Final answer:
While a credit card can make certain transactions like car rentals and online purchases easier, it is not the only method available. Debit cards, smart cards, and other payment forms can also be used. Owning more credit cards does not affect the quantity of money in the economy.
Step-by-step explanation:
The belief that you need a credit card to rent a car or make purchases online or by phone is a common myth. While a credit card can facilitate these transactions, they are not the only way to make a purchase or secure a rental. Credit is essentially an agreement where goods and services are received with an agreement that payment will be made in the future, which does mean taking on debt. Using a credit card involves borrowing money from the card issuer up to a certain limit and agreeing to pay it back with interest if not repaid in full by the billing cycle end.
Understanding the differences between credit cards, debit cards, and smart cards is essential. A debit card allows transactions by directly accessing your bank funds, without creating debt, while smart cards are equipped with a microprocessor chip that enhances the functionality and security. None of these payment methods alter the amount of money in the economy; they are merely different vehicles for moving your own funds to another party.
It is also noteworthy that owning multiple credit or debit cards doesn't increase the quantity of money you own, similarly to how printing more checks won't increase the balance in your checking account. Alternative payment options exist, such as prepaid cards, payment apps, and even sometimes personal checks or cash may be accepted for rentals or phone purchases, though less commonly.
Moreover, credit cards that offer rewards, such as a mile of air travel for every dollar spent, are appealing and can lead to high spending habits. These types of rewards programs can prompt questions about independent events in statistics, for instance whether using the card and charging a certain amount per month are independent events.