Credit card use has been on the rise in the last few years with more people replacing cash with credit cards. The increased use of credit cards has provoked an issue for the US as a whole. The development and economic growth of a country depends heavily on its inhabitants. Credit card debt in the US is around one trillion dollars, and it only keeps increasing from there (US National Debt Clock).
Now a days there are people who have credit cards because they are very essential, as long as they know the responsible use of it. Credit, if used smartly and with discipline can be an ally to build credit for a family or a heartache if not used correctly. The long term solution is to educate the public and create a different culture in the way we look at and spend money. Creating awareness amongst the public on proper credit card usage will help change the financial culture to a more efficient and effective way that will be beneficial to people.
When people are taught good spending cultures the prevalent increasing debts will be avoided in the future time. This will have the overall advantage of increasing the economy of the whole country.
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Teaching kids at a young age the importance of credit cards is benefitial for not only the individual but for society. Credit cards can be benefitial just like how they can be risky if they are not used properly; causing the accumulation of high debts, due to the high interest rates that credit cards have, as well as the facilities that they give people to do their shopping and pay their balances. Some of the advantages of using a credit card are being able to plan your expenses, as well as avoid carrying cash with you.
Through the use of a credit card you can keep an organized record of your purchases and divide your total amount of transactions into monthly payments. Although carrying a credit card has its advantages it also has some drawbacks, they may involve additional charges for their use. If you do not pay the total balance each month, the cost of the items you purchase has an additional cost due to interest. Also if you do not have discipline and use it impulsively, only pay the minimum or not clear of the dates of payment, you can accumulate a debt bigger than you can pay. That is why it is important for an individual to know how to use credit in an intelligent way.
Using credit cards smartly has a positive side from the perspective of national economy. Individuals can purchase things they need and pay it back later by building their credit. When consumers make purchases, businesses generate revenue and this stimulates economic growth, meaning the debt can be repaid in future. At the global level, a cashless finance system will save on paper since it would be retaining resources used in making money. You only need to swipe the card, pay the monthly bill online and receive an receipt through email. Therefore, no paper is involved. If only people knew how to use it properly, instead of blaming the banks for making a business by creating profit from interest and fees, then credit can be an ally for the family with all of their purchases as well as for the whole world.
However, creation of awareness and education might be a capital expense. When finance classes are introduced at the school level there will be an increment in operational costs due to the added salaries of the finance teachers. Additionally those teachers who had few classes initially will have to handle more classes causing them to request more income. However, most schools already have finance teachers and classes therefore making it more possible to make it a mandatory class. Most teenagers don’t know how credit even works, if we start with the youth then it can help the generations to come.
As you can see, owning a credit card comes with lots of benefits like accessing credit to own things you don’t have, building credit, avoiding paperwork and saves you the risk and inconvenience of carrying large amounts of cash. If you use the credit card responsibly, you can build your credit and access home and car loans without using your savings. Teaching the correct use of credit cards to the youth would help the economy exponentially. We can initiate this change by implementing mandatory financial knowledge courses. Bringing light to the problem and being held accountable for your own knowledge is the best way to get out of debt.
