The Impact Of Payment With Credit Card

And that's just in the United States. The card has become more secure and can be managed in the palm of your hands. From freezing your account to making deposits it can be even more secure to making online, over the phone, and on your phone/apps by the touch of your phone. That's how the credit card evolved from being a cardboard to cheap flammable plastic and now a card you can wear out. In the end the credit card was invented by a man that couldn’t pay his bill in a restaurant and thought of one of the best thing that people nationwide could use and that forever changed the way we paid for

Credit card debt arises because of unexpected predicaments or impulsive financial decisions. Financial hardships, like credit card debt, are usually the result of poor financial knowledge. This issue is most frequently found in junior enlisted service members, single parents, separated, newly married, or those who have recently relocated. “A survey of 700 service members reveals that, more than one in four reported having more than $10,000 in credit card debt. The enlisted personnel were the highest to respond with making the minimum payments and paid late fees” (Singletary, 2010). Credit card debt may cause difficulties in Soldiers and families, has been associated with depression, and influences personal relationships,

Before the causes and resolutions are discussed, debt must be understood. Terry Herman, a financial advisor for Edward Jones, expresses this definition: “Simply put, debt is a product bought or a service utilized that you still have a financial obligation to” (Herman). To further that definition, debt is the borrowing of money with the entitlement of repayment with interest; this explains the financial obligation Herman expressed. While family members and friends may not enforce interest, interest would not demean the situation. The current consumer-driven culture has significantly increased the amount of personal debt from decades ago. A chart derived from statistics collected by the Federal Reserve and Bureau of Labor Statistics displays the climb of debt from $1,186 per person in 1948 to $10,168 in 2010 (Indiviglio). As shown, the increase over 62 years is approaching a factor by the multiple of nine. Consumers are clearly spending irresponsibly, which Herman manipulated into the “complete difference between an investment and expenditure” (Herman). An investment is something expected to obtain an additional value while an expenditure is unnecessary spending. Thus, consumers must be acquiring expenditures more frequently than investments.

Consumer Research, Inc. is investigating whether there is any correlation between specific characteristics of credit card users and the amount these users charge on credit cards. Their objective is to determine if these characteristics can accurately predict the annual dollar amount charged by credit card users. Data was collected from a sample of 50 credit card consumers presenting information on the annual income (referred as Income), size of household (referred as Household), and the annual credit card charges (referred as Charges) for these consumers. A statistical analysis; including a descriptive, simple regression, and multiple regression tests, of this data was performed and the findings are presented below. Due to the

U.S. consumers remain addicted to credit. Consumer debt continues to rise to record levels and a significant number of households have lost control of their finances. Credit cards can be a useful financial tool when used appropriately. However, research clearly indicates that consumers are not using credit cards wisely and consumers do not understand the terms and conditions of the credit card contract. Adding to this public dilemma, the practices of numerous credit card issuers have been described as predatory. The Credit CARD Accountability Responsibility and Disclosure Act of 2009, also known as the Credit CARD Act of 2009, is the first major reform of the credit card industry since the Truth in Lending Act of 1968. The Credit CARD Act of

The government has ensured the money will be repaid through the wage garnishment system. Only a small percentage of consumers endure this process because debt can be collected by numerous means (Arnold). In response, credit debt was virtually non-existent until 1970, now Americans have an average of $3,500. A time used to exist where only the wealthy had access to credit cards, but the credit score industry caused financial companies to feel comfortable with the broadening of credit cards across the population (Indiviglio). Letting consumers purchase those big-ticket items also enables them the ability to spend more holistically. For example, $20 cash is manageable for a few groceries, but a credit card can cover those groceries and a new television simultaneously. Credit cards seem to give consumers an infinite amount of money at their fingertips. After so much debt has risen, creditors resort to the courts. Over a million lawsuits are filed annually concerning credit card debt, which does not seem like a small percentage (Arnold). And through wage garnishment, creditors collect their payment whether the consumer can afford it or not. The consumers should not be treated in this manner for using a credit card in the means that it was distributed for.

Periodically reviewing the validity of the need for credit cards at executive and operating levels.

On a periodic basis, the Federal reserve releases key statistics related to credit card debt in America. With almost 2,000,000,000 credit cards in use while in the hands of almost 200,000,000 individual credit card holders, there is no denying the popularity of these little pieces of plastic. Through May of 2015, Americans were responsible for $901 billion in credit

Age would also help in determining spending habits. Developing families tend to spend a lot more money on large purchases like appliances and furniture. Lowering their interest rates could coerce them into making more purchases and longer term balances on their cards.

Attitudes about spending changed drastically. At this point, more people had access to credit cards because credit card companies stopped limiting their customer base to the wealthy, and began issuing cards to people with moderate to low incomes (Garon, 2012, CNN World). This gave Americans a way to purchase goods and services immediately, even if they didn’t have the cash on hand. The seven to eight percent savings rate maintained in the United States from the 1960s to the 1980s plummeted to less than two percent, and remained so until the first decade of the 21st century (Melicher & Norton, 2014, p. 168).

Another study completed by The Social Science Research Network (SSRN) in 2013 proved the effectiveness of the Act by finding that since being passed, The Credit Card Act has saved consumers $20.8 billion per year. In fact, the same study found that late fees decreased from $33.08 in 2008 to just $26.84 in 2012 (Fay, Bill). These studies highlight the success of The Credit Card Act in protecting consumers and deterring college students from overspending. The Credit Card Act of 2009 effectively shifted the financial responsibility from the credit card companies to the consumer.

The credit card has evolved its way into being a more convenient if not methodical way to pay for materialistic items today. It is fast, efficient, and it can be paid off at later dates. However, the real question to be asked, is it really beneficial to the public as a whole? One of the theories studied in class so far is the Utilitarianism Ethics Theory by John Stuart Mill. This theory states that the greatest amount of happiness that can be obtained is by increasing the benefits and reducing the negatives. Furthermore, this greatest happiness should and must benefit the reigning majority. After watching the documentary, it seems that although people are benefiting from the use of their credit cards, they are also somehow impacted by it, because in the end it is the credit card companies who charge higher interest rates and advertise their cards to greater and more vulnerable populations. With that said, the use of the credit card is not supported by Utilitarianism Ethics because it would seem that the credit card companies who are reaping more of the benefits by charging their customers unfair interest rates even though the citizens are able to buy whatever they want with their cards.

Consumer debt has increased by 10 percent over the past three-year period. Credit cards are readily available from multiple companies which solicited the consumer by mail, internet, school campuses etc. Applications require minimal information giving the consumer hundreds or even thousands of dollars in minutes, causing the consumer to live beyond their means. Offering zero percent interest rates however, not mentioning after the first year interest rates rise to 21 percent making repayment schedule longer than anticipated.

The Rise of Credit Card Debt: Viewing the Past, Present, and Future of Credit Card Debt

Credit card debt is a big problem in the United States today. The lending creditors are taking advantage of consumers, which pile up charges on their credit cards, to the point they are unable to pay of f the card at the end of the month. Consumers end up relying on the credit that is provided by the card issuer.