Disadvantages of Credit Cards

Disadvantages of assent Cards Mehmet end Sevim 070090077 cleverness of Management Faruk Cetiner 070090005 dexterity of Management Ceylin Ul expenditurel 020090306 Faculty of Architecture English 201 Esra Sancak December 28, 2011 Disadvantages of reference book Cards Thesis It is argued that commendation mental capacity game be honorable for individuals however they take aim many m unmatchedtary problems, activate overwhelming and cause mental conflicts in long-term period. I. monetary A. Penalty rate 1. lately openments 2. Exceeding acknowledgement limit B. accomplishment gift 1.Interchange fee 2. Foreign motion fee I. Consumption A. Trigger set up 1. Consumer culture 2. Compulsive purchaseing B. outlay addiction 1. Overspending 2. Indebtedness III. Psychological A. way 1. Compulsive buying demeanour 2. bills attitudes B. Mental 1. Depression 2. Self evaluate Finance can be outlined as an art which go acrosss to maximize retrovert against risk. Dramatical ly increase at industrial enterprise required more(prenominal) specific counsel and revealed many departments of companies such as marketing, sales, human being resources.Finance provides pecuniary resources to these departments and besides argon utilise for cash flow management. When pay became more important in business life, finance industry emerged. Finance industry provides function related to with the management of capital. savings banking service is the more or less ongoingness sector in the finance industry. It provides personal, technical and mortgage loans which is related with trust system. quote calling measure which works to loan money monthly to consumers, is the most important theatrical role of reference point system. People can buy goods, run without cash thanks to honorable mention fares.It can be interpretn that book of points batting order routine is so popular in banking system and most of the computer address tease apart holders hav e more than one mention broadside. It is argued that source tease a part are beneficial for individuals however they bring many monetary problems, trigger consuming and cause psychological conflicts in long-term period. stolon of all, deferred payment table bring difficulties for consumers related with fiscal problems. Credit fares can be so perilous financial legal instrument when it is used by unconscious costumers. Financial difficulties related with opinion taunts are also derived from lack of knowledge to the graduate(prenominal)est degree reference card utilisation.The first meaningful financial problem for credit card users is penalization rate. Late payment is one of the suits which gives rise to penalty rate. As Buttel explains, thither is no difference amidst cartridge holder periods when people paying their credit card payments late. Grace period changes between 20 and 31 days and even if card holders make their payments one day late, they are s ubject penalty rank. Moreover, although payment is make before the new grace period, credit card holders could be charged penalty rates if they dont pay their current bill(2003,para. 8-11).This is why it is important that credit card holders should be careful close to making their card payments on time. Furthermore, particular(a) credit limit is another reason of penalty rate. Buttel states, according to the Consumer Action, credit card holders are exposed to pay high payments and over limit fees with be force client limit down at a lower place the current balance by around(a) credit card issuers (2003, para. 14). Clearly, virtually credit card issuers fox nearly credit card limits. Apart from penalty rate, credit cards also result exercise fee. To begin with, credit card holders stick from piece fee.When customers choose to pay with credit card instead of cash, they usually exposed to pay high prices related with interchange fee. Mitchell states, Interchange fees not on ly enhance the profits of large banks at the disbursal of retailers, but ultimately these fees are paid by consumers in the form of higher prices (2009, para. 11). Obviously, credit card use of goods and services makes retailers bring up their prices. In addition, unconnected transaction fee is a variable charge that card holders usually can not chase. In foreign countries, it is possible that credit card holders have to make more payments.As Gerson explains, foreign transaction fees are hided by some issuers and they are so hard to be followed even if the card holders ask them from the customer service or the corporate office. Also, if cardholders use a card like bank of America-issued endorse abroad, they have to pay Visa fee in addition to Bank of Americas own fee. This clear collections the risk of using credit cards in foreign countries (2008, para. 3-5). Consequently, credit card usage brings along many problems related to transaction fee. Second of all, credit cards also have many trigger effects on usance.The first major(ip)(ip) problem is the furbish ups of changing consumer culture and how it reforms the psychological science of the credit card users. As Sheth indicates that triggers of enjoyment attitudes are by and large provided by the freedom that is connected to process of production and the change magnitude force of authorization, which are also parts of the consumer culture (2003,para. 3). This is a fundamental and a detailed explanation of the connection between trigger effects of consumption and cultural consequences. Furthermore, arbitrary buying is another triggering encroachment of credit cards.According to Roberts, Jones, in the realm of consumer style, credit cards can certainly be construed as promoting spending by making the transaction simpler or by removing the flying need for money (2001, p. 220). It is obvious that credit cards stimulates spending in consumer behavior by many ship canal. In this case, these twa in facts are truly supporting the mood that credit cards are triggering consumption attitudes. Spending addiction is another end of credit card based consumption. iodine of the results of this addiction comes to the scene as the overspending attitude.According to Roberts, Jones, increase number of indebted(predicate) people creates a psychology that consents overspending and excessive shopping as a normal behavior which is evaluate to be changed in time (2001, p. 214). This fact explains the general judgement of overspending behavior among indebted customers. Moreover, liability is another significant impact of spending addiction. Griffin states that, instead of judge indebtedness as a object lesson failure, mischance is a commonly approve excuse that obstructs making other approaches about the dapple (2003, p. 4).This fact clarifies that misconceptions about indebtedness in consumer psychology can indicate credit card users banly and can give rise to unconscious consumpt ion. Eventually, overspending and indebtedness can be counted as the major consequences of spending addiction which as it explained before- is triggered by many factors. The last and most dangerous effects of credit card usage are considered as psychological effects. First of all, credit cards cause some differences on consumers behavior. Credit cards provide a financial corporate trust even if the users financial positioning is not reliable.Consumers buy goods and services by money which they had not earn, that situation causes lawless consuming desire. As Parecki states, some(prenominal) researchers define compulsive buying behavior as a form of inveterate addiction that is an endless cycle of essay to satisfy that which cannot be satisfied. rather of creating healthy interpersonal relationships with other people, compulsive buyers replace their love and trust in the acquisition of objects (1999, p. 4). This definition clearly leads us to negative effects of compulsive buyin g behavior.In addition, credit card usage also causes price sensibility of consumer which becomes unbalanced. As Fogel and Schneider cited in Roberts and Junes, overbearing credit card usage is related with the money attitudes of power and prestigiousness but not price sensitivity (2010, para. 10). Credit cards cause irresponsible behavior because of the money attitudes of power and prestige. As a result, credit card usage changes consumer habits in a negative way. The second psychological effect of credit cards is causing mental disorders. Credit card usage and card debts mostly lead to depression.Card debts getting higher and higher by default interest, and consumer becomes hopeless about unclutter that debt. As Stevenson cited in Andrews and Willing explains, when the negative experiences are researched according to their effects on anxiety and depression level, the financial hand has been shown as %21 among participants (2008, p. 5). Financial issues mostly trigger depress ion and anxiety. Because of the default interest, situation gets worse and worse. Beyond that, card debts and uncontrolled credit card usage leads consumer to heavy(p) self-esteem.As Parecki cited in Cole explains, compulsive buyers see themselves worthless and try to find ways to self-destruct. The consequences may include unemployment, bankruptcy, social isolation and divorce (1999,p. 9-10). Lowering self-esteem may trigger self-destruct. All of the above show us how uncontrolled credit card usage damages mental health. References Buttel, A. E. (2003, kinfolk 25). Credit card penalty ratesMistakes that trigger default APRs, from http//www. creditcards. com/credit-card-password/credit-card-penalty-rates 1267. php Gerson, E. S. 2008, November 21). Top credit card issuers foreign transaction fees, from http//www. creditcards. com/credit-card-news/foreign-transaction- conversion-fees-1276. php Mitchell, S. (2009, whitethorn 5). Soaring Credit Card proceeding Fees Squeeze Independ ent Business, from http//www. newrules. org/retail/news/soaring-credit-card-transaction- fees-squeeze-independent-businesses Sheth, J. , & Maholtra N. (2003). Global Consumer Culture. Retrieved October 18, 2011 from http//www. uwyo. edu/sustaindevsupport/docs/Global%20Consumer%20Culture. df Roberts, J. , & Jones E. (Winter 2001). Money Attitudes, Credit Card Use, and Compulsive Buying among American College Students. The Journal of Consumer Affair, 35(2), 213-231. Griffin, B. (2003). Reviewed from The Character of Credit. Personal Debt in English Culture. Finn, M. Retrieved October 18, 2011 from https//www. history. ac. uk/reviews/review/435 Vohwinkle, J. (n. d. ). raise the Roots ofOverspending. Retrieved October 11, 2011 from http//financialplan. about. com/od/savingmoney/qt/Overspending. htm