Are credit cards a trap for the everyday consumer? Are the consumers' suckers for credit card companies? Maybe if you are one of those who run up large credit card balances and pay the minimums each month. People who exhibit that behavior is hurt because they end up paying a lot more for the products or services than the list price due to accrued interest and various finance charges from the credit card issuer. But does this apply to everyone who uses a credit card?
Two studies by researchers at the Massachusetts Institute of Technology and the University of Warwick may provide insight into my opening prose. The results from the MIT study say that people paid more when using a credit card than with cash. The University of Warwick study also concluded that people spent more using credit cards than cash or checks in similar purchasing situations. While these studies describe a specific segment of consumers, can we make the blanket statement that all people who use credit to pay for services and goods are "suckers?"
While credit card issuers often face criticism for some of their unscrupulous practices, they offer consumers many benefits. The first being is that if your card is lost or stolen, you can call the credit card company immediately and not be responsible for any charges an unauthorized user might have put on your card. This is my favorite benefit that cards offer that has led me to rarely carry cash in my wallet at any given time. I sleep well at night knowing that if someone steals my wallet, I'll only be out tiny amounts in cash and the frustration of having to get the relevant cards replaced.
Another significant benefit is that many credit cards offer rewards for using them. Credit cards also provide consumer protection. If a credit card user purchased a good or service from a merchant that did not fulfill expectations, the user could contact the card company. The company will then take up the battle with the merchant on your behalf. One example of when using a credit card came in handy was when I purchased a custom retro gaming console online and never received the console after waiting a year. After contacting the seller numerous times to no avail, I was able to call my credit card company, who then credited my account for the cost of the console. If I had not used a credit card, I would have been out of luck.
While credit cards have a bad rap among many people, not all people that use them are "suckers." Some people indeed purchase more when using a credit card than when they use cash. However, it is entirely unfair to paint all card users with a broad brush and say they are fiscally irresponsible. Credit cards are practical in many cases, and if a person has enough self-control to use them properly, the benefits are enormous. If you are a person that exhibits self-control, think about whether or not you would make a purchase if you were using cash, but continue to use credit cards and enjoy the immense benefits they offer.
Thank you for reading and hope you have a good rest of the day!
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