Credit cards have been helping and hindering our country for years now. At first, credit cards were used as a way that consumers could buy or pay for something with a promise to the credit card companies that they’ll pay them back. Credit card providers give a person a line of credit, determined by the company, and in exchange the person tells guarantees that over time they’ll make sure that the company gets their money back. In the Frontline episode, it was stated that the average American family has eight credit cards. But the difference between borrowing money from a friend, or even a bank, is that credit card companies can change the percentage of interest rates, which makes the holder of the credit card owe more money than they initially agreed to pay. This causes more and more debt as time goes on, which is a reason that a lot of people are failing to pay their bills, car payments, or mortgages. A lot of people take on these credit cards for a quick way to gain money and think that they can just pay back what they owe. This is not the case with credit cards. These companies approve you of a certain amount of money, let you use their money, and expect you to pay back way more than what you borrowed in the first place.
By Americans having these credit cards in their wallets they are putting themselves in a deeper debt, especially if they don’t have the money to pay off the cards. Credit card companies approve of thousands of dollars everyday, with APRs (annual percentage rates) through the roof. What we, as Americans, don’t realize is that the more we borrow, the more we owe. We look at credit cards as an easy way out or to buy something that we probably didn’t need in the first place. Everything is glamorous when we use our credit cards to buy things or pay for things but when the bill comes in the mail is when reality hits. That’s when we, as a majority of people, realize that we actually don’t have the money to pay for these credit cards but they looked so good and cheap in the mail. Credit card companies offer the choice of paying minimum payments on credit cards but in return credit scores will be lowered. With this, there will be lower chances of actually having enough credit to buy a car, a house, or even get a bank loan because they will know that you aren’t good at money management.
Even though credit cards pose a major threat in our financial stability in later years, there are a few solutions that would help. The obvious solution would be to just stay away from credit cards period. If you don’t have a credit card, you won’t have the chances of not being able to pay off the card. But for those that do or plan on having credit cards, a solution would be to better understand what a credit card is, what are the pros versus the cons, and to find out if a credit card is really the best thing for you. Ways to do this are by: contacting a financial advisor, doing thorough research before signing or agreeing to anything, calling the credit card company and asking to speak to someone that can “dumb things down” for you and don’t end the conversation until you can completely understand what was said. Credit card companies value customers because they’re putting money in their pockets so they will answer all questions.
Another solution to the credit card issue would be to only offer credit cards to people that could afford them. Asking for proof of income every three or six months would eliminate probabilities that people wouldn’t be able to pay off their cards. If credit card companies were to only give credit cards to people that they were sure could pay them their money back, then they would have a higher chance of actually getting their money back instead of people sending in IOU’s or ignoring their phone calls. This is the ethical thing to do because credit card companies really aren’t ethical at all. They take from the rich and poor, especially people that have low self-control, and provide them with credit lines that they know these people can’t afford. By only offering credit cards to people that can afford them, less people would be in debt. Those that can’t afford the cards would be denied and those that can afford them will be able to pay them. With this, credit card companies shouldn’t be allowed to change the rates of someone that is paying their cards off on time and with an amount that can satisfy their debt.
If changes aren’t made to the credit card system, our debt would increase even more than it is now. Making it impossible to buy anything, making us poorer, which could ultimately lead to losing of houses, cars, and even bankruptcy. Borrowing money that we know that we can’t pay back isn’t the smartest idea but people continue to do it because of things that they want but can’t afford. Even people that can afford to pay their credit cards off are upset because their rates are being changed right before their eyes. In my personal opinion, I think that credit cards should be eliminated completely because credit card companies have entirely too much power. Money “makes the world go around” and they know this which is why they send out credit card applications and offers to homes all across the nation and the naïve fall for them. If change isn’t made, our national debt will only increase which will make prices of everything increase which will make taxes increase. Before we know it, we’ll all be apart of one broke country.