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Impact of credit cards
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When it comes to learning about credit cards, most people do not expect to hear that it can effect a persons overall emotion and wellbeing. By having a credit card close at hand people are able to spend money knowingly but do not realize the implications from their choices. They make decisions that they would not have made otherwise if the consumer paid in cash or the full amount up front on the credited bill. Researcher Greg Davies wrote a paper on the overall behavior of human emotion when it comes to consumer goods. “ His 2003 paper, The Realities of Spending, looked at models of spending behavior and how they were influenced by means of payment . . . The paper identified several theories which could explain why people appear to make irrational …show more content…
When this happens the borrower falls into debt over the years unless they are able to control their spending habits. Credit cards were originally created to help people buy things when it was desperately needed. It was not created for basic transactions but over the years it has changed into our main source of payment. Every year, the overall amount that borrowers fall into debt increases by billions of dollars. People continue to spend money that they are not able to repay during the period of time given to them. A prime example of this is “ Within two years, Gemma had incurred 14,000 of debt. The money went on clothes, holidays, meals, and luxuries.” After this Gemma then stated “I realized I was in financial difficulty when the bills started to come through and I struggled to make the minimum payments. I started to feel ill about it and realized I needed help. I got into that mess because I just didn’t get it. I didn’t get what money was about, I didn’t understand it”(Harding). Most borrowers and consumers do not understand the true use of credit cards like Gemma. They do not try to look into the consequences of having a credit card and its real …show more content…
Not only do they fall into debt and spend beyond their limits, but they also forget to read the small print. Most consumers borrow money from credit card companies but do not realize add on fees. For every late payment or transaction that goes against the credit card companies guidelines just adds for more consequences. This leads borrowers to spending even more money on the items that they originally bought. Especially if they are already having payment problems on the monthly bill this just adds to the amount that needs to be paid off. Credit card companies intentionally target borrowers that are already struggling with debt because they know that there is more money to be made off of them rather then clients that pay their monthly fees on time. Author, Patrick Maysun Jose, journalist for The Post and Courier Newspaper states “ critical of the card issuers’ heavy fees and aggressive marketing tactics, especially toward finance-naïve student and low-income communities, Levin says people have been bludgeoned by credit card offers, often going to consumers already struggling with debt . . . “ By not having the proper knowledge about credit cards and their policies more and more people suffer from debt that could have been
The United States lending industry’s main focus has become accentuating profits; therefore, they have made it impossible to live without a credit card in today’s economy and to avoid being taken advantage of by the banks. James Scurlock, director and producer of the film, “Maxed Out”, devotes his movie to informing the audience of the credit card system and its many flaws and gives examples of people who are majorly affected by the pressure the lenders apply. Throughout the movie, numerous statistics, and expert testimonies are presented, as well as comparisons and appeals to emotion. Through the use of this support Scurlock, is able to convey his overall message and propose numerous minor arguments that clarify his argument and make it more credible.
As a native of Texas, Lendol Calder graduated Phi Beta Kappa from the University of Texas at Austin in 1980 and went on to earn his Ph.D. from the University of Chicago in 1993. Calder is currently a Professor of History and African-American Studies at Augustana College and is presently working on an analysis of the thrift ethos in American history and culture with a team of scholars organized by the Templeton Foundation and the Institute for the Advanced Study of American Culture at the University of Virginia. He is a scholar of the history of American consumerism and this interest led him to study the progression of consumer credit in America when little else had been published on the topic. Calder draws from some of his own experience with consumer credit in the form of a department store credit card he and his wife obtained early in their marriage to purchase what he says was “a suite of furniture costing twice as much money as we could have scraped from our bank account.” (p.5) Most of his presumptions, however, were discarded in his explorations of the “peaks and valleys of consumer credit” (p.16) due to the fact that most common sense beliefs about the history of credit are in actuality a myth. In Calder’s Acknowledgments, he gives thanks to his parents for coming to his aid and saving him “from having to do some unwanted personal research into the subject of debt.” (p.xiii)
Over-Utilisation of Your Credit Card Limit: People often over utilise their credit card limits and this result in a high credit balance in their account. High balances on credit cards are also a cause of low credit scores. It is always better to pay your credit card bills every month. If you are not able to control your spending habits, then it may make sense to go for a card with a lower limit. This way, you will not build up a large debt and easily be able to pay all your dues. Another thing to note, credit card bills have a minimum sum to pay along with the overall outstanding. If you are unable to pay off the total amount you owe, it makes sense keep paying the minimum amount due until then.
We now live in a society where kids start their adult lives “in the red”, as their debt exceeds their income. (Draut, 2005) 60 years ago this wasn’t the case, as told by Studs Terkel in Hard Times-An Oral History of The Great Depression, “I had no idea how long $30 would last, but it sure would have to go a long way because I had nothing else. The semester fee was $22, so that left me $8 to go.” (Turkel, 1970) Imagine that! 60 years ago tuition was $22 dollars a semester! Furthermore, 45% of adults under 35 state they find themselves resorting to credit card use for basic living expenses like rent, groceries and utilities, (Draut, 2005) adding to their mounting debt. This use of credit puts them into an entirely different category of indebtedness: survival debt. (Draut, 2005) Imagine being forced to borrow to live! (Draut, 2005) If a car breaks down or someone gets sick, the only option available is using a credit card. (Draut,
In the Spring of 1949, Alfred Bloomingdale, Frank McNamara, and Ralph Snyder came up with a new plan for a modern type of credit card. While out to lunch one day in New York, the President of the New York Credit Card Company Frank McNamara had forgotten his wallet at home (Evans 53) . He had a thriving business yet credit cards at the time were only given to selected people. The first modern credit cards was introduced by Diners Club Inc. because of this. The modern day credit card is a small, plastic, rectangle, more than three inches. There is an account number and a name that is embroidered on the front. The first credit card did not look much like what credit cards look today. They were made out of paper not plastic, and they weren’t cards they were a lot like a tiny booklet that had all the same information the modern day credit card has now(Weiss 38). The modern day credit card can carry up to a $200 line of credit meaning you can buy anything you want at that certain time and pay it back at a later date such as months or a year after that time. Some companies require you to pay the full amount of your charge on the card at once, but some allow you to pay in small amounts. In order to apply for a credit card you must be at least eighteen years of age and if you are not you must have an adult sign the paperwork to apply for one. Prior ...
Money, in the physical form, is rapidly dying and in its place credit and debit cards are
“Proper society did not think about making money, only about spending it.”, said Barbara W. Tuchman. This quote shows our real world, and the people that spend money, but they forget about the value of money. Nowadays people want more that they have. They forget how many things they have, and how much money they spend. Most people when they see other people having something better, and in that moment they want to have it also. Also, people forget how hard they got that money, but how easily and quickly they spend it. In the article “The treadmill of consumption” by Roberts, he says that people are willing to go into debt to buy certain products and brands. That is right that people can do crazy things to buy certain goods.
Statistics suggest about 32% of consumers are going to over estimate the rating on their credit, while only around 4% are going to under estimate the rating on their credit. Ones who will overestimate the quality of their credit are most likely less informative about finances overall, and will be more likely to have learned about their financial knowledge, unfortuanately, the hard way. Also the consumers who are going to overestimate the ratings of their credit will be less likely to properly budget, effectevely save their money, or learn to invest it often. With another example, in 1999 it was found that about 40 percent of mortgage borrowers didn't understand what the interest rates that were associated with their loans were.
...: A Critique of the Global Credit Card Society." International Journal of Comparative Sociology 38:1 June 1997, 77-82.
We all have to pay, but how the question remains. While online purchasing has become a very popular choice to buy specialty items, as well as our everyday items, some people still prefer to shop at local shops. Whichever way you decide to shop, you must still find a method of payment that is right for you. Two of the most popular forms of payment are cash and credit. Cash payments have been around for many years, and is still a widely accepted and preferred method of payment for many. This form of payment was around long before the others were introduced into our society, which aids in the popularity with our older generations. However, recently the popularity of credit has greatly increased due to several reasons; convenience and the
Credit plays a significant role when it comes to consumer spending, but can have a significant impact if misused. It doesn’t take much for consumers to get in over their head with the overuse of credit, credit debt can quickly mount if left unchecked. According to Stinson (2016), “The road to a credit card debt pileup is often paved with spending that seemed like a good idea at the time. But too many well-intended moves can lead you into a financial ditch and ruin your credit” (Stinson,
This is supported by the study of Hakim and Haddad (1999) which found that the loan repayment obligations related to income and are an important factor in the possibility of default.... ... middle of paper ... ... According to the Credit Counselling and Management Agency (CCMA) (2012), the main reasons people fail to pay a debt were poor financial planning (25%), high medical expenses (22%), business failures or slowdowns (15%), loss of control over the usage of credit cards (13%), and loss of jobs or retrenchments (10%). Therefore, Lea, Webley and Walker (1995) found that debt with economic, social and psychological factors are closely related.
If we don 't have credit cards, we can’t build our credit history. If we don 't have a credit history, we aren 't allowed to buy cars or houses with low monthly payments. Having credit cards is a cycle in life because without one thing, we can 't have the other. When people have credit cards they have to use them. It doesn 't help that banks offer many credit cards to people, ending in high debt. Banks also encourage low monthly payments. If people pay low monthly payments, they will never end up paying their credit card debt off. They will probably end up paying for the objects they bought, two or three times. People aren 't forced to pay high monthly payments in order for it to take longer to pay the card off. If it takes longer for a person to pay a credit card debt, the credit card companies will be making a lot of money. I can definitely say I have experienced this because I am always offered to get a credit card. There are many stores that carry their own credit cards, and offer them for their customers. Offers are tempting and they can add to a future of credit card debt.
The lack of knowledge plays a big part in the debt young people are getting themselves into. Credit cards are often offered to young adults as soon as they get out of high school. Many take advantage of having a credit card without even thinking about the responsibilities that come with it, instead they think about the things they will be able to buy. In “Generation Debt” the author Tamara Draut says that young people are getting into debt younger than ever before. Two of the reasons that are more costly on young students that hit hard on the budget are car repairs, and travel for students who have families and friends in other states (231). From my experience I know first-hand what it was like to be offered credit cards right out of high school, and I didn’t hesitate to get any of them. I st...
The phenomenon of impulse buying is becoming increasingly commonplace in developed countries. Our culture of consumption makes us less likely to resist temptation and consider the consequences before purchasing things. The impacts could be varied dramatically depended on where it takes place. For instance, the things that you purchase impulsively could be a bar of chocolate; however, it could also be a Louis Vuitton handbag and the consequences would be much severe. Hence, a lot of researchers are interested in studying the causes of this phenomenon in terms of different parameters such as age and gender. In relation to gender, researchers attempted to find whether there will be a gender difference in impulse buying and the possible