CONSUMER

1. hire purchase
use of 2. extended
credit Different payment
meaning - credit
‘buy now, pay later’
CREDIT types of
3. store cards
4. informal
credit credit
5. credit card

meaning - consumer durables buyer seller reasons for

goods that are expensive increase of credit
and that last a reasonable
period of time pros - buyer pros - seller
1. obtain goods immediately 1. may increase in 1. the payments
2. payment can be postponed sales
3. can achieve high standard of 2. their stocks may be can be
meaning - customer credits living cleared quickly postponed
4. does not have to carry large
goods & services bought amount of cash in pocket 2. the buyer will
have an increase
on credit by consumers cons - seller
1. may experience of material
cons - buyer
1. they have to pay
delays in payment
2. result in bad debts wealth
meaning - credit worthiness interest
with people who
don’t repay
3. retailer can sell
2. some agreements 3. requires more more goods
how much credit the would be unfair paperwork when on
credit
for the buyer
person/ business has 4. some goods may be
returned and can be
hard to resale

by: DK.Ameerah 11A

 meaning
CONSUMER HIRE a system of credit whereby the
purchaser hires the goods but does

CREDIT PURCHASE
not own the goods until the last
payment
seller
buyer

pros - seller
CHARACTERISTICS pros - buyer 1. Boosts sales and
1. OWNERSHIP TRANSFER: Ownership of goods profitability.
1. Use goods before full payment.
Different remains with the seller until the final payment is
made.
2. Improves standard of living. 2. Expands stock and
choice.
types of 2. PAYMENT TERMS: Detailed payment schedule and
3. Enhances mobility and job
prospects. 3. Reduces wastage of
credit total purchase price are outlined in the agreement.
3. REPOSSESSION: Seller can repossess goods if
4. Access to higher quality goods.
5. Budget purchases over time.
outdated stock.
4. Provides security
buyer falls behind on payments, subject to 6. Good after-sales service. through repossession.
certain conditions based on payment percentage. 7. Convenient for cash 5. Potential for higher
4. LEGAL FRAMEWORK: Strictly controlled by buyers. profit margins.
legislation, which may vary by country.
5. WRITTEN AGREEMENT: Each item purchased requires
a signed agreement.
6. INTEREST CHARGES: High interest rates, typically
cons - buyer
1. Risk of over-commitment. cons - seller
1. hire purchase 1. Risk of bad debts from
charged as a flat rate on the total borrowed sum. 2. Difficulty in keeping up repayments. defaults.
2. extended 7. COOLING-OFF PERIOD: Buyer has a period to 3. Expensive method due to high 2. Increased administrative
payment withdraw from the agreement if signed away from interest rates. costs.
seller's premises. 4. Buyer pays significantly more 3. Challenges in reselling
3. store cards 8. TERMINATION: Buyer can terminate the agreement than cash price. repossessed goods,
4. informal with conditions on repayment status. 5. Risk of goods repossession for especially if damaged.
credit 9. RESTRICTION OF SELLING GOODS: Goods cannot be missed payments. 4. Capital tied up in debts,
sold until payments are completed. 6. Limited availability in some shops. requiring substantial
5. credit card 7. Goods may become obsolete or resources.
damaged. 5. Unpopular court actions
8. Lengthy paperwork process. may harm reputation.
9.
6. Repossession may not fully
cover costs.
 meaning
CONSUMER EXTENDED credit given whereby the buyer
becomes the owner as soon

CREDIT PAYMENT
as the goods

buyer seller
CHARACTERISTICS
1. Immediate Ownership: Consumer
Different becomes owner upon purchase, goods
pros - seller
types of cannot be repossessed. pros - buyer 1. Increased sales,
2. Limited Regulation: No written 1. Immediate ownership, especially designer
credit agreement and minimal regulation. use, and resale. goods.
3. Goods Value: Typically low second- 2. Goods cannot be 2. Lower administration
repossessed. costs compared to
hand value, often inexpensive items
hire purchase.
like clothing.
4. Down-payment: Typically requires a
down-payment, often around 25% of
1. hire purchase the total price. cons - buyer cons - seller
1. Fewer safeguards
2. extended 5. Interest-Free Period: May offer 1. No return option. against non-payment.
payment interest-free credit for a period to 2. Interest increases 2. Risk of bad debts and
3. store cards boost sales. purchase cost. non-payment.
4. informal 6. Payment by Instalments: Consumer 3. Risk of legal action 3. Inability to transfer
credit pays for goods over time in for non-payment. transaction to
finance company.
4.

5. credit card instalments.

 meaning
CONSUMER STORE a plastic card provided by a
large-scale retailer to

CREDIT CARDS
customers through which credit
is given.

buyer seller
CHARACTERISTICS
1. Issued by large retailers to encourage
Different customer loyalty. pros - seller
types of 2. Incentives like free gifts and rewards pros - buyer 1. Costs of credit
offered. 1. Cashless shopping control department.
credit 3. Additional services provided, such as convenience. 2. Non-payment and
2. Interest-free with debt recovery issues.
advance sale notices and free
delivery.
monthly payment.
3. Additional services
4. Credit limit assigned to cardholders.
offered.
5. Flexible payment options: full 4. Usable across all store
payment or partial payment with branches.
cons - seller
1. Increased sales.
1. hire purchase interest.
2. extended 2. Enhanced customer
6. Some are charge cards requiring full loyalty.
payment
payment monthly.
3. store cards
4. informal 7. Trend towards using credit cards over
store cards.
cons - buyer
1. Risk of overspending
credit
5. credit card temptation.
2. Interest charges for
unpaid balances.
3.
 meaning
CONSUMER INFORMAL credit given by small-scale
retailers to customers who are

CREDIT CREDIT
known to them

buyer seller
CHARACTERISTICS
1. Offered by small-scale
Different shopkeepers. pros - seller
types of 2. Typically given to well-known pros - buyer 1. Increased sales
1. Convenient lump-sum potential.
credit customers. payments. 2. Limited to known
3. Goods held until buyer's 2. Useful for essential customers for safety.

payday. purchases during

shortages.
4. Payment made at the end of
the week.
5. Payment arrangements for
cons - seller
1. No interest earned.
1. hire purchase
2. extended items like milk or newspapers. cons - buyer
1. Availability limited to
2. Risk of bad debts.
3. Storage required for
payment 6. Records kept but avoids small known customers. reserved goods.
3. store cards
4. informal
individual payments. 2. Risk of losing access 4. Record-keeping
if forgetful. burden.
credit 3.
5. Delay in receiving
5. credit card payments.
 meaning
CONSUMER CREDIT a card that is used to obtain
goods and services without

CREDIT CARD
making payment at the time of
purchase.

cardholder businesses
CHARACTERISTICS
1. Plastic cards with cardholder's details.
Different 2. Global use and popularity.
pros - business
types of
3. Issued by credit card companies like MasterCard
and Visa. pros - cardholder
1. Instant, convenient credit
1. Increased sales and
competitiveness.
credit 4. Businesses and individuals can apply.
5. Credit limit determined by income and usage. usage. 2. Reduced need for
6. Purchases made using chip and PIN or signature. 2. Safer than carrying cash. cash, lowering risks.
7. Monthly statements provided to cardholders. 3. Up to eight weeks' free credit.
8. Interest charged on unpaid balances. 4. Widely accepted globally.
9. Minimum repayment required monthly. 5. Zero per cent interest offers.
10. Commission charged to businesses by credit card 6. Cash advances available.
companies.
11. Various benefits like purchase protection and 24-
cons - business
1. Commission charged
1. hire purchase
2. extended hour assistance.
12. Offered by major banks, stores, and charities.
cons - cardholder
1. Limited acceptance in
by credit card
companies.
payment 13. Some cards offer introductory interest rates or
some areas. 2. Increased paperwork
3. store cards rewards.
2. Higher interest rates. and record-keeping.
4. informal 14. Multiple payment methods available. 3. Additional time
credit 15. Additional charges for exceeding credit limits or
3. Temptation to
overspend. required for security
5. credit card late payments.
checks.
4. Potentially higher prices
due to commissions.
5. Risk of theft or fraud
liability if not reported
promptly.
6.
 Security of credit card and credit card fraud
1. Increased protection for online payments by Visa
and MasterCard.
2. Participation in security systems like MasterCard
SecureCode and Verified by Visa.
3. Use of unique passwords for online transactions.
4. Implementation of chip and PIN system to
authenticate cardholder identity.
5. Fraud detection systems monitoring for unusual
activity.
6. 24-hour worldwide assistance for lost or stolen
cards.
7. Insurance coverage against misuse of lost or stolen
cards.
8. Cardholder precautions:
Never disclose PIN.
Keep card details secure during transactions.
Shred unwanted cards and statements.
Ignore unsolicited emails about PINs.
Shield PIN entry in public.
Provide card details only in initiated calls.
Use secure websites with HTTPS.
Consider a separate Internet-only credit card with a
low limit.