What is the factor that cause credit card debt in term of economics? I only know "expense via credit card to income ratio" ... are there other factors?
2007-03-13 01:30:38 · 7 answers · asked by sirinipha_prae 1 in Social Science ➔ Economics
it's the "gotta have it now" gene... we all want things now, rather than working and saving for them.... people think "I can afford the payments" even though they could never afford the item itself.... then they end up paying more than twice what it's worth.
people need to listen to Dave Ramsey... the world would be a better place.
2007-03-13 01:34:00 · answer #1 · answered by J-Rod on the Radio 4 · 1⤊ 0⤋
Ask a person if they would borrow money from a loan shark and they would emphatically say, "No!". Yet that same person deals with loan sharks (in the form of credit card companies) each month as they struggle to pay off high interest credit cards, making the minimum monthly payment where it will take years, even decades to pay off the balance.
It's the gimmegimme mentality that is to blame, people wanting something now and not willing to save up for it. Sure there are times when cash is short and your car dies and a credit card is a handy thing to have around. But just saving up a couple thousand dollars in the bank is usually enough money to get through an emergency without having to turn to credit.
2007-03-13 01:51:28 · answer #2 · answered by A C 3 · 0⤊ 0⤋
Several people have answered, but here is one reason explained in terms of economics. Liquidity constraint. By that I mean, at this very moment a person might not have the cash (or liquid funds) to make the purchase, but expects to be able to pay the debt in the future so that person needs a short-term loan and gets that through a credit card.
2007-03-13 03:28:13 · answer #3 · answered by fernpalmnj 1 · 0⤊ 0⤋
"I want it and I want it now! I don't want to save for it. I will deal with it later". They buy what they want and think they will be right when the bill comes. But when the bill comes so do all the other bills in the meantime. Then there are the crazy interest rates on those cards! It's a struggle to pay for some people and it just ends up accumulating. I think some people just see it as easy money when they see something they want but don't have the money at the time, which of course there is no such thing. You can have cards and be sensible but the banks know most people aren't, that's why they throw cards at people!!
2007-03-13 01:40:16 · answer #4 · answered by RD 3 · 0⤊ 0⤋
A lot of people is not financially responsible anymore and think credit cards are the next best thing to money growing on trees. And use credit cards to pay off credit cards and soon find themselves at the business end of a repo company. People spend more than they make weekly and that adds up real fast, especially when it adds up with other bills. Digging yourself into a hole when it comes to credit cards if you don't know how to use them right.
2007-03-13 01:45:16 · answer #5 · answered by Fallen 6 · 0⤊ 0⤋
Not paying off your card every month. If you can't pay it off at the end of the month (or before interest starts), you shouldn't be charging stuff to a credit card.
Spending money before you earn it. "Oh I'm getting a big check next month, I can afford this purchase." And things keep adding up until you are in a lot of debt.
2007-03-13 01:38:14 · answer #6 · answered by hello 6 · 0⤊ 0⤋
People want stuff. Not that hard.
2007-03-13 01:35:39 · answer #7 · answered by KevinStud99 6 · 0⤊ 0⤋