CREDIT CARDS VS REFRAINING FROM
LOANS 2
The rising household debts in countries is a major cause of concern for financial
regulators, policymakers, and citizens. Credit cards have recently become the most common
method of buying goods and services. While financial institutions argue that credit cards are
convenient, it may not be overlooked that the credit cards have raised household debt levels.
Credit cards as some scholars have argued have increased materialism and reduced individual
savings. Those who refrain from loans enjoy reduced cost of living, have more financial
choices and saves more for retirement than those who use credit cards.
Firstly, people who have no loans enjoy reduced cost of living compared to those using
credit cards. Those who do not have debts and don’t owe banks each month has only a few
monthly expenses that make it easy to meet monthly needs (Neilson, 2014). Also, unlike those
with credit cards where most people spend more than they have, it is hard to make one without
a credit card to spend more than they can be able to pay back. While the financial future of
those with the credit cards can be harmed, those refraining from loans financial future is good.
Besides, few loan obligations help individuals in capitalizing on investment opportunities in
the market. Refraining from debts enables people in retirement to live on less which results in
a more vibrant and fuller life.
Secondly, people without debts have more financial choices compared to those using
credit cards and more likely to have debts. Using credit cards as some researchers have
indicated increases peoples’ expenses (Rosato, 2008). One who has a credit card is more likely
to spend more money than those without a card as a credit card is not as explicit as counting
cash. Besides, those who refrain from debts may spend meet their current expenses as they
don’t have debts to pay. Therefore, one can decide what they can spend and save for the future.
Conversely, those who have credit cards are more likely to have debts which means that they
have to pay their past obligations fast which make their cash to run out before the next payment.
