Credit Card Use and Debt in America
A promising deal, low interest rates, even lower monthly payments, a free t-shirt, instant cash advances; these are all promises credit card companies make to lure you in to what could be a later trap of debt. All humans are born with natural instincts, however, when it comes to the word free, and all that “free” entails, few listen to the voice in the back of their head. The voice that is telling them that NOTHING is free and they sign their name away, registering for that little piece of plastic that later sucks them into a whirlwind of problems, a place where “free” is the last thing they feel. With the presence of debt on the rise, people, particularly students, are pressured to find ways around it, yet with a lack of practical methods, doing so is highly unlikely. To fix this problem in America, I propose that the government should make it harder for citizens to obtain a credit card by placing stricter rules and regulations on getting one. In America, the credit card was introduced to meet the desires of an impulse buying society. Currently, there are about 350 million people and 1.2 billion credit cards in the United States (Karger, 2005). This is a sign of just how popular “plastic money” has become. Many American’s view the credit card as the answer to financial crisis, yet this could not be farther from the truth. Rather than providing financial relief, the credit card has led to financial crisis for its holders, particularly in America where it has become a common feature. As of 2009, the total debt on American credit cards stood at $962 billion (Carradine, 2009). Debt is unfortunately, and sadly an extremely common issue in society today. So common in fact that a surplus of shows, books, and even clips on the ever popular You Tube have been created just to address debt problems and to advise the people who have them. Although debt has been around for centuries and is certainly not a new dilemma, the occurrence of debt has exploded, showering down on millions of Americans. The credit card is popular for a number of reasons. It can be used to purchase any type of a good or a service. People use it to buy fuel, clothes, and even pay bills. One of the conveniences of the credit card is that it takes away the burden of having to walk around with a lot of liquid money (Tripathy, 2007). Carrying money has its risks, the most common one being theft. Looking at the credit card, if it is stolen, the holder can simply contact the creditor and ask him to block his credit account. Another attraction is that the credit card is able to cater to the immediate need of the consumer. One does not have to have money on them to purchase an item. They can buy it at that moment, but pay for it later (Hall, 2000).
Even though the credit card is a great convenience, it carries with it a lot of problems for the holder. Many credit card holders get carried away and shop for things they do not really need. Clothes, shoes, designer bags and cars are particularly known to attract impulse buyers. This has led to many Americans accumulating large sums of debt. In addition, if the holder does not meet his monthly credit card payments on time, he will have to pay additional late fees, further straining his finances (Carradine, 2009). Also, there is a charge imposed if the holder spends beyond his credit limit, which is in addition to the regular fees and interest rates. Credit card companies have also taken into account how naïve and inexperienced college students are when it comes to managing money, and have acted accordingly with their credit card offers. Companies offering high credit limits and low monthly payments have attracted students to take up plastic money. However, the students do not put the money into proper use such as buying books, or paying tuition fees. Instead, they purchase expensive electronics, without regard to the fact that the card will accrue interest....
References: Carradine, C. (2009). Building Wealth and Eliminating Debt. New York, NY: Charles Carradine.
Hall, M. (2000). Credit Cards and Checks. Jordan Hill, Oxford: Heinemann Library.
Karger, H. (2005). Shortchanged: Life and Debt in the Fringe Economy. San Francisco, CA: Berrett-Koehler Publishers.
Kiesilainen, J., Ramsay, I., & Whitford, W. (2003). Consumer Nankruptcy in Global Perspective. Worcester Place, Oxford: Hart Publishing.
Leonard, R., & Lamb, J. (2009). Credit Repair. Berkeley, CA: Nolo.
Singletary, M. (2010). The Power to Prosper: 21 Days to Financial Freedom. Grand Rapids, MI: Zondervan.
Tripathy (2007). Financial Services. New Delhi, India: PHI Learning Pvt. Ltd.
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