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Dangers of Credit Cards and solution

The thin line between advantages of credit cards versus the dangers of having one is slowly enlarging towards the danger side. It is becoming more apparent that credit card being advantageous or disadvantageous now depends on whether one approaches it from the consumer’s point of view or from the good or service provider’s point of view. Nevertheless, the increasing hue and cry can only imply that credit cards put people at financial risks brought about by impulse buying and overspending. The genesis of this problem can be attributed to the factors such as dying business ethics (Laura, 34), liberal financial policies, transition to an E-economy and the perceived autonomy with which credit cards come to the users.

Point often overlooked is that credit cards have already impacted negatively on users lives in very many ways. To begin with, it has been found that credit card issuers normally perform a consistent check on credit cards to net defaulters. In many circumstances, companies use late payment as a lame reason to increase interest rate on one’s credit card. Besides, sometimes unsuspecting credit card users have found themselves on the receiving end owing to shrunk grace periods. Company policies may allow them to reduce grace period say from 30 days to 25 days without necessarily having to alert credit card users (Self Help Credit Repair, 1). Under such circumstances, credit card users who do bulk shopping from day 26th onwards under the impression that they are still covered within the initial 30 days grace period may be in for a rude shock when pay time comes.

As a result, there is a need to find a solution to these hidden dangers of credit card. The most effective way would be to educate the public on the advantages and demerits of using credit cards. Since the market segment often targeted by credit cards issuers are college students, high schools and colleges should start an education program that aims to enlighten these category of learners on the pros and cons transacting using credit cards.

Furthermore, pressure should be exerted on credit companies through lobby groups that terms and conditions should be presented to credit cards users in the most simple, easy to understand and clear way. Ethics (Robert, 112) should still be emphasized as a corner stone in business. Modification should be done so that any shopping using credit cards to also include pin verification, a code which only genuine owners should have. Credit cards should also have self alert system for expenditure beyond credit limit so that users may make a decision on whether to proceed with expenditure beyond maximum manageable level.

However, the consequences of not developing a remedy strategy towards this growing problem can prove disastrous either for the credit companies or for clients. For instance, under court orders, a company may lose millions of dollars under court order if its terms and conditions are found to be intentionally misleading. On the other hand, a large number of people may continue to increasingly find themselves living marginally or forfeiting their property due to overspending, fines, higher interest rates or impulse buying.

Works Cited

Hartman, Laura. Perspectives in Business Ethics. Dubuque, Iowa: McGraw-Hill. 2005

McGee, Robert. “Legal Ethics, Business Ethics and International Trade: Some Neglected Issues.” Cardozo Journal of International and Comparative Law, 10, 1, (2002) 109-216.

Self Help Credit Repair Retrieved from http://www.selfhelpcreditrepair.net/top-10-hidden-dangers-of-credit-cards-2, on 18th December 2011.