Module 3 : Ethics

Credit Card is it Good or Bad?

            From the word credit card, credit means we are able to buy something without paying cash in hand and replace payment with card. Before the concept of credit appears in card form, consumers and traders use credit coins and charge plates as currency. (Gerson, 2007)

Charge Plates
(source : http://www.creditcards.com/credit-card-news/images/charge-plate-bloomingdales-1946.jpg)

Charge Coin
(Source : http://www.creditcards.com/credit-card-news/images/charge-coin-hotel-lasalle.jpg) 

In the early 1900s, before credit cards were issued by bank they were provided by each specific company in the trades. These cards can only be used on that specific shop or business and is it also very limited in location too. The main purpose of early day credit cards was to improve customer’s relationship and providing better service. This also builds up customer loyalty towards a certain brand or company. (Woolsey & Gerson, 2009)

The first bank issued credit card is by John Biggins of the Flatbush National Bank of Brooklyn in New York during 1946. Before everything was in electronic form like today, merchants will deposit the sales slips to the bank and the bank will bill the customer at every end of the month.

The Diners Club credit card
(source : https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqm4SNv5wV3fPqLFQjkbNlCP1oP6yUQImyQz2SwI9yLjjDKzfDo3BTiHrm9IcZLlqaT88HERUcZ3S3vj7pzR_EtQ3EnpMO-_wTov1TZC_ycnx9ls7IAAkkc9XzApFxNhE9dDS4f9ivitK5/s1600/credit.JPG)

In the 1950s is the time that modern credit card started to become popular. The very first is called The Diners Club credit card while there isn’t any competition for them until the later 1950s we saw the establishment of American Expresses (AMEX) and Bank Americard (called VISA now). Since then the concept of credit card grow and start to spread across the world. (Rosenberg)

Advantage of Credit Card

            Credit card has made buying things easier today as we can still pay for something without paying cash but also save us time from going to ATM to withdraw some cash. We can buy expensive things such as electronic products that cost thousands of dollars by just swiping the card and sign it to complete purchasing.  It also allows people to pay stuff by instalment which improve affordability of goods so it is easier for people to afford something more expensive. Instead of saving for a long time they can pay by monthly instalment back to the bank. Moreover credit cards come in handy when there are unexpected urgent matters we need to deals with like large amount of house repair bills or medical bills as not everybody will have enough fund to cover for every unexpected events.

            In another hand we also can see the growing of online purchasing with the use of credit cards. This also allows people to save time from going to shop instead people can go thru their website and pay it online then the product will be delivered within the promised period. Another thing that makes society to have a credit card is that they offer certain rewards like vouchers or cash back after spending certain amount of money because cash or debit cash doesn’t offer such rewards. (Creditcardproblems.co.uk, 2009) Below is a video about how to take advantages of the usage of credit card.

Disadvantage of Credit Card

            Although credit card is able to improve our life in different ways but it also brings up social and ethics problem in the society. One of the most major problems with credit card is that people will easily spend beyond their mean because they think that they can pay it back to the bank once they received their salary in future. (American Institute of Certified Public Accountant) Once they miss the payment or just paying the minimum amount required the bank will then charge a certain amount of interest on card use and from there onwards debts will stack up in no time. If that’s the case you will be paying more than what you have purchased or borrowed. Below is a video about credit card debts.

            While not only debts will increase it also has a negative impact towards your credit rating which in future there will be difficulty in applying for loans and mortgages. So it is important to have a good credit rating and pay off the amount we borrowed so it doesn’t stack up and become a burden. (Creditcardproblems.co.uk, 2009) With the debts if one loses its job they will not be capable to pay off the debts and lastly will lead to bankruptcy.

            Since credit card is a type of electronic source of payment they are still chances that credit card fraud can happen. Hackers are able to steal data when people swipe the card because the magnetic stripe at the credit card contain all the information needed to duplicate another counterfeit card and use it somewhere else without the card holders knowledge.US & Mexico are countries that have the highest number of people who experience credit card fraud. (Touryalai, 2012) There was a case which Home Depot an American retailer in home improvement and construction product service said that 56million of shoppers had their credit card data stolen from their server. This is one of the world largest credit data thefts in history to date. (Poulsen, 2014)

            From above we all know that credit card has its good and bad side so it can be a blessing for some people but can also be a curse too. In the end everyone should realise that credit card should be used on a proper way and spend within their mean.

Reference

American Institute of Certified Public Accountant. (n.d.). Advantages and Disadvantages of Credit Cards. Retrieved from 360financialliteracy.org: https://www.360financialliteracy.org/Topics/Credit-and-Debt/Credit-Cards/Advantages-and-Disadvantages-of-Credit-Cards

Creditcardproblems.co.uk. (2009). The Advantages and Disadvantages of Credit Cards. Retrieved from Creditcardproblems.co.uk: http://www.creditcarddebtproblems.co.uk/advantages_and_disadvantages.html

Gerson, E. S. (2007, November 7). Pre-plastic credit: Charge plates, coins, celluloids. Retrieved from Creditcards.com: http://www.creditcards.com/credit-card-news/credit-collectible-coins-charge-plate-1264.php

Poulsen, K. (2014, September 25). Why the Heyday of Credit Card Fraud Is Almost Over. Retrieved from Wired: http://www.wired.com/2014/09/emv/

Rosenberg, J. (n.d.). The First Credit Card (Part 2). Retrieved from about education: http://history1900s.about.com/od/1950s/a/firstcreditcard_2.htm

Touryalai, H. (2012, october 22). Countries With The Most Card Fraud: U.S. And Mexico. Retrieved from Forbes: http://www.forbes.com/sites/halahtouryalai/2012/10/22/countries-with-the-most-card-fraud-u-s-and-mexico/

Woolsey, B., & Gerson, E. S. (2009, May 11). The history of credit cards. Retrieved from CreditCards.com: http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php