Custom «Credit Cards» Essay Paper

Credit cards are just small plastic cards that are in most cases issued to users to use them as a payment system. The card gives its holder permission of buying goods as well as services depending on the promise of the holder, of paying for such goods and services. Those who usually issue the cards ends up creating a revolving account and provide a credit line to their client. From such credit line, the cardholder has the capability of borrowing money for making a payment to their merchants, or even as advance cash to the user.

Most American confuses credit cards with charge card; on its side, a charge card needs the balance be made in full after every month. This point contract with a credit card, since, credit cards gives room to users a continuing debit balance, subject to interests that will be charged upon. In other terms, a credit card is also different from a charge card, in that, charge cards can be used just like currency by their holders, while in most cases, credit cards are issued by financial institutions or even credit unions, and their size and shape has already been specified by some standards like ISO/IEC 7810 as ID-I. as a matter of fact, this easy critically looks at the reason as to why most American should not use credit cards.

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One of the reasons is that, credit cards have a problem with security issues. It has been found that, the security of credit cards along with the privacy of the card owner depends on the physical security of the plastic card. As an effect, at every time an individual other than the card owner accesses it or its personal identification number, there is a compromise on security, as it might no longer exist. The matter in most cases get worse, when merchants accept card numbers without any form of additional verification details for mail order purchases.

The common practice that is being used to only ship to the addresses that are confirmed as a measure of security, with the aim of minimizing purchases that are fraudulent. There are merchants in the United States of America that that accepts a card number for the purchases that are described as being in-store purchases, whereupon, the number access allows fraudulent very easily, though most of them require the card to be by itself present, as well as the signature. However, a lost card can be cancelled, but this will only be possible if this is reported immediately.

On the other hand, what if one realizes very late that the card has gotten lost? It will then amount to much insecurity. Actually, though much has been done to ensure card security, but still there exist many risks on the credit card usage. Due to this insecurity issue, most Americans need not to use credit cards.

Another point is that, the costs incurred in the card operations are many and too high. In fact, the costs incurred in the process of running the credit card is very high, yet they are all passed to the cardholder. Such costs include; salaries for the executives involved in the day-to-day operations, costs of printing the plastic card and statements mailing. Other expenses might a rise due "running the computers that keep track of every cardholder's balance, taking the many phone calls which cardholders place to their issuer, protecting the customers from fraud rings. Depending on the issuer, marketing programs are also a significant portion of expenses.

Another problem of credit cards is high interests as well as credit issues have users filling bankruptcy. It is true that, in most cases, credit cards need users to pay very high interest rates, which have been placed at a very high percentage. In such a circumstance, the interest rates met every month might even be higher as compared to credit monthly payments. For instance, consumers might even pay 18 percent rate of interest on credit cards while the earnings might be only 5 percent on their saving account. As an alternative, American should switch to debit consolidation credit card, which is obtained at a very low interest rates. Studies have indicated that, a debt consolidation will help most consumers from very high rate on credit card debt. As an effect, the user will have no need of filling bankruptcy.

It has also been shown that, most of the Americans have no limit when it comes to matters concerning spending. One of the advantages of credit cards is that, they are convenient in every day's lives. This point has made most Americans to buy products and items easily online, telephones and even afraid of carrying large sums of money when going or making purchases. As an effect, individuals are encouraged to purchase even unnecessary things, hence building up debts, to an extent that, such debts becomes a problem and a cause of worry. This is because, individuals might never realize "how much money they are spending, the swipe of the credit card at the register is quick and easy, but by paying for items with cash, people become more aware of their spending habits".

The process of making payments with cash one has a chance of feeling the pain of the money leaving the pocket, which has never and will never be felt when using credit cards. This is because, just flipping credit cards on a counter, leaves most of Americans feeling emotionally nothing. There are also those parents who have even went ahead to offer their children with credit cards who have not yet fully learned on how to delay pleasure. This in one way or the other increases family spending also.

Just as they encourage overpaying of an item, they also encourage individuals to buy more than what they have budgeted for. This kind of condition, whose solution is best to avoid as well as realizing that it is not a good idea to use a credit card, can assist most Americans to avoid founding themselves in difficulties of managing their resources, (Arthur & Sheffrin, 2003). Due to the fact that, most Americans have lead to the world banking disasters, due to their total greed with purchasing items that they could have not afforded otherwise. They are also not able to think that, other individuals in different countries are encountering financial problems, because of their ignorance along with greediness. The times when cardholders delays in paying particular credit user, interest rates are in most cases raised in considerably. Having any universal default, other cards that the customer has for which the client might be paying, night also have their interests rates raised, or even their credit limits might change.

In conclusion, some of the credit card advantages include, allowing individuals to make larger purchases and having a lot of assistance during emergencies like accidents and medical bills. Other advantages are; permitting holders to fit into American middle class lifestyle; developing high quality spending habits; and at the same juncture adolescents developing basic moral codes, as well as stronger ethics while using credit cards and the rules of the society to delay gratification. However, most Americans do belief that credit cards is a very useful tool, hence ends up abusing it. Then as a matter of fact, they should not use credit cards, let them us debit cards or even use cash.