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Americans Dependency on Credit Cards

Credit Cards

Most of the American people love to use credit cards to make ends meet. However, the use of credit cards leads to overspending due to an increased desire of having a better lifestyle. Despite credit cards leading to overspending, there are different ways that can reduce spending, but retain the use of credit cards.

The American public is spending on their credit cards and for most it is all for the sake of putting food on the table and keeping the lights on. Most of them are depending on credit cards for the sake of paying bills on time and ensuring that they keep their heads above water (Leamy 120).

According to a research, most moderate-income families were found to rely mostly on credit cards for basic needs like; groceries, mortgage payments, insurance costs and utility costs (Leamy 200). The use of credit cards has seen increases to 45% for families whose annual income is less than $50,000, annually. When the recession of 2008 occurred, many American families were found relying mostly on credit for their daily expenses (Leamy 220). Before this time, credit cards were mostly used like an emergency savings account, but when there were unexpected circumstances, people began making use of their credit cards for daily survival. The emergency account is now treated and used as a daily survival tactic, ensuring daily needs are being met.

There are different explanations as to why credit card usage has risen to a higher percentage, ultimately leading to too much spending than expected. Credit cards help in building of solid credit rating; hence,  allowing someone to easily enter into a bank and get a loan. Credit cards are easy and quick to use compared to direct use of money where counting of coins takes some time (Breyer 115). In matters of accounting and reporting, credit cards are highly valued as a way to bundle monthly spending into one place. Credit card statements also categorise spending for any single person, and a person doesn’t require to carry cash. The use of credit cards makes automated billing quick and easy, but it doesn’t mean that a person can’t check the credit card statement to confirm accuracy and items purchased. The use of credit cards is common, whereby; most people use credit cards to carry out transactions. Credit card usage guarantees the use of points or frequent flyer miles thus making it easier for a person to collect and redeem points, thus take advantage of products, services and even free swags in the market.  Such activities are possible because; people used tend to use credit cards instead of using solid money.

The use of credit card ought not to be mistaken in showing that the American public spend much, using their credit cards. Research conducted, recently, has shown that thirty percent of survey respondents owed more than $11,000 proving that the debt level in this group was $18,366. Additionally, some of the respondents had no clue how they could pay off their debt. It is very interesting to note that the respondents combined had an earning of 476,000, and almost half were college graduates (Breyer 116). The cause of the high spending on their credit cards was due high living standards where the respondents are employed, frequent home and car repairs, veterinary and medical bills which were very high. This is a direct correlation as to the reason why spending on credit cards has increased drastically. People have to live on credit as a way of making ends meet. Use of credit cards by most Ameircan citizens is a better way of catering for their daily needs (Breyer 116). Increased use of credit leads to increased building of balances at a young age. College graduates are on the front line of using credit cards, and this increases credit accumulation between expenses and student loans. However, use of credit cards is highly rising for senior citizens who are incurring a $3,998 in medical debt.

Credit cards are very helpful tools and despite the high debt that many customers are trapped, they should not stop the use of credit cards. The use of credit cards should continue as normal, but the only amendment that can be made lies where a person needs to avoid lowering the credit card balances (Tong and Lee-Ing 118). The people who are squanderers, may struggle with the right tracking for balancing their spending. A person should know what he or she owes, but credit cards don’t make this easy guess work and can give a mind-set of dealing with it later when the bill arrives. Credit card bills should be written down, and interest rates recorded accordingly. It is a good thing for a person to keep in touch with their credit card companies and even make calls to them to request better interest rate. Interest rates have to be monitored and/or changed overtime for the sake of making them successful for proper use. Keeping up with spending is not bad, but normal outgoing bills, insurance, cell phone bills and other utilities have to be written down (Tong and Lee-Ing 119). The expenses written down should be well scrutinised and where possible they should be cut to ensure that credit card spending is well budgeted. Splitting monthly budget into weekly spending helps a person to stay on a track. Also, staying on a budget helps ensure that overspending while using credit cards is reduced, and the use of credit card usage doesn’t come to a standstill.

However, most of the American public like to use credit cards to make ends meet. Despite the shortcoming with the use of credit cards, it also leads to convenience, is secure and gives potential valuable rewards for its regular users. Despite credit cards leading to overspending, there are different ways that can be employed to reduce spending, but retains the use of credit cards. It is practical to use credit cards as they give better and convenient results.

Danger emerges when credit card utilization has a tendency to be extremely, as cardholders can charge large amounts and just pay a little month to month. As the charges keep on adding, they rapidly get themselves, not able to pay their base adjust and near default (Steele 1). There are new different options for credit, which have made numerous Americans to stop the utilization of charge cards (Steele 1).

In conclusion, the American public shouldn’t stop using credit cards, but rather ensuring the use of credit cards don’t lead to overspending because of an increased desire of a better lifestyle. Spending can be reduced through budgeting.

 

Works Cited

Breyer, Stephen G., et al. “America’s Constitution: A Biography/Revolution by Judiciary: The Structure of American Constitutional Law.” The Yale law journal 115.8. 2006.

Leamy, Elisabeth. Save Big: Cut Your Top 5 Costs and Save Thousands. Wiley; 1 edition. 2011

Tong, Carl H., and Lee-Ing Tong. “The U.S.-China Trade: An American Perspective.” Competition Forum 6.1 (2008): 116-21. ProQuest. Web. 4 Feb. 2016.

 

Related: Classification of credit

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