Which one of the following is the name given to a substitute for cash and cheques?

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Currency

Credit card

Coins

Demand deposit

answer is B.

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Detailed Solution

A credit card is the name given to a substitute for cash and cheques.
It is the facility provided by the bank which permits its users, i.e., cardholders, to withdraw money from the bank over the balance of their account. This excess amount is treated as a loan by the bank. The bank charges interest on the amount withdrawn above the account balance. However, the banks fix a certain amount as the limit above which they are not allowed to take a loan based on the individual's creditworthiness. Other cardholders have different levels of limitations on their cards. Therefore, this facility is not beneficial for everyone. Only account holders who have good creditworthiness will have a positive effect on this card.

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