Analysis Of Soman And Cheema ( 2002 )

A consumer may decide on a whim to take a gamble and purchase a four thousand dollar surround sound system only to find out that he cannot cover his bill at the end of the month. This type of spending creates debt and has a bad effect on your credit report. Consumers must learn to control this type of spending and manage their debt properly in order to keep a good credit report and stay ahead of their payments.

Evaluation: This article, posted on April 1, 2016, was originally published on TheConversation.com. Throughout the article, the author cites sources that come from 2012-2017, with the majority of them coming from 2015-2016. Moreover, these cited websites are credible, well-known, and have information that can be corroborated with other sources. Some of these sites included The Wall Street Journal, the New York Times, and a report from the Federal Reserve. Moving on, the author, Mechele Dickerson, is an expert on this topic. Dickerson received both her B.A. and J.D. from Harvard University and currently works as a professor of law at the University of Texas at Austin. Here, she teaches classes on consumer law, debt and spending to law and undergraduate students. In her current research, she explores causes and consequences of consumer debt and how the culture

The Federal Reserve statistics indicate that the average U.S. household has a credit card balance of $7,283 while the average indebted household has an outstanding balance of $15,611 (Bricker, et al., 2014). Only home mortgages and student loans exceed credit card balances. If consumers hope to create an appropriate level of wealth to support themselves in the latter years of life and avoid counting on government programs as their primary source of income, consumers will need to save more of their income. Servicing credit card debt required approximately 13.9% of consumer’s disposable income in the fourth quarter of 2008 (Wilcox, Block, & Eisenstein, 2011). If these dollars were available as contributions into a retirement account on behalf of the consumer, countless people would be confident about their ability to save for an appropriate lifestyle in retirement. The abuse of credit card usage may be caused by a lack of spending discipline, lack of information or a lack of financial literacy, or a combination of the three. These shortfalls are examined to determine if policy makers can intervene to motivate consumers to generate improved decisions regarding the use of credit cards. The first step in this process is having a basic understanding or knowledge of financial matters. The need for improving financial literacy in America continues to grow as financial products and services continue to become evolve in complexity. The Great Recession has recently proved that financial literacy in this country has room for improvement at all economic levels. The CARD Act required The Secretary of Education and the Director of the Office of Financial Education of the Department of the Treasury to coordinate with the President’s Advisory Council on Financial Literacy to develop a strategic plan to improve, expand and support financial

Many Americans have accepted the consumer debt as an essential component of their everyday life. People who say they don’t have enough money to live comfortably have greater financial worries than people who feel they have enough money. Both people who feel as though they don’t have enough money to live comfortably and people who do have enough are worried about not

Credit allows consumers to finance transactions without having to pay the full cost of the merchandise at the time of the purchase. A common form of consumer credit is a credit card account issued by a financial institution. Merchants may also provide financing for products which they sell. Banks may directly finance purchases through loans and mortgages. Consumers imperatively rely on credit, so it is necessary that credit laws help protect the consumer. I will discuss some of the major credit laws that impact the consumer, examine whether these laws are working, and talk about possible changes that might be needed to make sure the consumer is rightly protected.

Approximately seventy percent of Americans, present day, are living paycheck to paycheck. Why you may ask? Many of the families have jobs with incomes to surpass the amount to not live paycheck to paycheck, but they are paying off past credit issues they got themselves into. Credit debt is a real problem among Americans today, due to instant gratification and not having the patience to save for their purchases, while measures could be taken to stay away from or prevent it. (Ramsey, D.)

In today’s modern world, I can say without hesitation that we live in a disposable society where throwing away items isn’t a tough commitment, rather we spend money aimlessly on extravagant items only to add to our wishlists after the last purchase was made. As individuals use their credit card to make purchases locally and abroad, many appear to overlook the fact that daily periodic interest charges are added to their credit card balances. Consequently, John Verdant brings the subject of purchasing into play as he describes the regular routine of the Able family. According to Verdant’s statement, “When they decide on a purchase, the Ables pay the local merchants in cash unless they choose to a credit card to get a warranty extension or to buy something locally. Paying by cash or check saves the merchant the 1.5% to 4% percentage fee they pay to the credit card company on the purchase plus the per transaction fee they have to pay to the bank.” (Verdant, pg. 153). Although card transactions can be made in the blink of an eye, the biggest disadvantage of this method of payment is the amount of debt held by the

Firstly, not using credit card is the utmost issue which needs avoiding in order to be rich in the future. As regards credit cards, there are billions of people using it around the world. The purpose of credit card is for convenience, that the owner of the credit card can spend money at any time without handing cashes, which attract many thieves and criminals in busy places. Furthermore, it is not necessary for the credit cards owners to have actual budgets of money to purchase goods and services, for they can borrow loan through the card and pay the lender later. In my opinion, I think it is very good to fulfill my wants immediately before having enough money to afford it, yet in return for the comforts which a credit card fetches me, I have accumulated a fortune of debts. The debt may be dismal, thus extraneous to raise the credit

In response to the Credit CARD Act’s intent on fighting against young consumer perdition with debt, new credit card usage has been halved by those aged 18-20 . It is possible that the halving may not be completely related to the Credit CARD Act, and could possibly stem from the recession itself. However, it has played an important role in reducing unnecessary credit for young consumer. The application process has become somewhat prohibitive. That serves, in effect, to limit the amount of people who will try to obtain credit through credit cards. The goal is to limit acceptance for young consumers who find credit to be necessary and feasible.

Beginning in the twentieth century, household debt levels were increasing as the standard of living was rising. As technology and innovation was becoming a large part of industrial growth and new commodities were becoming available to consumers, households began demanding a wider array of goods and services. These commodities included vehicles, appliances and other modern devices were heavily demanded by North American and European consumers. These commodities were purchased on credit and were considered ‘easy credit’. This allowed the mindsets of consumers to shift from saving to spending.

With an ever growing rate of national debt, americans are making more decisions on their spending rather than in their savings. According to Grayson Bell’s article ‘Overspending in America – The Sad Truth’ publishing statistics on the overspending truth of the american lifestyle shows that, 'The average American spends $1.33 for every dollar spent’’, which is devastating to the american economical growth of the country. According to the usdebtclock.org, the US owes $898,235,950,000+ in credit card loans, this is an ever growing debt that the american people have caused by overspending. Many spend money to embellish a lifestyle that can’t be afforded, hence conspicuous consumption, yet without a strong discipline to control their temptation it has become a finite between spending and savings. Forgetting the difference between the want and need can truly affect how americans feel about overspending money. In Kathryn Buschman Vasel’s article,’Why we over Spend’’ the reason behind an individual’s failure to save money states that ‘almost everyone will overspend at one point in their life, but some feel like they deserve the same goods as their peers -- and that’s where the problem lies: not knowing the difference between wanting something, deserving something, and being entitled to something’’, many are oblivious about the obsession of spending on the wants, so the poor decisions continue to arise with an America being now a consumer and not a

As a retailer, it would be wise to extend credit to my customers. First of all, it is an easy solution that allows customers to buy goods and not worry about paying them upfront. By doing so, my business can increase sales, and gain more customers which is a must if I want the company to be profitable. Secondly, offering credit can encourage customers to spend more since they have more time to account for the debt. This type of timetable provides more oriented customers focused on purchasing than being sensitive to prices.

Credit cards are helpful in that every month they report to the bureaus and can reflect new usage. Just remember to keep the ratio in mind and those balances fairly low. This will show that you are living below your means and being responsible with your finances. By maxing out your credit cards, this shows that you are not financially stable and can be considered a risk to lenders.

This study examined how parents’ teaching and modeling of financial concepts affects college student credit card debt (n = 173). Parental hands-on mentoring of financial skills was most strongly related to lower levels of credit card debt and this relationship was partially mediated by it leading to greater financial delay of gratification and less impulsive credit card purchasing which in turn were related to less problematic credit card use. Having parents who struggled with debt was not significantly related to debt although having parents who avoided talking about finances predicted problematic credit card use. Students’ beliefs that their parents would bail them out of debt were related to lower levels of debt. Financial knowledge and

This study will enhance the advice financial practitioners provide to clients by exploring data that highlight a specific phenomenon preventing consumers from adequately saving for retirement. Also, understanding the roadblocks that prevent consumers from saving may lead to strategies that academics and industry practitioners can develop to assist consumers with the proper usage of debt and effective ways of eliminating debt. In addition, the proposed research intends to add to existing scholarship by examining the economic and behavioral differences of pre-retirees servicing high levels of consumer debt in comparison to pre-retirees not burdened with debt. The proposed research also contributes to the existing body of knowledge by utilizing the most recent data available to identify the reduction to the standard of living caused by debt, the significant cost of consumer debt, and debts implications on financial assets. The implications of this study may also provide insight into changes to the labor market if pre-retirees are forced to work longer than expected, in their final attempt to reduce debt prior to retirement. To this point, Li, Montalto, & Geistfeld (1996) noted that inadequacy of financial resources may necessitate re-entry to the labor force.