Literature

Credit cards have many advantages.  They can be used for the purchase of a product online, use in case of emergency, replaces the use of cash, can be used outside the country, and immediate purchase of any goods, products and services.  However, for those who do not know how to handle credit cards they may experience a lot of hardship and suffering.  Use of credit card may lead to large amount of consumer debts or the debt that is incurred primarily for the purchase of consumer goods rather than for investment.  According to Liz Puliam Weston, about 48 of credit card holders owe less than 1,000 in credit card debt. (Weston, The Truth About Credit Card Debt, 2)  The problem with consumer debt is that 36 of those who owe more than 10,000 have household income which is less than 50,000 while 13 of those who owe more than 10,000 have household incomes under 30,000.

Credit cards can be evil.  For those who have credit cards but do not know how to properly manage them, paying for the credit card bills can be disastrous.  Many customers nowadays think that the business of credit card lending is one of the most vilified businesses. (Michael Hiltzik 2) This research offers an explanation by presenting several arguments to explain why a credit card can be an evil to many cardholders.

II. First Major Supporting Point - Credit card encourages consumer greed which is the condition where the consumers want to spend more for items that they do not actually need.

Ordinarily, consumers who do not have credit card will not spend more than he can buy since his cash may not be sufficient for the additional purchases.  However, when the consumers are carrying credit cards they may become greedy and want to buy more.

A. Minor Support - Credit cards encourage the credit cardholder to overspend which is confirmed in a study conducted by Dunn  Bradstreet which found that people spend 12-18 more when using credit cards than when using cash. (Andrew Beattie 2)
Consumers spend more when they have credit cards because there is a natural tendency for the shopper to overpay for a particular item.

In contrast, however, shoppers who only carry cash cannot overpay for any particular item because he only carries enough to pay for a product that he desires to purchase.

B. Minor Support - Consumers overspend because when they have credit cards they are tempted to buy more products than they actually need or want.

In contrast, a person who does not have credit card will only purchase products that he can afford to pay at the time.

C. Minor Support - Credit cards encourage consumer greed.

When consumers have the capacity to take a product or item home they will do so even if eventually they will realize that they do not need the product or item.

III. Second Major Supporting Point - Credit card companies encourage consumers to buy more but leave them to pay their bills on their own.

A. Minor Support

A proof is the application form given by credit card companies to those who wish to have their own credit cards containing the terms and conditions for the use of credit card which is written in fine print. (Liz Puliam Weston, Credit Card Companies Evil Tricks, 3)

Credit card companies do not even take the initiative to explain to their clients how they are being billed and charged for the items they purchased.  Liz Puliam Weston, Credit Card Companies Evil Tricks, 3)

Consequently, it is common among many card holders to overlook the terms and conditions.  Oftentimes the cardholders fail to notice these terms and conditions until it is too late.

B. Minor Support
Credit card companies do not even bother to explain the interest rates, finance charges and late charges in the billing statement.

Instead, credit card companies launch massive campaign enticing the buyers to get their credit cards because of low interest rates.

B.1. Secondary Minor Support

There is no explanation about interest rate, finance charges and late charges.

For example, a cardholder who is a first time user of a credit needs to how much how the interest rates he will be paying so that he may make the decision on whether to continue the use of credit card or not.

B.2. Secondary Minor Support

There is no explanation as to the portion of the money paid by their customers that go to the principal and the portion that goes to the payment of interest.

For example, interest rates, late charges and finance charges are concepts which every client has the right to know.

IV. Third Major Supporting Point - Payment of credit card debts may cause financial hardship for the consumer

A. Minor Support

The credit card company may file a case against him to recover the unpaid obligation and blacklist him from the company.

This could be harmful for the financial reputation of the credit cardholder.

A.1. Secondary Minor Support

At the time cardholders realize their mistake it will be too late since a lawsuit has already been filed against them.

Any person against whom a case has been filed even if it is subsequently settled will forever have a bad credit record.  In case, the credit cardholder applies for another credit card in other companies, this record will come up and shall form part of his evaluation.

In addition, the credit card holder may also be denied his application for a car or housing loan with any Bank because of his negative credit record.

A.2. Secondary Minor Support

Even if the credit card companies do not file a case against the credit cardholder the act of blacklisting him also affects his credit standing in the community.

B. Minor Support

The credit cardholder may eventually realize that he has expended more money paying for the interest rather than the principal.

Credit cards are here to stay.  Despite the complaints against the practices of many credit card companies, they will continue to do business.  They will still attract the young professionals.  With the growth of Internet Technology use of credit cards will remain as the major tools for transacting online.

The card holders are therefore advised the following
a) Use cash when purchasing.
b) Use credit cards only in case of extreme emergency.
c) Keep the receipts every time credit card is used and determine how much has been used for the billing cycle.
d) Read the terms and conditions in the application form and billing cycle carefully.
e) Limit the use of credit card to purchases which the card holder can afford to pay on the due date.
f) Payment during the due date should not be limited to the total amount due but the entire outstanding balance.