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Credit Cards Most Americans Should Not Use Essay

Credit Cards Most Americans Should not Use Credit Cards.

For some, credit cards are a convenient and safe substitute for cash. It is particularly helpful, for example when making distance purchases, such as ordering something by mail or over the Internet. However, for the majority of Americans, credit cards have become debt traps that are fast resulting in a financial crisis not only for these individuals, but also for the country as a whole. According to Chu (2008), for example, an increasing number of Americans are using their credit cards to survive today's harsh economic climate. This trend is simply driving the crisis to further extremes. However, credit cards are not only used to stay afloat. Many Americans are driven by greed and consumerism to buy as much as they can with what they perceived to be their "wealth." This trend makes it almost impossible to resist buying a non-essential item when it seems that the means to obtain it are available. Because of these issues, I believe that Americans should not use credit cards at all.

According to Chu (2008), the problem is partially the fault of the economic situation, particularly during 2008 and 2009. The author quotes analyses from the credit bureau, which indicated that consumer trends were changing rapidly because of the cheap and ready availability of credit: consumers were beginning to pay their credit card and car bills before their mortgages. This trend spells danger for the economy, as accelerated mortgage losses would have a very negative effect.

Chu also notes, however, that the rising cost of living is not the only culprit. Consumers are also lured by cheap and plentiful credit, along with an unwillingness to live without the luxuries that they have become used to.

While the economic situation can be understood, it appears that the availability of credit cards has discouraged Americans from even trying to tighten their belts. According to Simon, for example, a study has shown that the "typical" American consumer had four credit cards in 2007. This is significantly higher than the number recorded...

In addition, the study also found that 14% of Americans had more than 10 credit cards, compared with 10% of consumers for 2004. Many of these credit card holders use as much as, or even more than, 50% of the credit available to them.
Some states showed a higher trend in credit card usage than others. Hawaii and Alaska, for example, showed the highest number of consumers who used over 50% of their credit. According to the study, this was due to the housing boom of the previous year. Many residents were able to obtain mortgages with adjustable rates or 100% financing. As a result, the changing economic times have created a crises, as their rates are suddenly higher than they in fact can afford. Hence, these consumers are using their income to pay their mortgage and their credit cards for their daily necessities.

These trends show a general lack of sound financial planning encouraged by today's consumerism culture, particularly in the United States. The drive towards immediate gratification has placed sound financial practices like saving and living within one's means at a lower priority than these have ever been before. Instead, today's children are taught that everything is available to the person with enough "plastic" to swipe.

To remedy this, the best option is to remove the use of credit cards altogether. Not having credit to spend would remove the illusion of having money that in fact does not belong to the consumer. Credit cards provide a false sense of security, especially in today's harsh economic climate. Americans, as shown by the trends in using credit cards, are generally the victims of a child mentality when it comes to spending. They tend to want whatever they desire no later than "now."

Despite the fact that many cite the difficult economy as a good reason for using more than 50% of one's available credit, it is possible to live without a credit card. A case in point is a Knoxville consumer, who reported that credit cards "make her nervous," and that she has therefore never owned one (Block, 2010).

In 2010, the…

Sources used in this document:
References

Block, S. (2010, Feb 8.). More consumers Just Say No to Credit Cards. USA Today. Retrieved from: http://www.usatoday.com/money/perfi/credit/2010-02-08-creditcards08_CV_N.htm

Chu, K. (2008, Mar. 30). More Americans using credit cards to stay afloat. USA Today. Retrieved from: http://www.usatoday.com/money/perfi/credit/2008-02-28-credit-cards_N.htm

Simon, J. (2007, Mar. 9). Experian Study finds Rise in U.S. Credit Card Usage. Retrieved from: http://www.creditcards.com/credit-card-news/credit-card-usage-rising-1276.php
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