Plastic money Essay

Plastic money is a term that is used predominantly in reference to the hard plastic cards we use every day in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, pre-paid cash cards and store cards. Introduction: A slang phrase for credit cards, especially when such cards used to make purchases. The â€Å"plastic† portion of this term refers to the plastic construction of credit cards, as opposed to paper and metal of currency. The â€Å"money† portion is an erroneous reference to credit cards as a form of money, which they are not. Although credit cards do facilitate transactions, because they are a liability rather than an asset, they are not money and not part of the economy’s money supply. Plastic money is the alternative of cash or the standard ‘money’. Plastic money is used to refer to the credit cards, debit cards that we use to make purchases in our everyday life. Plastic money is much more convenient to carry around as you do not have to carry a huge some of money with you. It is also much safer to carry it along or to travel with it as if it is stolen one can consult the bank whose service you are using and get it blocked hence saving your money from getting stolen or even lost. Plastic money or polymer money, made out of plastic, is a new and easier way of paying for goods and services. Plastic money was introduced in the 1950s and is now an essential form of ready money which reduces the risk of handling a huge amount of cash. It includes debit cards, ATMs, smart cards, etc. Nowadays even developing countries like India are encouraging the use of this plastic money more than cash due to these reasons. Furthermore these credit and debit cards also have plastic used in their making and that is where the name ‘plastic money’ has originated from. Anonymous In today’s materialistic world, every one is running behind money or you can say that the whole world is running behind money. In addition, these days, things have become costlier and with out hard cash it is difficult to make any outright purchase, if you are an impulsive buyer. Nevertheless, with ‘Plastic Money’, i.e. Payment Cards, you can do it without carrying any money on you. There is no burden of carrying a bunch of notes, no fear of loosing or forgetting the wallet at home. Welcome to the age of ‘Plastic Money’. Different Types of Plastic Money. Cash Cards – A card that will allow you to withdraw money directly from your bank via an Authorized Teller Machine (ATM) but it will not allow the holder to purchase anything directly with it. Credit Cards – Again this card will permit the card holder to withdraw cash from an ATM, and a credit card will allow the user to purchase goods and services directly, but unlike a Cash Card the money is basically a high interest loan to the card holder, although the card holder can avoid any interest charges by paying the balance off in full each month. Debit Cards – This type of card will directly debit money from your bank account, and can directly be used to purchase goods and services. While there is no official credit facility with debit cards per se, as it is linked to the bank account the limit is the limit of what is in the account, for instance if an overdraft facility is available then the limit will be the extent of the overdraft. Pre-paid Cash Cards – As the name suggests the user will add credit to the card themselves, and will not exceed that amount. These are usually re-useable in that they can be ‘topped up’ however some cards, usually marketed as Gift Cards are not re-useable and once the credit has been spent they are disposed of. Store Cards – These are similar in concept to the Credit Card model, in that the idea is to purchase something in store and be billed for it at the end of the month. These cards can be charged at a very high interest rate and can are limited in the places they can be used, sometimes as far as only the store brand that issued it. Advantages: You don’t have to carry cash. You can have your job’s check directly deposited into the bank. You can buy what you want without having the money right then to buy the item as long as you do not go over the card’s limit. In unexpected financial emergencies, cards can be used to pay for what you need. Wise use is beneficial to your credit report. Disadvantages: They encourage overspending You can get in too much debt, leading to filing bankruptcy. Cards often have extra or hidden fees and high interest rates. Using credit and debit cards puts you at higher risk of identity theft than using cash. Cards might be lost.