CREDIT & DEBIT CARDS (ALSO CALLED ‘PLASTIC MONEY’)

Question 1

What is a credit card?

Answer 1

A line of credit extended by a bank
Allows you to borrow money up to a limit
You’ll need to pay interest on any outstanding balance
Can be used for online and in-store purchases

Question 2

What is a debit card?

Answer 2

Linked directly to your checking account
Deducts money immediately from your balance when you make a purchase
Doesn’t usually offer rewards or help build credit

Question 3

What is an overdraft?

Answer 3

A feature on some checking accounts that allows you to spend more than you have in your account, up to a limit
Incurs fees
Best used as an emergency safety net

Question 4

When is it best to use a credit card?

Answer 4

Larger purchases you want to pay off over time
When you want to take advantage of rewards programs
To start building your credit history

Question 5

When is it best to use a debit card?

Answer 5

Everyday spending
If you want to avoid debt and stay within your budget
When you don’t need the benefits of rewards or credit building

Question 6

What is the main difference between a credit card and a debit card?

Answer 6

A credit card lets you borrow money for purchases with interest charged on the balance.
A debit card is linked to your bank account and uses your existing funds.

Question 7

Can you withdraw cash from an ATM using a credit card?

Answer 7

Yes, but it’s treated as a cash advance and often comes with additional fees and higher interest rates than regular purchases.

Question 8

What is an advantage of using a credit card?

Answer 8

Potential rewards like points or cashback
Can help build credit history if used responsibly
May offer purchase protection or extended warranties

Question 9

What is a potential disadvantage of using a credit card?

Answer 9

Can lead to debt if overspending occurs
High interest rates on unpaid balances
Can negatively impact your credit score if not managed well

Question 10

What is a hybrid/duo card?

Answer 10

A single card with two chips, functioning as both a credit and debit card.
Provides the convenience of carrying just one card.
Example: IndusInd Bank Hybrid Card

Question 11

Describe a prepaid card.

Answer 11

A type of debit card not directly linked to a bank account.
Can be purchased even without a traditional bank account.
Often used for specific purposes (e.g., travel, online shopping).
Example: IRCTC UBI Prepaid Card

Question 12

What are the advantages of a hybrid card?

Answer 12

Convenience: Eliminates the need to carry multiple cards.
Flexibility: Offers both credit and debit payment options.

Question 13

What are some use cases for a prepaid card?

Answer 13

Travel: Convenient for budgeting and currency exchange.
Online shopping: Provides security for online transactions.
Gifting: A flexible gift option.
Budgeting: Helps control spending.

Question 14

What is tokenization?

Answer 14

Tokenization is a security process where sensitive credit or debit card data (like your card number) is replaced with a randomly generated string of numbers called a “token”.

Question 15

Why is tokenization important?

Answer 15

Tokenization protects your card information during online transactions. Even if a merchant’s website is hacked, the stolen tokens are useless to the hackers because they don’t reveal your actual card details.

Question 16

How do I obtain tokens for my card?

Answer 16

You can usually generate tokens through your bank or card issuer’s website or mobile app.

Question 17

When did tokenization become widely adopted?

Answer 17

Tokenization became more widely effective as a security measure from October 1, 2022.

Question 18

Can you provide an example of how tokenization works?

Answer 18

Yes! Let’s say your card number is 1234-5678-9012-3456. Through tokenization, this might be replaced with a token like 8753-2948-1039-5723. When you shop online, the merchant only receives and stores the token, not your real card number.

Question 19

What are CVC-Less Transactions?

Answer 19

Online transactions where customers don’t have to input the Card Verification Code (CVC) every time.
Made possible by the Reserve Bank of India’s (RBI) tokenization guidelines.
After initial card tokenization, merchants don’t store the CVC, enhancing security.

Question 20

How do CVC-less transactions work?

Answer 20

Tokenization: The customer’s card details are replaced with a unique digital token during the first transaction.
Subsequent Transactions: The customer selects the tokenized card and confirms with a one-time password (OTP), eliminating the need to enter the CVC repeatedly.

Question 21

What is the National Common Mobility Card (NCMC)?

Answer 21

A project by India’s Ministry of Housing & Urban Affairs (MoHUA)
Aims to create a single, interoperable card for various transportation systems (trains, buses, etc.)
Promotes the ‘One Nation, One Card’ model for seamless travel.

Question 22

What are the benefits of NCMC?

Answer 22

Convenience: One card for multiple transport modes.
Cost-effective: May reduce the need to buy multiple tickets or passes.
Efficiency: Could streamline fare collection and reduce travel delays.
Data insights: Can help in better transport planning and decision-making.

Question 23

What is a FASTag?

Answer 23

A FASTag is a prepaid, rechargeable tag that allows automatic toll payments at toll plazas using RFID technology.

Question 24

How does FASTag technology work?

Answer 24

FASTags use Radio-frequency Identification (RFID). The tag on your vehicle communicates with a scanner at the toll plaza, and the toll amount is automatically deducted from your linked account.

Question 25

What organization launched the FASTag initiative in India?

Answer 25

The National Highways Authority of India (NHAI)

Question 26

Name two mobile apps associated with FASTags in India.

Answer 26

MyFASTag FASTag Partner

Question 27

What is NETC?

Answer 27

NETC stands for National Electronic Toll Collection. It's the technology developed by NPCI to make FASTag toll collection work across India.

Question 28

Describe the basic process of using a FASTag.

Answer 28

Purchase a FASTag and link it to a prepaid account (bank account or mobile wallet). Affix the FASTag to your vehicle's windshield. When you pass through a FASTag-enabled toll plaza, the RFID scanner automatically detects the tag. The toll amount is deducted from your prepaid account.

Question 29

What are the primary benefits of using FASTags?

Answer 29

Reduced congestion: Automatic toll deduction speeds up traffic flow. Convenience: No need to fumble with cash or wait for change. Transparency: Account statements provide a clear record of toll transactions. Potential for other uses: FASTags could be expanded for use in parking and fuel payments in the future.

Question 30

When did FASTags become mandatory in India?

Answer 30

FASTags became mandatory for all vehicles at national highway toll plazas in 2021.

Question 31

What happens if a vehicle doesn't have a FASTag?

Answer 31

Vehicles without FASTags are permitted to pass through toll plazas, but they are charged double the toll fee.

Question 32

What are some possible future developments or expansions for FASTag technology?

Answer 32

Parking payments: FASTags could be used to pay for parking in public areas. Fuel payments: Integration with gas stations could allow FASTags as a payment method. Other toll roads: The technology could be adopted for state highways or private toll roads.

Question 33

What is RFID technology, and how does it relate to FASTags?

Answer 33

RFID (Radio-Frequency Identification): A technology that uses radio waves to wirelessly identify and track objects or people. RFID systems have two main parts: RFID Tags: Small chips with an antenna that store unique data. RFID Reader: A device that emits radio waves to read and possibly modify the data on the tags. FASTag Connection: FASTags are a specific type of RFID tag attached to vehicles. Toll plazas have RFID readers that scan the FASTag as a vehicle passes through. This scan identifies the vehicle and links it to the prepaid account for automatic toll deduction.