How Reliance on Credit Cards Affects Financial Habits

Reliance on credit cards affects the way the general public spends money. There can be no escaping from that fact. It was in the 1920s that credit cards first came into use. American hotels and oil companies began to issue the cards to their customer base. People found the use of the cards very useful indeed, for when they were short of hard cash. If one looks back even further into the past, then one can find evidence that credit cards were being used during the 1890s within Europe. Merchants would offer credit to their customers, and if accepted, the customer would then be issued with a credit card,

During the year 1938 there were many companies that had begun to accept credit cards from each other. Now, in this present day and age, credit cards are the ‘staple diet’, if you will, within today’s society. This has resulted in personal debt spiralling out of control because there are many people who believe – wrongly – that the money charged on the card is ‘free money’.  This is especially so with many young adults, who simply refuse to believe that they will have a big bill to pay at the end of the month. The trouble with credit cards is that it is ‘invisible money’, and this then alters the way we all spend that money.

Credit cards that offer ‘invisible money’ alters our spending habits greatly. So, people spend and are shocked when they ‘max’ their cards out, having reached the cash limit. Our reliance on credit cards has actually reached crises point, this is simply because of the personal debt that has destroyed families in the past, and even now.

What is so surprising about this is the fact that although people may have racked up hundreds – or even thousands of dollars/pounds in debt – banks were still offering credit. To still offer credit to people who had built up such debts was and is indefensible. One has to say that the banks and finance companies have got a lot to answer for the debt crises that people now find themselves in.

However, banks cannot tell someone how to spend money that is made available to them on a credit card. Yet there is a direct link in the way in which we spend money that is charged on a credit card. Bad, financial habits set in, and it becomes so hard to break down those habits, once a person becomes used to spending what they believe is ‘free money’.

There are many people who simply lose control and the credit card then becomes a ‘lethal weapon’ in the wrong hands. Evidence suggests that bad financial habits ‘ground’ themselves within a person, once something is purchased with a credit card. There are people who would not dream of spending such huge amounts of cash, if it were not made so easily available to them. And the blame for this has to lie squarely with credit cards, in which their misuse, has now become rampant.

Banks, and financial companies have to take some of the blame too, in issuing out cards to people who have already accrued ‘bad debt’. Until this cycle is broken, then personal debt will continue to spiral out of control. Until there is some kind of government legislation – in reference to banks and financial institutions issuing out cards to people with ‘bad debt’ – then this major problem will continue to grow.