According to data released April 26, 2018, by the American Banking Association, there
were 364 million open credit card accounts in the United States as of the end of 2017.
And credit cards are found in most Americans' wallets with multiple studies showing that
about 7 in 10 Americans have at least one credit card.
With so many cards on the market, which one is the right one to choose?
We won’t be looking at every card out there today but we will be comparing two of the
major players.
The two that we’ve all heard of and most of us have used or will use at some point.
Welcome to this episode of The Infographics Show: Visa vs. MasterCard.
Visa’s history dates back to 1958 when Bank of America launched the BankAmericard.
This was the first mass-marketed credit card program and it quickly grew in popularity.
By the 1970s, BankAmericard was an independent entity and it was renamed Visa.
Visa then launched VisaNet, which was the first electronic payment authorization, clearing,
and settlement system in the world.
Visa has a market capitalization of $195 billion, there are 11,300 people working for the company
and there are $6.5 trillion in transactions made on Visa cards around the world each year.
What about MasterCard?
MasterCard was originally known as Interbank/Master Charge and it was created by several California
banks as a competitor to the BankAmericard – which as we just mentioned was what Visa
used to be called before it was called Visa.
From 1966 to 1979, MasterCard was called Interbank and Master Charge.
The MasterCard brand officially came into effect in 1979.
It continued to grow as a major credit card brand and listed as a public company through
the New York Stock Exchange in 2006.
MasterCard has a market capitalization of $110 billion, there are 10,000 MasterCard
employees and there are $3.6 trillion transactions made on MasterCards around the world each
year.
So the numbers tell us that Visa is the bigger company, but today both Visa and MasterCard
are widely accepted in over two hundred countries and it is very rare to find a location that
will accept one but not the other.
However, neither Visa nor MasterCard issue any credit cards themselves.
They simply provide the payment service and mechanism and then rely on the banks to issue
credit cards.
So when it comes to comparing specific card benefits such as monthly fees and interest
rates, you need to look at the bank or financial institutions that issue as well as assessing
Visa or MasterCard themselves.
So which is better, Visa or MasterCard?
Before we get in to a head to head comparison, let’s first look at what’s important to
take in to account when choosing a credit card.
Firstly you need to have a good think about what you want to use the credit card for.
Maybe you want to buy things online, or on holiday, or to pay your bills.
And how you intend to pay off what you owe on your card also has a bearing on which card
is the best for you.
Do you intend to pay the full bill each month or spread repayments over a period?
Then you need to look at what the card has to offer that will best match your purchasing
and repayment profile.
Both Visa and MasterCard offer a number of features and service offerings.
Let’s take a look at some of these.
Premium cards – Both Visa and MasterCard provide a range of standard and premium card
options.
Features vary depending on the credit card provider but could include things such as
concierge services, global customer assistance, complimentary insurance and special offers
at a range of stores, hotels and restaurants.
Contactless payments – This is functionality that allows you to make payments by simply
tapping your card against a compatible reader.
“Tap and Tag” as it’s more commonly know.
Exclusive offers - Visa has their Entertainment Program and MasterCard the Priceless Program.
Both provide offers with entertainment, dining, travel and shopping.
And the options vary depending on whether you are a premium or standard cardholder.
Global security services – Both card companies have global service support hotlines to provide
assistance if a card is lost or stolen, and these services are available 24/7 from anywhere
in the world.
Online shopping protection – Security is an important area for Visa and MasterCard
and they have their own security processes when shopping online.
There is Verified by Visa and MasterCard SecureCode.
When using these services you will be prompted to enter a password or unique SMS code when
you make purchase at an online store.
So with these cards being so similar, how do you choose between them?
From what we learnt online, it’s best to look at specific details for the card you’re
considering.
Here’s are some of the features and benefits worth considering:
6.
Annual fees – Most credit cards charge an annual fee and it’s something worth exploring
when you’re deciding which card is best for you.
The fee can be as low as $25 for a basic card, or as high as $700 for a premium option card,
which comes with all the premium benefits.
The credit card issuer determines the actual annual fee depending on the features available.
Visa Platinum, Signature and Infinite cards, as well as World MasterCard’s, usually have
higher fees because of the premium features and services they provide.
5.
Interest rates - Standard credit card interest rates can have a major impact on the cost
of the card you choose, so it’s important to look at both the purchase rate and the
cash advance rate for each card you compare.
You also need to decide how you intend to pay your card off.
Will you pay it timely each month, or let the balance roll over?
Your spending and repayment habits make understanding the interest rates very important.
4.
Rewards – if you are a big spender then rewards programs can be attractive and there
are a wide range of Visa and MasterCard rewards and frequent flyer programs.
These products offer you points per $1 spent and when comparing the programs it’s worth
considering the earn rate, the type of rewards available and the average amount you will
spend on your card, so that you can decide if the annual fee will be worth it as the
fee will often be adjusted to how attractive the reward program is.
3.
Interest-free days – We already talked about understanding your repayment habits, and one
of the main reasons this is important is because cards will have different interest free periods.
Both companies will usually offer some sort of interest free period, so if you pay your
bill within that time, you can save big.
2.
Introductory offers - Credit card providers regularly offer new customers additional perks
to encourage you to bin your current card and swap providers.
Offers such as bonus points, 0% balance transfer interest rates or 0% purchase rates.
But these features are generally available for an introductory period so may only add
short-term value to the card you choose.
So make sure you assess all the benefits before making a decision.
1.
Security services – We’ve mentioned security with online shopping, but in addition to these
security services some of the credit card providers also offer 24/7 fraud-monitoring
services, daily transaction limits or even the ability to temporarily lock your card
if you have misplaced it.
And in the US all credit cards are now chip-and-PIN products, which offer superior security for
in-person payments when compared to the older style cards that just have a magnetic strip.
While Visa and Mastercard are different on a corporate level, the variations are relatively
minor when it comes to using a credit card from either of these companies.
If you’re in the market for a new credit card or maybe your first credit card, the
important thing to do is focus on the features that best suit your needs such as interest
rates, annual fees and awards programs.
Which do you prefer?
And do you know other differences between these two financial giants that we didn’t
mention?
Let us know in the comments.
Also be sure to check out our other video, What a Dollar ($1) Gets You Around the World.
Thanks for watching, and as always, please don’t forget to like, share and subscribe.
See you next time!