Many people are not willing to read the modest print before applying for a credit card. Through their ignorance consumers regularly sign up for financial products that only remove what little spare change they already have. With high balance transfer fees, high interest rates, and high foreign transaction fees financial institutions can take advantage of unknowing customers. The oppressive fee based structure of most credit cards combined with poor purchasing habits and compulsive personality traits mean that many people set themselves up for failure when they fill out credit applications.
It is said that debt from credit cards can cause of 1 million bankruptcies every year in America. Legally almost all of the blame lies on the consumer. After the stock market crash in 2008 there was some increased regulation in the credit card industry which forced the credit card companies to more clearly show the interest rates and fee structure. In the end this has not seemed to greatly aid in the reduction of credit card debt related bankruptcies. Every year there are still hundreds of thousands of people who are forced to declare bankruptcy due to excessive credit card debt. With the legal culpability staying on the customer it is important that consumers educate themselves on how to use credit cards before they sign up for the application.
The dangers of credit cards lie in the fact that they institute a strong discontinuity between the act of making a purchase and the related labor required to pay for such purchase. In centuries past not every transaction was monetized as battering was a much more common form of payment. When an individual is forced to work with their hands and then see the fruit of labor then the cost of any given item seems so much more tangible. In the heart of the barter process is action that when one is forced to trade one good for another the individual can clearly see they are giving up in return for the other product.
In the modern monetized economy it is common for people to pay for an item months or years after it has been purchase. This means that they find it difficult to mentally connect their labor with the item that was purchased. When one can pay for an item on credit they are encouraged not to look at the working hours that they put in during the past week but instead to imagine that they can amortize the payment over a longer time period. The problem with this is that it is that people can become encouraged to assume that their cash flow will stay at its' current level throughout the payment period. Without a constant level of cash flow it is very possible that they will fall behind on their payment.
It is said that debt from credit cards can cause of 1 million bankruptcies every year in America. Legally almost all of the blame lies on the consumer. After the stock market crash in 2008 there was some increased regulation in the credit card industry which forced the credit card companies to more clearly show the interest rates and fee structure. In the end this has not seemed to greatly aid in the reduction of credit card debt related bankruptcies. Every year there are still hundreds of thousands of people who are forced to declare bankruptcy due to excessive credit card debt. With the legal culpability staying on the customer it is important that consumers educate themselves on how to use credit cards before they sign up for the application.
The dangers of credit cards lie in the fact that they institute a strong discontinuity between the act of making a purchase and the related labor required to pay for such purchase. In centuries past not every transaction was monetized as battering was a much more common form of payment. When an individual is forced to work with their hands and then see the fruit of labor then the cost of any given item seems so much more tangible. In the heart of the barter process is action that when one is forced to trade one good for another the individual can clearly see they are giving up in return for the other product.
In the modern monetized economy it is common for people to pay for an item months or years after it has been purchase. This means that they find it difficult to mentally connect their labor with the item that was purchased. When one can pay for an item on credit they are encouraged not to look at the working hours that they put in during the past week but instead to imagine that they can amortize the payment over a longer time period. The problem with this is that it is that people can become encouraged to assume that their cash flow will stay at its' current level throughout the payment period. Without a constant level of cash flow it is very possible that they will fall behind on their payment.
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