Negative Effects Of Credit Cards

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Today credit cards have become increasingly popular and more frequently used than cash when it comes to making purchases. In 2012 it was found that 27% of all point of sale purchases were paid with cash and by 2017 that percentage was expected to drop to 23%. While credit cards are clearly being used more many people are paying the consequences. But where and when did the credit card even come about? John Biggins is the man given credit for creating the idea of credit cards in 1946. He started off with the “Charge-it” program where people could deposit sales slips in the bank and then the bank would then bill the customer who would use the card. It wasn’t too long after that Frank McNamara founded the Diner’s Club. In 1950 its card was issued…show more content…
In an article done by, U.S News and World Reports, the author looked into the many ways that issuers make money off credit cards as well as what gets people hooked into getting one. Today one late payment equals two penalties. Card holders can be penalized with two surcharges on one delinquency, and won 't have any idea until they 've been charged. These penalties can come in the form of a late fee up to $35, and a penalty rate (permanent interest increase). Once a cardholder forgets to make a payment they are easily caught up in a mess. The longer the card holder stays in debt the more interest credit card companies can charge, the more money they make, and overall the worse things get. In the past, card holders had a 5 percent minimum monthly payment. This was a problem for creditors because people were easily paying off their balances quickly. So the monthly minimum was decreased to 2 percent. With smaller repayment requirements, people are prone to spend more and accumulate more debt each month. Credit card companies also make money off of all the different fees that they have. An annual fee charges a customer every year in order to keep their accounts open. Another fee is the late fee that charges when a payment is paid late. A cash advance fee is a charge to access the cash credit line on a card holder’s account. Overall there are many ways that issuers and credit card companies make

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