Nowadays, credit cards constitute an essential part of the life of people. In fact, the contemporary economic relations are simply unthinkable without the use of credit cards, which became the universal and probably the most widely spread medium used for transactions and acquisition of material values. At the same time, the growing use of credit cards is accompanied by new challenges and problems people often face in their daily life, such as numerous frauds and cheating involving the use or, to put it more precisely, unauthorized use of credit cards. In such a situation, credit cards become not only a convenient means of payments, which provides users with ample benefits, but it is also a source of numerous problems and even financial losses.
First of all, it should be said that the wide spread of credit cards is determined by the objective need in the more effective use of financial resources on all levels from individual to corporate level (Viardot, 2001). Basically, credit cards gradually replaced cash and became the use of money easier and more convenient to users. In fact, the growing use of credit cards marked the transition from cash to virtual money, which means the use of credit cards as the means of payment instead of cash and basically the use of credit cards does not involve the use of cash or materially existing money, instead virtual money, i.e. money existing in electronic form is used.
Specialists point out that the use of credit cards facilitated considerably the financial operations and make money more secured and easier to use (Peters, 2002). To put it more precisely, credit cards can help people to fully use the potential of their bank account. What is meant here is the fact that they do not need to keep a large amount of money in cash and take whenever they want to buy some goods or services. Instead, they can use the money they had on the bank account and even more to pay for goods and services they would like to buy. Naturally, such a use of credit cards facilitates the process of payment considerably and practically eliminates any limits on the expenditures of users in terms of their solvency. Furthermore, the use of credit cards decreases the risk of money being stolen physically or misused since credit cards may be of little use for an “accidental”¯ owner.
On the other hand, it does not eliminate the risk of frauds totally. In fact, the problem of frauds with the use of credit cards is constantly growing and a large number of people are susceptible to the risk of having such a problem (Peters, 2002). However, the risk of loss of money because of the unauthorized use of credit cards is lower compared to cash, which can be simply stolen without any possibility to prevent its further use. Moreover, in response to frauds, developers of credit cards introduce new technologies, such as chip and pin, which can decrease the risk of an authorized use of credit cards.
Thus, it is obvious that, at the present moment, a credit card is a very convenient medium of payment, which is widely used due to its reliability and convenience.