Negative Influenced Of credit Cards

Negative influence of Credit cards on our lives

Introduction

The idea of credit cards as an alternate transaction medium is in the model of the demand for money by the (Warwick & Mansfield, 2000, pp. 617-626). In this document is applied to credit cards, and their impact on the demand for money. This paper provides a rationale for why a consumer would choose to use credit cards with no intention of borrowing on the map. The goal is to minimize the number of trips to the bank and the interest on cash balances not needed at any one time, investing in bonds, as in the original Baumol-Tobin model (Warwick & Mansfield, 2000, pp. 617-626). Warwick & Mansfield, (2000, pp. 617-626) found that credit cards allow consumers to hold lower cash balances and more bonds than normal Baumol-Tobin result. This idea of ease of use. This model, therefore, stresses the advantages of two credit cards. First, the additional interest earned on the funds do not need the money as residues. econd, the number of transfers of assets (eg, money, bond, bonds, cash) is reduced. Since each channel is causing the price of assets, it is important to reduce the costs added on top of interest.

Discussion

Looking at the impact that the amount of revolving credit card balance in the account transactions, as well as whether a household has a credit card, the impact of usability compared to borrowing at stake, you can begin to be untangled. The results showed that some of the negative effects of a credit card holder money demand is due to borrowing.

Some studies have been done on the credit card transaction as an alternative means. Warwick & Mansfield, (2000, pp. 617-626) believes that credit card ownership and checking account deposit balances, a proxy for the demand for money negatively associated, while there is a positive relationship between savings accounts and credit card ownership. These results are consistent with the theory of money demand, including credit card transaction as an alternative media.

A very small number of cards a household, responsible for a large number of revolving consumer debt. Thus, the question remains: Is credit card debt (and therefore borrowing) What is driving the negative result of credit card ownership and current account balances of deposits? Given the significant growth in revolving credit in recent years, at least some of the families to borrow. Since this is borrowing so high, it is big enough to drive results, and others suggested that the point for the convenience of using credit cards? (General Accounting Office, 2001)

Despite the convenience of consumers rely on the cards, they come with high costs and the risk of accumulation of unsustainable debt on the consumer. Here are some of the main reasons why credit cards should be avoided, the main disadvantage of the negative, that come with using a credit card.

As good as it may seem, credit cards also have a negative itself. Every time people buy on credit, they may ultimately pay more ...