The article: http://www.thestar.com/business/article/611151
Canada's recession and decreasing employments have caused the government to become more involved in credit card companies. Statistics say that credit card losses are quickly pacing up to the number of losses in past recessions. Because of this, many major banks are beginning to enforce rules that are more strict towards high-risk clients regarding lending out money, and raising the credit card limit. CIBC is one that has already begun doing so, and are seeing positive results. The growing percentages of consumer loss ratios, credit card losses, personal bankruptcies and job losses, are persuading the government in Ottawa to step up and take charge of the credit card industry. The NDP is already considering making a consumer bill of rights. On the other hand, many credit card companies such as Visa is arguing that government intervention may limit competition, therefore hurting consumers.
This article about credit cards and what the credit card industry is planning to do connects with the material in the textbook because Canadian banks are planning to change and make new decisions that will affect the consumers in Canada. Credit cards are very popular amongst households, and they may be the reason why many families are able to support themselves. Seeing the statistics of growing personal bankruptcies and job losses in Canada, it is safe to say that cash is becoming less available for Canadian households, making credit cards even more important. Banks that offer credit cards have to be more stingy in lending out money, as they're taking into account the amount of cash or assets they actually have before they can lend out big loads of money to just anyone.
Aside from the reason that many people are getting laid off from their jobs, which results in a lower income and less cash, I think another reason for the high credit card losses is because of what the consumers are spending it on. In my opinion, credit cards should be used for mainly necessities. If people start buying things that they don't really need with their credit card, along with the things that they do need, the amount of money they owe will of course increase. Whereas, if necessities were bought with credit, and the extras were bought with already existing cash or assets, one's debt would not be as great, making them being able to pay off easier. In addition, government intervention for credit card companies, and the fact that the rules may be more strict, may ultimately harm the economy instead of help. Consumers would spend less because of these limits, therefore not helping the economy.
skip to main |
skip to sidebar
homies
Posts
Blog Archive
About Me
- picassoingsome-thing
- I like to paint, and draw, and eat. I am proud to say that I love going to comic book and anime conventions, even if that means taking a trip from my beautiful city of Vancouver. Simple things are always the best because life is a tangled ball of yarn. I'm also an avid fan of tea, board games, and giraffes!
3 comments:
The idea of using the credit card to buy only necessities is a somewhat difficult idea. Credit cards are great for huge payments on certain items (such as televisions and other electronics) that people do not or cannot pay over a short amount of time. Whereas with the necessities (such as clothing and food), they cost less and could be easily paid off with cash. It is more of a "wow I don't want to blow all my cash on an expensive item at once" kind of thing. Usually people would keep their money in deposits rather than leaving them lying at home, I know that I for one would do that.
Jason Choy
Block F
I agree with Jason that permitting credit card to only buy necessary items for consumer is a difficult idea. Firstly, the purpose of credit card is a temporary loan that allows you to buy something that exceeds your current pay. An example would be a $2000 television. If you make $500 weekly it will take you 4 weeks inorder to buy the television. Credit card acts as a temporarily loan in which you pay back the money at the end of the month. In truth it is not true money, but a type of transaction. Hence, the thought of using credit card only for necessity is not probable for it defeats its original purpose to buy luxary items.
John Hui
Blk. F
For a fact, credit cards should not be permitted to buy only necessities. I agree with John: it truly defeats the purpose of having a credit card in the first place. Most people use credits cards to purchase large sums, and not small payments, like groceries. Credit cards are handy because it allows you to purchase items that you, at one point in the time, cannot afford. These transactions permit you to pay at the end of the month which is very convenient. Personally, when it comes to credit card usage, I always imagine it being purchasing 65’’ plasmas or paying for $500 dinners, and not using it to buy towels and toothpaste. As you can tell, it’s a very difficult idea to cope with.
K.Ip
Block F
Post a Comment