Theoretical Framework

1.1 DEFINITION OF CREDIT CARDS

The word credit comes from the Latin credititus (the nominal form of the verb credere:
create), which means 'entrusted thing'. Thus, 'credit' in its origin means among others
things, to trust or have confidence. Considering credit, the right that one has to
Creditor entitled to receive from another debtor a sum of money for others.
In general, the exchange of present wealth for future wealth, based on the
trust and solvency granted to the debtor. Credit, according to some
Economists, it is a type of exchange that acts over time instead of acting
in space. It can be defined as 'the change of a present wealth for
a future wealth.

In economic and financial life, credit is understood, therefore, as the

trust you have in the ability to fulfill, in the possibility, willingness and
solvency of an individual, as it refers to the fulfillment of an obligation
contracted.

1. ORIGIN OF CREDIT CARDS

It is usually talked about the first card as the one that came out, Diners Club.
Its founder, Frank X. McNamara, went to dinner at a restaurant where
curiously they were talking about a client who was having problems with making
He faced his payments. But he realized that he had forgotten to bring enough.
money to pay the bill.

Seeing that it was a very embarrassing situation, he founded the company Diners Club (the
Delos club what they are going to have dinner). It was originally intended to be used as
half payment in restaurants, for this Mr. McNamara had to convince
many restaurants that will accept your card.

Although the story of McNamara is known, the truth is that the credit card
it was not your invention. According to this 'working paper' from the Federal Reserve
Philadelphia, credit cards began to be issued since the first decade
of the twentieth century. Initially, they were issued by oil companies and large
warehouses, but they were not very successful since they could only be used in
geographic areas and specific establishments.

As for the history of bank cards, it dates back to the year 1914.
when Western Union issued the first consumer credit card, but
particularly to their preferred customers. Until the first half of the century, other
companies such as hotels, department stores, and gas stations
They issued credit cards for their clients.
After World War II, new ones emerged with renewed impetus.
cards. But it wasn't until 1950 that the Diners Club card was released, which a
the same credit card was accepted by a variety of businesses. In 1951 the
Franklin National Bank of Long Island, New York, issued a card that was
accepted by local businesses and shortly after by around 100 banks. Without
embargo, how are you, they only worked for an area of the local bank, 'very
few could generate enough profits for the banks, so many
they disappeared as quickly as they emerged.
Based on those pioneers, local banks in the United States of
North America ventured to issue their own credit cards as
substitutes for the check. By the 1960s new modalities were offered.
deferred payment on the balances to be paid, which offered additional income and greater
profitability to the banks, which unite in associations or through agreements
Throughout the North American territory, they were able to issue common credit cards.
creating a national character system, from where arose the ones that are today
large card companies that operate under the

MasterCard International and Visa International names, in the case of Visa, their
The background dates back to 1958 when Bank of America began to
issue the Bank America credit card in the United States.

In other countries around the world, new card programs will be launched.
always managed by banks or by associations of financial institutions,
creating global credit card systems.

The creation of the credit bank card is nothing more than the last link in the
evolutionary chain of value exchange. In addition to meeting the three
main functions of a financial intermediary, as it transfers funds;
a credit instrument and under safety aspects contributes to filling the
function of the custody of values. It is also a fact due to the progress
technological and market growth, credit cards have ceased to be
a classist instrument to penetrate the mass market, what has
created an increase in operations worldwide.

1.3 CLASSIFICATION OF CREDIT CARDS

There are different types of cards based on their nature and their final objective. The first
these genres are divided into local and international, depending on the scope
What is their capacity to carry out transactions in currency?
different from the country of origin.

In general, the so-called International Credit Cards can be used in

the purchase of items in any country in the world, while the Cards of
Local credits are limited to the execution of transactions merely in the
currency
There are also the so-called Conventional Credit Cards, which are the ones that
allow the user to pay for the expenses incurred through it, whether by
monthly installment payments and/or a revolving credit line with the limit
established by the

my issuer. If the full amount owed is paid at the end of the month, it will not be
they charge interest. However, if there is a credit balance with the bank, this
charges interest at a predetermined annual rate, which varies according to the
issuing institution.

Within this group are also the Premier Cards, which are the same as
the previous ones, but with higher credit limits, as well as certain types of
preference. They increasingly belong to a reduced market of users.
within the total market of cardholders. Another type is the Cards
Corporate bonds issued in favor of a company or institution, similar to the
private credit cards, with which articles can only be purchased within
of the issuing company itself.

The company Visa has designed a new card modality where the user
You can pay for the purchase of a good or service through immediate debit for
the bank to their personal checking account. The confirmations of these debits are
made electronically, through the same credit card system
conventional. In fact, a debit card works like an account of
paperless checks.

Amplitude and Variety

MasterCard
International
International Visa
International Classic
Local Classic
International Gold
Gold Local
Business Visa
Business MasterCard
American Express Platinum
Global
Gold

1.4 BENEFITS, ADVANTAGES, AND DISADVANTAGES OF THE USE OF

CREDIT CARDS.

Economic Benefits:
 30-day credit, automatic and interest-free.
Medium-term interest-free credit.
Automatic credit increase according to payment history.
Benefits regarding Safety:
There's no need to carry a lot of cash.
Goods and services can be acquired up to the credit limits.
Personal protection against accidents while traveling.
Comfort and Speed:

Allows cash from ATMs.

Ease of payment for services through the phone: water, electricity,
phone

Flexibility:
It allows reservations and rentals of cars and hotels.
Ease of financing through trial extra credit
up to 25% free overdraft.

Prestige and Elegance:

The cardholder is considered a legal entity and

financially solvent.

It grants the user prestige and reliability.

Control
They allow the verification and control of the expense balance.
completed.

User Advantages:

Immediate credit is offered in numerous establishments throughout the

country and of all genres for the acquisition of goods and services, without
there is necessarily some relationship between the cardholder and the
affiliated establishment.

The substitution of cash management and the use of checks through the
Issuance of a single monthly check.

The prestige it brings to the user, as it constitutes a means of

identification and reliability, understanding that every holder of a
the credit card has been duly cleared and can be considered as such
a person economically and morally solvent.
It helps improve the management of one's own money and for control.
budgetary.