...Are Debtors Digging Their Own Graves? Who Is At Fault For Credit Card Debts? Americans have become more and more dependent on credit cards, a rapidly growing issue. Although some may disagree, the problem with the credit card industry is not the creditors. It is actually the cardholders. The fault lies within the consumers that do not fully understand their financial circumstances therefore, spending beyond their ability to repay their debts. Having a line of credit should be a convenience, not a must. Reliance: Credit cards have become a necessary part of our everyday lives that we all have and use at some point. However, it is mind-boggling to think that many will use credit to make purchases knowing they cannot afford it. "Even as...
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...Credit card is a payment card which user can borrow money for payment as a cash advance. Due to its convenience, more and more transactions are settled by credit cards and thus it became popular in recent years. However, the application of credit cards are much more easier nowadays especially for teenagers just over eighteen, therefore the problem of overspending with credit cards exists. If fact, there are three major reasons that lead to overspending of credit cards among teenagers. First of all, most teenagers don't know how to manage their own finance. A research report by Sallie Mae (2009,p2) shows that, there is a recommended 10% of income as a payment of debts for teenagers. However the research has investigated that there are 30% of income as debts payment in reality among teenagers which is $3173 US dollars on average. It also states that teenagers are mismanaging their credit cards by overspending with it and they are unable to pay for the debts in result. To conclude, teenagers just spend all or even more then they have with the help of their own credit cards, resulting in overspending and debts. Secondly, not knowing the serious consequences that bring by overspending among teenagers is also a major reason that cause overspending. A research report by Xiao, J.J & Tang, C.Y & Serido, J & Shim, S, (2011,p4) try to investigate factors that affecting risky borrowing behavior on over 2000 first-year student that have their own credit cards. The result...
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...Young Consumers Credit card use: disposable income and employment status Joshua Fogel Mayer Schneider Article information: To cite this document: Joshua Fogel Mayer Schneider, (2011),"Credit card use: disposable income and employment status", Young Consumers, Vol. 12 Iss 1 pp. 5 - 14 Permanent link to this document: http://dx.doi.org/10.1108/17473611111114740 Downloaded on: 26 November 2015, At: 00:30 (PT) References: this document contains references to 29 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 2151 times since 2011* Users who downloaded this article also downloaded: Downloaded by Universiti Selangor At 00:30 26 November 2015 (PT) Arpita Khare, Anshuman Khare, Shveta Singh, (2012),"Factors affecting credit card use in India", Asia Pacific Journal of Marketing and Logistics, Vol. 24 Iss 2 pp. 236-256 http://dx.doi.org/10.1108/13555851211218048 Zafar U. Ahmed, Ishak Ismail, M. Sadiq Sohail, Ibrahim Tabsh, Hasbalaila Alias, (2010),"Malaysian consumers' credit card usage behavior", Asia Pacific Journal of Marketing and Logistics, Vol. 22 Iss 4 pp. 528-544 http://dx.doi.org/10.1108/13555851011090547 Wendy Ming-Yen Teoh, Siong-Choy Chong, Shi Mid Yong, (2013),"Exploring the factors influencing credit card spending behavior among Malaysians", International Journal of Bank Marketing, Vol. 31 Iss 6 pp. 481-500 http://dx.doi.org/10.1108/IJBM-04-2013-0037 Access to this document was granted through an...
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...Credit VS Cash Although both credit and cash differ in some ways, they are equally important and their functionally has aided in making payments quick and easy in today’s fast paced society. The differences are huge, but they can impact people’s lives in different ways. While in today’s world 73% of people use less cash than ten years ago, this could become a bigger problem in the world. Many people wonder why using a card is safer than using cash? Most of them do not like carrying around a lot of cash due to the fear of losing it. Once it is lost, there is no way to replace it. Cash cannot be replaced; on the contrary, if one loses their credit card they are protected. If a credit card is lost or stolen one can easily put a hold on the account. If someone besides the owner uses it, the credit card company will investigate it and the most that is required is to pay a minimal amount, if that. Carrying cash is often not an option when making large purchases because of the possibility of losing it or the possibility of being robbed. Credit cards offer more security and it is much safer and easier to use a credit card. Very few businesses offer a reward while paying with cash. However when one pays with a credit card, the company normally offers the buyer a rewards program where they can earn something back on the purchases they make. Credit card companies offer a “Cash-Back Card” which allows the user to receive cash back at the end of the month when a certain amount of...
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...Eliminating Student Debt Bonnie Heath COM/156 August 29, 2010 Lori Wilson Eliminating Student Debt What I hope to accomplish in this paper is to show the reader that because of the predatory practices and shady deals with the different schools, credit card companies should not be allowed on campuses marketing to college students. The level of debt in society today is high enough and credit card companies do not need to be targeting college students just to increase their number of customers. Even though they should be allowed to market to college students because it is a good way to learn about credit cards and how to handle them responsibly, credit card companies should not be allowed on campuses to market to college students. College students already have enough debt as it is if they do not receive scholarships or help from their parents, and college students, fresh out of high school, do not know enough about personal finance and personal credit to be responsible about credit cards. I happen to agree with this statement because when one thinks about it, college students who do not have scholarships or help from their parents are already in enough debt as it is. One argument for credit card companies being allowed to market to college students is credit cards are a way for students on their own for the first time to establish a good credit score, which then can be used later in life to obtain loans for cars or homes. Credit card companies market to college students...
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...Consumer Behavior of Credit Card Users in an Emerging Market Prof. Dr. Kemal KURTULUŞ, Istanbul University, Istanbul, Turkey Dr. Süphan NASIR ABSTRACT Saturation of the developed markets pushes multinational corporations (MNCs) to newly emerging markets for business expansion. As emerging markets provide growth opportunities for multinational businesses, the development and implementation of marketing strategies are critical for the success of MNCs in these newly emerging markets. Emerging market conditions differ significantly from those of the developed world markets and these conditions affect firm’s performance. Therefore, understanding market conditions of an emerging market is likely to become an increasingly important issue. Credit card companies have also expanded quickly into the emerging markets in order to exploit the opportunities that are provided by the emerging markets. Credit card usage pattern of emerging markets also differs from those of well-developed markets in important ways. Understanding the factors that explain consumer behavior of credit card users in emerging markets could provide an essential insights to marketing strategists of financial services, retailers, and businesses in promoting use of credit cards. Thus, this paper considers the consumer behavior of credit card users in emerging markets in the light of Turkish experience. INTRODUCTION Marketing managers can no longer rely on only domestic markets...
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...technology has provided. Gathering of information, news and data has been made easier and wider with the aid of the latest gadgets and instruments that are brought by the latest technology. Technology has touched everything even the process in which the people are obtaining something for payment, the purchasing process. In today’s perspective, purchasing has been an easy way to acquire something because of the innovative instruments that aids the process. The most basic and most used instrument is the cash, which is provided by the government of every country. Derived from this is the credit card, which is one of the most innovative instruments of purchasing since it can easily be used and is very convenient. There are other instruments for purchasing, but these two instruments are somewhat competing in many ways with no particular reason. In this study, a careful analysis between cash and credit card will be provided to give its readers wider range of knowledge about these instruments. Personal experiences from real people will also be provided to support the study. This will be a good reference for all the interested readers who do not have enough knowledge regarding the...
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...Opinion of consumers towards credit card usage A Study in Chandigarh 1. INTRODUCTION 1.1 History As far back as the late 1800s, consumers and merchants exchanged goods through the concept of credit, using credit coins and charge plates as currency. It wasn't until about half a century ago that plastic payments as we know them today became a way of life. 1.1a Early beginnings In the early 1900s (Ben Woolsey, 2011), oil companies and department stories issued their own proprietary cards, according to Stan Sienkiewicz, in a paper for the Philadelphia Federal Reserve entitled "Credit Cards and Payment Efficiency." Such cards were accepted only at the business that issued the card and in limited locations. While modern credit cards are mainly used for convenience, these predecessor cards were developed as a means of creating customer loyalty and improving customer service, Sienkiewicz says. According to Ben Woolsey, the first bank card, named "Charg-It," was introduced in 1946 by John Biggins, a banker in Brooklyn, according to MasterCard. When a customer used it for a purchase, the bill was forwarded to Biggins' bank. The bank reimbursed the merchant and obtained payment from the customer. Purchases could only be made locally, and Charg-It cardholders had to have an account at Biggins' bank. In 1951, the first bank credit card appeared in New York's Franklin National Bank for loan customers. It also could be used only by the bank's account holders (Ben Woolsey...
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...CASE 1.6 NEXTCARD, INC. Jeremy Lent, a chief financial officer (CFO) with Providian Financial Corporation decided to apply the marketing tactics used by Providian to establish an internet based company to offer Internet users a faster way to obtain credit cards. Lent hired dozens of marketing researchers to analyze the “surfing habits of Internet users. With this information the marketing team developed an Internet-based advertising campaign to target internet users that frequently used their credit cards and maintained large balances due to purchases made over the internet. NextCard advertised to new customers if they applied on line a response would be received within 30 seconds. Lents business model was a success and by 2000 and had more daily hits than any other credit card issuer. Other well established credit card affiliates referred potential clients to NextCard. NextCard had extended more than $1 billion of credit to internet customers but unfortunately profits were not immediate which the executives ignored to disclose in any press releases. A NextCard executive boasted in February of 2000 that the “company continues to beat our aggressive growth targets while maintaining very strong parameters and core elements of our business model” (Knapp, p 6). In 1999 the company produced a large loss of about $77.2 million. NextCard was able to take the company public with stock price initialing selling for $20 per share regardless of large losses for each reporting...
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...Credit Cards, Excess Debt, and the Time Value of Money: The Parable of the Debt Banana Timothy Falcon Crack and Helen Roberts University of Otago, New Zealand The parable of the debt banana is an analogy between the accumulation of excess personal debt and the accumulation of excess body weight. We created this parable to grab student attention and to then serve as a springboard for discussion of personal debt, time value of money mathematics, the mechanics of credit cards, personal bankruptcy, moral hazard, ethics, and credit card reform. A follow-up survey in a large class (453 students; 84% response rate) showed that 92% of students seeing the parable alongside the underlying finance principles said that it grabbed their attention more than if the underlying finance principles alone were presented, and 87% of students said it made an impression upon them that will make them more careful in their future credit card spending habits. We provide worked examples of credit card use as well as a spreadsheet that lets readers explore these examples and perform sensitivity analysis. INTRODUCTION The parable of the debt banana is an analogy between the accumulation of excess personal debt and the accumulation of excess body weight. We created and presented our parable in a compulsory Finance 101 course taken by all business majors. Most students had little or no exposure to the world of finance and many had poor mathematical skills. Both their lack of financial...
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...Examining the Correlation between Social Class Position and Debt Introduction This paper looks into the correlation between social class and the prevalence of debt. More specifically, it examines the debt level of the American middle class. The middle class is a broad term given to American households whose yearly income measures from ~$25,000 to ~$100,000 according to the non-profit organization, The Drum Institute for Public Policy. Depending on the model used, the middle class makes up somewhere between 25 to 66 percent of all households in America. Due to the far-reaching nature of the class, most sociologists divide the middle class into two sub-classes: the upper or professional middle class and the lower-middle class. The professional...
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...Journal of Banking & Finance 22 (1998) 613±673 The economics of small business ®nance: The roles of private equity and debt markets in the ®nancial growth cycle Allen N. Berger a a,b,* , Gregory F. Udell c Board of Governors of the Federal Reserve System, Washington, DC 20551, USA b Wharton Financial Institutions Center, Philadelphia, PA 19104, USA c Kelley School of Business, Indiana University, Bloomington, IN 47405, USA Abstract This article examines the economics of ®nancing small business in private equity and debt markets. Firms are viewed through a ®nancial growth cycle paradigm in which different capital structures are optimal at dierent points in the cycle. We show the sources of small business ®nance, and how capital structure varies with ®rm size and age. The interconnectedness of small ®rm ®nance is discussed along with the impact of the macroeconomic environment. We also analyze a number of research and policy issues, review the literature, and suggest topics for future research. Ó 1998 Published by Elsevier Science B.V. All rights reserved. JEL classi®cation: G21; G28; G34; E58; L89 Keywords: Venture capital; Small business lending; Bank; Mergers 1. Introduction The role of the entrepreneurial enterprise as an engine of economic growth has garnered considerable public attention in the 1990s. Much of this focus * Corresponding author. Tel.: 1 202 452 2903; fax: 1 202 452 5295; e-mail: aberger@frb.gov. 0378-4266/98/$19.00 Ó 1998 Published...
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...Conclusion The finance industry is in a considerable period of change at the minute with the credit crunch implications meaning “The public sector has provided massive liquidity support, injected capital and improved deposit insurance. Looking further ahead, wide-ranging reforms are under way aimed at increasing market and institutional resilience. It is an open question how wide the financial safety net will be cast. The future financial sector can be expected to be smaller and operate with higher capital and liquidity buffers than before the crisis.” This quote by M.Gudmundsson, basically says that that credit will not be as easy got by consumers from the pre 2007 levels, with the governance of banks meaning finance will be harder to get thereby meaning that people who are credit risks will struggle to get credit and so therefore economic growth will be slow for a few years until consumer confidence and bank capitol rises again with the economy. The introduction of payday lenders, easy to obtain credit cards with high interests and poor credit acceptance and the fact that online banks are now challenging banks on both finance and banking respectively mean that the finance industry is changing. In our research we looked at the PESTEL, Porters' 5 forces and blue and red ocean frameworks and applied them to the finance industry. We found some common trends and threats, with all models linking up to show common trends and interlinking the 3 frameworks, examples of this...
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...The Impact of Obamacare on the Economy Kimberly Carter Dr. Monjica-Howell MGT 5064: Cost and Economic Analysis 23 April 2013 Abstract In 2010, there were approximately 50 million uninsured Americans. In March 2010, President Obama signed into law a piece of legislation that reformed American’s healthcare industry. The legislation is coined as “Obamacare.” Supporters argue Obamacare provides coverage for our nation’s uninsured while boosting economy. Opponents argue Obamacare will increase healthcare costs and in turn, add to the deficit. The research supports the belief that improving the health status of the American citizens does result in economic expenditures for the United States. There is a relationship between affordable healthcare and the economy. The impact Obamacare has on the economy can be viewed through a simple math equation, a return on investment analysis. The return on investment analysis revealed a positive return on investment. The results suggest American has invested wisely. Investing in the healthcare of the American citizens will improve productivity, is cost effective, and reduces healthcare care costs. The Impact of Obamacare on the Economy In 2010, there were approximately 50 million uninsured Americans. This means that 16.9% of American’s population is uninsured. The numbers are overwhelming and reveal healthcare in American is not affordable. Many argue that the cost of healthcare has doubled in recent years (Department...
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...than 9 million individuals are victims of identity theft each year. The Justice Department puts the figure at more than 3.5 million households (Anderson). Anyone can become a victim of identity theft and it is not limited to the financial activities of one’s life. People’s identity is also stolen in order to commit criminal activities. Both activities are defined as fraud and are punishable by law if caught. Financial identity theft or fraud includes bank fraud, credit card fraud, computer and telecommunications fraud, social program fraud, tax refund fraud, and mail fraud. In fact, a total of 25 types of financial identity fraud are listed and investigated by the United States Secret Service (Obringer). In 1997, Secret Service agents made approximately 10,000 financial crime arrests which 94 percent involved identity theft (Obringer). Fifteen years later, Javelin Strategy & Research reports that over 12 million financial identity theft cases were reported (Javelin Strategy & Research). Other types of identity theft usually involve financial elements as well but are typically committed to fund some sort of criminal enterprise. Criminal activities include gaining someone else’s identity in order to enter a country, get special permits, hide one's own identity, or commit acts of terrorism. Criminal identity theft is relatively easy to commit by simply providing someone else’s name and birth date. Thieves are aware that evidence will point to the...
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