In the modern society there exist many forms of buying goods and services. In ancient times, people used to buy goods and services by the use of barter trade; this involved exchange of goods for other goods and services. There are various forms of paying for goods and services, among them being cash, hire purchase and buying on credit. Buying on credit refers to a form of payment that can be used by an individual to acquire goods and services and pay for them in the future (Calman 21). Buying on credit is an internationally accepted way of purchasing commodities. Credit cards have become ubiquitous in today's society, and this makes shopping simpler. The consumer does not have to worry about carrying cash or having money at the time of the purchase. This form of payment has been widely used for a long period, and it is increasingly finding its way in the modern society. Most people have always preferred buying on credit instead paying cash (Garon 45). The essay will try to outline the types of credit cards; qualifications to user of credit card, things one to consider before buying on credit, advantages, and disadvantages and it relevance in the modern society.
People use credit cards with the promise of paying for the commodities at a later date. Credit cards are of different types depending on users' selection. The commonly used debit cards include installment credit, revolving credit, and open credit among others. Installment credit is a form of credit that allows one to borrow money with an assurance to pay the equal acquired money for a specified period like a week, a month and years. The credit acquired can be paid in agreed installments until the full debt is cleared. Revolving credit is a form of credit that allows one the continuously borrow as long the person has a good standing account. The person can use the credit and receive the total spent amount after a given period of time. The borrowed amount is subject to interest on the time of payment. Open credit requires one to repay the amount borrowed at the end of a specified period agreed upon (Cameron 78).
Credit cards can be used on condition that the user is above eighteen years, has a national identity card or international passport. Qualifying to use a credit card requires the user to have a good history of repayment of debts on the required time. Having this kind of qualities will enable one to easily access credit at one’s own convenience. The duration of which one has used a credit card also matters in order to qualify. A person who has used a card for a long time has higher chances of accessing this service without difficulties. Individuals who have not used credit for a long time have lower chances of accessing this service easily. A good history of an individual boosts the chances of an individual in acquiring credit. This kind of quality builds lender-debtor trust as the debtor has the credibility to repay the acquired loan (Filippo 98).
An individual needs to consider a number of factors before thinking of using credit card. A person should consider if this service is appropriate at that specified time. Most responsible credit user saves a lot when it comes to making purchases. They normally weigh options before settling on a given on the type of card to use. The amount of purchases to be made greatly determines the kind of credit card to settle on (Garon 108). For instance, if one wants to make large purchases, a cash-back credit is the most appropriate. This allows one to get a lot of discounts and thus help to save some money. A person should also consider on how to repay the credit acquired. Most people spend without thinking on how to offset the balances in their cards. Having this in mind one will avoid some forms of using credit. The person also considers the kind of free bonuses that can be associated with credit cards. An individual, therefore, will consider using the credit card in order to gain bonus that can be used to shop in the future (Calman 67).
Credit cards have several advantages that make many people worldwide prefer using credit cards. Using this form of payment make it easy for one to buy goods and services since it does not require one to carry a large amount of solid cash. Carrying large amounts money is cumbersome and some companies do not accept to buy goods on cash. For instance most airlines, some hotels and car rental agencies demand the use of cards. Credits cards provide additional protection in case goods bought using credit get lost or get damaged in cases were original receipt of purchase get lost or misplaced. When one has a good credit history, it allows one to apply for more credit cards. This can allow one to apply for rental applications, loans and qualify for some jobs that are only achieved by paying debts on time. During a crisis, one can use credit card in case one does not have money. When one is held during floods or car break down, he/she can rent a hotel using the card. Some stores give discount benefits to customers who buy goods on credit. Some companies offer this bonuses and discounts thus motivating their customers to buy more goods on credit. This helps the involved companies to generate more profits as customers pay with interest (Filippo 72).
Credit cards have served positively in the lives of many people but on the other hand they have negatively impacted on the expenditures of people. Credit card encourages people to spend more money, and this makes people spend beyond their plans. Most of the companies do not require one to pay the outstanding debt before using their credit cards. Some people think credit cards goods acquired through credit cards needs to be repaid back. The payments demand a lot of interest making goods more expensive than buying using cash. Companies providing credit cards charge higher interest rates for the services rendered. The more one uses the credit card, the more interest you pay as this is the way they generate more income from people. Credit cards can be stolen and used for shopping. This leads to cases of fraud as one pays for the commodities not acquired by the owner of the card. Impulse buying is another problem associated by the use of credit cards. Most individuals spend more than they had planned for while shopping in different outlets (Cameron 109).
For one to effectively make well use of the credit cards, one needs to observe a number of things closely. One needs to keep records on all the purchases made using the card. Keeping a close track on this will help an individual to adjust on his/her budget in case there is increasing in one's monthly expenditure. People are advised not to purchase things they did not budget for. Spending out of one's the budget greatly affects a person's income as one is forced to operate in great debts. People should strictly convene themselves to their budget (Garon 15). A person is advised to pay all the balances at the end of every month. This helps to reduce the debt burden on one's credits. In doing so, the personal can adequately plan and limit on expenses that are not necessary and encourage more savings. In order to reduce on the cases of fraud, the person should avoid lending his/her credit card to another person. The card should be handled by the owner since he/she is the one who bears the burden of paying the balances incurred.
Works Cited
Calman Goozner, Thomas P. Walsh. Barron's E-Z Business Mathematics. London: Barron's Educational , 2010.reprint
Garon, Sheldon. Beyond Our Means: Why America Spends While the World Saves. NewYork: Princeton University Press, 2011.reprint
Schyrlet Cameron, Janie Doss, Suzanne Myers. Economic Literacy, Grades 6 - 12: A Simplified Method for Teaching Economic Concepts. Michigan: Carson-Dellosa Publishing, 2011.reprint
Stefanini, Filippo. Investment Strategies of Hedge Funds. New York: John Wiley & Sons, 2010.reprint
