Why Are Credit Cards So Popular? Even though 50% of Credit Card Owners are Defaulters in America

The White House tells us that eighty per cent of households have a major credit card. Another study says 75% have a credit card but only about half pay it off routinely. Students now carry four credit cards on average in their purse or wallet.

Why? Why at this time of financial crisis do people have credit cards? There are certainly a number of reasons.

Convenience is the primary reason for having a credit card. You don’t need to carry cash with you which can be awkward and dangerous. Think about how big your wallet needs to be if you had several thousand dollars in it. Even in one hundred dollar bills, it gets thick fast. In addition, not everybody will take a check for payment either. You generally have to register with your food market or other favorite stores in order to use your checkbook. Identification is needed and if you bounce one, you have some hefty fees to pay and the embarrassment of being a deadbeat.

Another reason is that you can have several of them to use if you are strapped. You can pay one off with another and roll over your debt for a while. You can stretch your paycheck and live a little better than you can really afford too. None of these are good, but people do them.

A question we need to ask is why you would use a credit card with the onerous interest rates and fees that can be charged. In face of our economic problems and higher and higher unemployment rate, it seems foolish to have them at all. But many businesses and people are getting by and living on their credit cards.

Credit card companies make billions and billions of dollars a year on fees they charge to both retailers and consumers. The interest rates are sometimes very onerous—even to the best customers. They can charge a rate in every state as high as their home state allows. Only South Dakota and Delaware lack usury laws. Washington is now trying to pass new regulations for credit card companies. In July of 2010, however, new guidelines will come into effect anyway that should eliminate a lot of the irregularities we are facing now. Be late in your payment, and you are charged a late fee plus the continued interest due. Plus, your credit score will suffer too. Now, the companies are lowering the amount you can borrow on the card. They also now are finding new ways to make money off of customers. Recently, several have started charging 2-3 % fees if used to buy foreign goods or while traveling overseas. It used to be free.

So in the face of all this, why would you want a credit card? Convenience, convenience and convenience.