for possessing it. If you are late in payment after the stipulated date, you pay an additional surcharge. Based on the volume of business that is now driven by credit cards, multibillion dollar industry has been created.
You have options too. You can ask for a staggered payment plan for expensive items that you wish to purchase, but don’t have the immediate wherewithal, and the issuer steps and guarantees it to the dealer, and the issuers charges a fee through which the cost of money is recovered.
The other part is handled by banks themselves, in cases of high values, like house mortgages, cars, expensive equipment for small and medium businesses, etc.
Used wisely, it is a great boon for everybody;unwisely leads to trouble. Further, because of its flexibility, it drives the national economy, creating demand for industry for its high value goods and services. But yet there is danger, which we have just seen in the crash of the sub prime mortgage markets. The financial institutions and the debt market have become so inter-twined that the crisis is rocking the foundations of the American banking system.
Not surprisingly, even bad credit has thrown up a whole array of specialists, experts, mediators, intermediaries, who help re-finance and restructure debt.
There is a slew of legislation, both Federal and State, to protect the consumer, and at the same time maintaining the balance between the fiduciary relationship between the cardholder and the finance provider.
The Uniform Consumer Credit Code
Caffeinated Content
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