Credit cards are pretty much how we survive today. It’s pretty hard to find anyone who doesn’t use one at least once a day. Hence, the reason why credit cards are referred to as the ‘cornerstone of the American economy’ in most financial corridors.
You see, a country’s economy is highly dependent on its citizen’s ability to spend money. If the citizens, or as they’re commonly known consumers, can’t consume, then a lot of people will lose their jobs. It’s quite practical if you think about it. For example, where will the delivery workers go to if there isn’t the consumption of what they deliver?
And the delivery guy is low on the chain, there are the manufacturers, the guys who pack the consumables and many others. Now, to be able to consume, in most cases, you need access to funds. And that’s where credit cards come in. However, do you ever wonder what the American economy would look like without credit cards?
In an ideal world, having no debt is a good thing, right? But for the American economy, it would be detrimental to its health. First of all, if there is no one owing credit card companies, it means that consuming would have dropped significantly. That means the economy would generally be stagnant.
A vast majority of the American economy is supported by consumer spending and that would be hindered if people didn’t borrow to spend. You may be questioning the idea, but not everyone has money to spend. People rely on the ability to take on debt to get through most days. Even for their essential obligations, most tend to use credit cards today. If these people didn’t have credit cards it would lead to a…
Inability To Meet Daily Expenses
If you never thought about it, then it’s time to. If there weren’t any credit cards, the economy would suffer since most people won’t be able to meet their daily expenses. When they were starting out, credit cards were majorly used as a luxury tool, to pay for restaurant meals, going on tours, and other expenditures that weren’t really considered essential.
What about today and the tough economic times we are in? Credit cards are essential since you’ll find that most people use them to meet essential daily needs. Without them, these people would probably go hungry some days. It isn’t such a luxury today to have a credit card, it’s more or less a necessity. And if day-to-day people are unable to meet their daily expenses due to lack of credit, then…
Unemployment Would Rise
As stated before, if there wasn’t credit card debt, a number of people would have to leave their jobs. From the manufacturer, what would they be manufacturing if no one is consuming their products? Then there are the packing companies who would have no products to pack. This chain effect goes on and on within the American economy.
And remember, there are millions of people working in these sectors; they’ll all have to lose their jobs. They will then be unable to meet their obligations and the debts they have will only sock up since they’ll be unable to pay. And that would lead to…
A Lack Of Growth
Without manufactures and the other people they directly or indirectly employ, what happens? The growth of the economy stops. It is true that if people are unable to pay back their debts the economy would crumble. But that’s the same scenario if there was no debt.
As you have seen, credit card debt alone can be enough to sustain the American economy as it is heavily reliant on consumer spending. Growth is majorly calculated on the ability to produce and less consumption which means a decline in gross domestic product.
Credit card debt is a huge defining factor when it comes to the American economy, at least for now. It easily connects the producers of products to the consumer, and in between a number of people who make that happen smoothly. If the country had no reliable lander, in this case, credit card companies, the economy would severely suffer and would crumble.
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