Effects
of Credit Cards
Times like these require everyone to have a credit card.
As far as studies show, the reason for using this little piece of plastic is more than just convenience. A credit
card, after all, is both an alternative medium of exchange and a means of borrowing. These two main functions say a
lot on the possible effects of credit cards not only on consumers but on the financial industry as
well.
What do credit cards do? First, credit cards allow consumers to purchase a wide array of products that cannot be
paid at the moment. This is very beneficial during emergencies when cash is not at hand. Credit cards are also
useful when making arrangements for travel such as hotel, car, and airline reservations. With the explosion of
online marketing, credit cards remain to be the most convenient payment method that can be used. Since the payment
of credit cards is in installment and does not have to be in full, the loose reign that it has over consumers is
very tempting. Imagine the line that all credit card companies use on their advertisements: “Increase your
purchasing power.” The simple idea of power is already irresistible.
Still, credit card companies know how to shake things up. They attach certain privileges and benefits to their
credit cards for consumers to choose them. They offer insurance protection, rewards programs, and even
frequent-flier miles programs to lure consumers - and everyone just gets hooked.
In general, credit cards allow families and individuals to keep less money in low-yielding accounts like checking
accounts and to take advantage of opportunities attached to the card. When used wisely, credit cards can help
establish an excellent credit history. This will make application for loans, insurance, and jobs easier for the
cardholder. The effects of credit cards on individuals are just amazing. However, the effects of credit cards on
the lives of families and their future are dangerous.
The negative effects of credit cards far outweigh the benefits. It is a trillion dollar industry that lives on
interests and fees and credit card companies know the right maneuvers to make things go their way. The simple fact
that they allow extremely low credit card payments is already testament to their intentions. They want cardholders
not to pay in full so that balances can accrue more interests. Once a cardholder fails to make a payment, they
start raising interests, finance charges, and penalty fees. This will further rack up the credit card debt that the
cardholder is burdened by but it will mean more revenue for them.
The recent economic slump is the perfect example to show the unforeseen effects of credit cards on
consumers. The financial industry was the most affected and banks and credit card companies received the biggest
hit. This definitely served as a lesson to consumers who enjoyed the beneficial effects of credit cards for so long
without thinking of the consequences. It certainly proved that credit cards are addictive and dangerous. It is up
to consumers to learn smart spending and payment habits to master the little piece of plastic that they own.
Source: Credit Cards For People With Bad Credit Rating
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