http://www.theprovince.com/Cautious+consumers+putting+themselves+credit+card+diet/1318667/story.html
This article from The Province talks about how many consumers are going on a "credit card diet". This means that more people are cutting up their credit cards and resorting to cash to pay for purchases during this tough economic time. After Jessica Hooper found out that there were a record number of job losses in January, she decided there would be "no more living in the moment". "Credit card dieting", according to one advertising agency, will be a major consumer movement this year. People will begin to spend only on things they need and not just on what they want. There are predictions that students will get their first credit card at a later age and that businesses will rely more on cash as opposed to credit cards.
One of the concepts of Chapter 7 is the demand for money, specifically transactions. Transactions are one of the categories of individual demand for money. In order to have day-to-day business, transactions are needed. Also, money is needed to buy things like food and clothing. Businesses require money to pay for the services they need. Consumers' decisions to pay by cash or credit influence the demand for money. Because there is currently a recession and with the "credit card diet", there will be a decrease in how many credit cards are used for purchases and an increase in cash used for transactions. This is probably the opposite of what things were like before the recession when consumers used credit cards to purchase pretty much everything.
Since I don't work, I don't have a credit card. There's no point in having a credit card if I don't make any money, so I pay everything by cash. For me, it's much simpler and I don't have to worry about paying the bills at a certain time of the month and making sure that I have enough money to pay it off. As mentioned in previous blogs, the recession isn't really affecting me, the main reason being that I'm not yet in the workforce. Whenever I do plan on getting a credit card, I'll probably use it for major purchases like buying a car or a house and use cash or debit for smaller purchases like groceries and clothing.
7 comments:
It seems logical that more people are curbing their spending habits in these economic times. I do not find it entirely all that surprising that people are now cutting up their credit cards in an attempt to stop themselves from splurging on products that they realistically do not need. I agree with the predictions that students will get their first credit cards at a later age because parents now are less inclined to give their teenagers the power to spend much more than they previously did. Teenagers have been known to have less control of their spending habits than adults. I personally do not own a credit card and have no intention of getting one anytime soon due to the economy right now.
G. Lai
It makes sense that people are cutting down on usage of credit cards during tough economic conditions,Although i don't think you should totally neglect the transactions of credit cards of the purchase of goods , there are pros such as keeping track of your finances and your expenses is easier because you will find them in a single statement. You can easily purchase anything simply by mail or phone. Furthermore, large quantities of your expenses can be paid in monthly installments. If the product you bought is defective, credit card allows you to withhold payment for it. Credit cards usage varies by people spending habits, so by controling your expenses you won't face any financial problems
Credit cards have gotten a bad reputation because of people's outrageous spending. They applied for the line of credit and received it. They went shopping. As a result, their bill was higher than expected and that trend continued, sparking slight debt. Where does the blame go? It goes to the credit card company because they provided the cash and are now charging interest that some people are unable to pay off. I find the use of a credit card level to the use of cash for the paying of a transaction. I can see teenagers getting their first credit card earlier to be honest, assuming that there is good communication between the child and their parents. The economic gloom pressures the teen to spend more wisely and carefully, ensuring that he/she has read all the fine print and knows how the credit card industry works. I can only recommend lessening the use of a credit card only in response to a growing fraud and identity theft market.
Alex Ng, Block E
Despite the numerous negative undertones associated with the underlying topic, credit cards are extremely useful in daily life and is only seen in negative light because of how people use it carelessly. The most simple way of controlling splurging with credit cards is so put a limit on the card (or simply to get a debit card instead). Regardless of spending habits and expenses, credit card interest can be easily avoided! If you pay off the balance by the end of the month, there is no need to worry about paying high interest rates. On the issue of credit cards being issued to young teenagers, there should be some kind of income requirement. An income requirement would ensure that young jobless teenagers would not get a hold of credit cards. Credit cards are not objects from hell, rather, they are seen as so because of how people use them.
I don't find it surprising that people are going on this credit card diet in these economic times. People feel like they don't need to splurge on things they don't need. But in a way I don't think people should be going on these diets because spending more will increase the GPA and it will help get out of this economic crisis. Just like you I personally don't own a credit card as well so I don't need to worry about all these problems. But with cutting these cards it will definitely help them control the amount of cash people are spending.
Although it might be nice to flash out a Visa, MasterCard, AmericanExpress card, there is a small price to pay for using them. For many purchases, there is a fee on the usage of credit cards for transactions because the retailer has to do more to be able to supply the payment option. Tough times cause people to really watch what they spend and actual money (bills, coins) allow people to watch what they have before they spend it. Credit cards have the tendancy to make people overspend because they don't realize how much their bill will be at the end of the month.
- Lily Nguyen, Blk E
As I read this I couldn’t stop thinking about what we had just learned from the previous chapter on how spending money is actually beneficial to the economy, yet people are cutting up their credit cards – which I tend to find kind of a drastic decision. Speaking as someone who does have a job and owns a credit card, even I admit to having occasional urges to use the card, but that doesn’t mean I abuse the power of having one; unlike some people I actually have the self-control to not use the card. I do believe with the prediction of students soon registering for a credit card, and personally I’m not against the idea, however my only condition – and this goes for anyone – is that a credit card should be given to someone who has a regular income and can be responsible enough to not misuse it.
Stephanie Murao
Block F
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