Chpt 14: Cash Control and Banking

http://www.cbc.ca/news/background/personalfinance/creditcards.html

Summary

The usage of credit cards by Canadians over the last few years have been steadily increasing and have now reached the point where over 50 million Visa and MasterCards exists within our wallets. Not only so, 24 million retail credit cards have also found its way into consumer's pockets by means of enticing offers of discounts when you apply for their card. With most stores accepting the source of payment by means of a plastic card, there are drawbacks to extensively using them. Credit cards most oftenly come hand in hand with interest and not paying on time simply increases that interest rate.Not only so, the option of paying the minimum amount only increases the debt. So why do Canadian have so many credit cards? Simple, they are easy to apply for and are a great way to pay off debt at a later date, especially when your paycheck has not yet arrived.

Connection

As many of us know, a visit to the bank to deposit money or withdraw money, the bank charges certain fees for helping you accomplish such a task. With credit cards, it is the same. Cardholders are charged transaction fees and annual fees and most importantly, interest on overdue payments. Interest rates vary from store to store and sometimes bank to bank but this is what takes a toll on the consumers, especially for people who do not take note of their bills when they arrive but when the stack of mail blocks out the light. It is often too late at that point to pay off their balances without interest and as a result, hefty interest rates. If this does not stop, it only becomes a cycle. On an even darker note, not paying your fees on time leads to bad credit history and may eventually be the reason for credit card companies to disallow you from applying for their card.

Reflection

I understand why individuals prefer to not pay in cash for cash is easy to lose and unconveinent to carry in large amounts. On the other hand, it's conveinent for small grocery shopping payments and if we were to live in a world where there is no cash, we will still encounter scams, losses, and so on just like we do today. Currently, microchips are being installed into credit cards to decrease the number of frauds, but technology can be fickle. Once an individual figures out how to access these new cards, they will spread the news and consumers will be back to base one. I don't think cash should be completely eliminated from means of payment, but what I do think is people should consider when to use a credit card and when to use cash.