Are Credit Cards Money If Not, Why Are They So Popular What General Impact Do They Have On An – Article Example

Are Credit Cards Money? No, credit card is not a form of money; rather it is a loan, which a bank gives to a to make purchases. “Using a credit card is a form of borrowing: you have to pay the money back” (Anonymous, n.d.). They are popular because they facilitate people in making purchases without using money. One of the main reasons behind increased popularity of credit cards is safety. Money in the pocket increases chances of robbery or stealing. When a person has a credit card, he/she does not need to keep money in the pocket while shopping; rather he/she just needs to put a credit card in the pocket for shopping or for any other purpose. “Credit cards have traditionally been considered a way for households to postpone the cost of goods” (Randall, 2010).
Credit cards put a negative impact on the overall economy. Although credit cards facilitate people in buying things without having money in the pocket, they lead to inflation, which is not considered good for the economy. Credit cards lower the value of money while increasing the viability. For users, they make things more expensive because of the raise in the interest rates that banks charge from credit card holders. They make the economic system of a country flooded with cash and debts. Sellers increase the prices of the products, which reduces the value of money that a person has in the savings account. Therefore, we can say that use of credit cards put an adverse impact on the economy of a country.
References
Anonymous. (n.d.). Credit Cards. Retrieved from http://ftc.gov/bcp/edu/microsites/moneymatters/credit-cards.shtml
Randall, D. (2010). How Credit Cards Hurt the Economy. Retrieved from http://www.forbes.com/sites/moneybuilder/2010/04/27/how-credit-cards-hurt-the-economy/