Question

Before the 1960s, use of consumer credit was limited. Credit cards were issued by individual stores and could be used only in that store. Describe how stores have benefited from the growth of consumers' use of credit cards since the 1960s. What new costs have resulted from this use? Do you think most consumers are better or worse off because of their use of credit cards? Explain your answer.

Answer 1

Since the 1960s, the widespread use of credit cards has benefited stores by increasing sales through expanded customer bases and the convenience of cashless transactions. This growth, particularly in online shopping, has allowed businesses to reach global markets. However, it has introduced new costs such as transaction fees, security expenses, and technology upgrades for payment systems.

Stores incur fees for each credit card transaction, impacting profit margins, and must invest in security measures to prevent fraud. Additionally, the continuous evolution of payment technology requires ongoing investments.

Whether consumers are better or worse off due to credit card use depends on individual financial habits. Responsibly managed credit cards offer benefits like convenience, credit-building opportunities, and rewards. However, misuse can lead to accumulating debt and high-interest payments, emphasizing the importance of responsible credit management for consumers.