would an economy that bans the issue and use of credit cards (hypothetically speaking) fare poorer?
fare poorer than all the other economies around the world today that promotes the use of credit cards?
- 1 decade agoFavorite Answer
A ban on the issue and use of credit cards would have little real effect on current society, something that might not have been true even fifteen years ago. When credit cards first became popular, the idea was not to spend money that one had not already earned, but rather to increase the liquidity of ones assets. Checks were not universally accepted, as there were not the instant account verification technologies that we enjoy today. Banks also charged fees for a variety of basic services that are now taken for granted as being costless.
At this point, credit card use is roughly equivalent to an instant approval short term micro loan. Since borrowing would theoretically still be legal, unscrupulous lenders could still cause the same problems that we see today. The key to correcting some of the current abuses is regulation of the banking and lending industry. There must be some mechanism to assure that those attempting to take out loans or gain access to credit have at least a modest shot at repaying their debts.
If the real aim of the question is to ascertain what would happen if lending were banned, that would be disastrous. What business, in the modern era, has started without a loan of one form or another? How many families have bought a house or a car? Durable goods would be the almost exclusive domain of the wealthy.
- megLv 71 decade ago
Prior to the late1960's most people did not have credit cards in the US and I think they became common in Europe even later. The economic growth in the decades after WWII was higher than it has been in recent decades. The use of credit for small purchases means that over a long period of time people will buy less because part of their money was spent on interest payments. Having some consumer cretid helps but stores offered credit for big ticket items and home mortgages were available. I don't think credit card improves the overall economy but it does enhance the GDP growth of the financial sector
The convenience they offer in shopping is also available using debit cards with the new technology.
- 1 decade ago
Many people wouldn't be able to get things their family needs without being able to purchase it and make payments. For example buying their school clothes or christmas presents. I know when I was a single parent it was how we made it. Then I'd pay a bunch of the debt with my income tax refund. It's very difficult to accumulate large sums of money out of low wages. You mostly spend what you earn. We have a serious wage gap problem in America. CEO'S are earning astronomical bonuses that should be more evenly distributed down the chain because believe me that one CEO could not have pulled off any kind of earnings increases without the help of the workers doing the job. The money they pay these guys should be seriously looked into and outlawed. It should shock the Courts.
- Anonymous1 decade ago
I think with no credit cards...that would decrease economic growth. People would make less purchases on large items(large in terms of high price goods), therefor discouraging spending in the markets, which won't benefit anybody.
Less people buying, less the producers/sellers are making, therefore a decrease in jobs, an increase in unemployment rates...so removing credit cards wouldn't be the best solution for anybody
Economists want to ensure an efficient and equitable market.
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- Anonymous4 years ago
properly, having labored interior the established public i be attentive to ninety% of pissing bandits run and pass away the mess at the back of. could I ever have this style of terrible concern ensue to me, i might tell the shop salesclerk that somebody had spilled "something" in aisle 2 ... and then head for the hills.
- vinnyLv 51 decade ago
For me persolally, yes!