There have been many technological advances made by man throughout the

course of time. These improvements have made everyday living for people more

convenient. During the olden times, people used standardized coins in order to pay for

purchases. This method was impractical since the materials used to make these coins

were heavy. Considering that the people before could only travel by foot or by horse,

the weight of the coins were a hindrance to their mobility. After many years, when

printing technology was invented, systematized paper money was introduced (Evans &

Schmalensee, 2005, p.27). Paper money was able to ease the burden of carrying heavy

coins. However, this kind of money was not able to completely overcome the

disadvantages of transporting large amounts of cash. If money was carried by a person

in large amounts, the person would be placed at the risk of having all of it stolen or lost.

In addition, if people were to carry only small amounts of money, they may lack the cash

needed to pay when faced with emergency situations. In order to counter these

problems, during the time when electronic technology was discovered, a new method of

paying was developed. This invention made it convenient for people to shop with the

assurance of safety and with more efficiency. This invention was the Credit Card.

Credit cards are replacements of money used in accordance to a "credit-debt"

relationship between the card holders and its providers. A credit-debt relationship is

defined as a relationship of someone or something possessing an object that is also

owned by another. By itself, credit is defined as money that is present in the future but

can be made available at the current time. Debt, on the other hand, is money from the

past that it is to be reimbursed at a future time (Finlay, 2009, p. 3). Credit cards make it

possible for people to buy goods that are sold by merchants that have entered into

1
agreements with credit card providers. These providers are the ones who ensure the

merchants of the payment of a purchase made through a credit card. They do this by

paying the sellers first before billing the purchase to the credit card owner; owners are

given a certain agreed time for the payment. Not paying on time would usually result to

an additional fine; the amount of the fine corresponds to the terms presented in the

contract agreed upon by the credit card providers and the holders (Finlay, 2009, pp. 18-

19).

Credit cards have provided consumers with different product and service benefits

that are exclusive only to credit cards. These services have improved the manner in

which people handle their funds, and it has also lessened the amount of time the

consumers spent in completing their transactions (Evans & Schmalensee, 2005, p.91).

It also brought about a change in the way people compensate for their necessities

(Evans & Schmalensee, 2005, p.45). Seeing as credit cards have greatly affected the

way people live, this paper aims to inform the people of the effects of credit cards to

their psychology and to their social lives. It also aims to inform them of the effects of

credit cards to a nation.

Firstly, the existence and usage of credit cards affect the psychological outlook of

people. Manning (2000) supports this, stating that it affects the way people think as

shoppers due to its delayed charging feature (p.3). Examples of these effects are seen

in its effects to a persons self-esteem. In fact, in a study, it was discovered that the use

of credit cards to purchase luxury items increases the ego of a person who had recently

experienced humiliation or a decrease in self-worth (Sivanathan & Petit, 2010). This

was further expounded in another study by Dwyer, McCloud, and Hodson (2011). It was

2
seen that the sense of self-mastery and self-esteem of young adults from lower to

middle-class backgrounds is heightened with the use of credit-cards. It was further

explained that the increase of self-esteem is mainly due to credit cards being seen as

objects of investments, alongside education, by youths. However, it was observed that

this effect is not seen within the upper-class due to the commonality of their possession

of credit cards. In addition, it was stated that despite the positive effects of credit cards

to young adults, most people in their late 20's do not experience the same positive

effects of credit cards to their self-esteems. It was suggested that this may be due to the

stress caused by having to pay debts gained from the accumulation of debt caused by

earlier credit card splurges (Dwyer, McCloud, & Hodson, 2011).

Stress may also be an effect of credit card usage or, more specifically, credit

card misusage. Many college students experience stress because of credit card debts.

There are even cases wherein the strain caused by their debts also affect their health,

academic performance, and social life (Manning, 2000, p.160). Not only the credit card,

but also the credit card system used itself causes stress. According to Manning (2000),

the new systems incorporated by credit card providers cause feelings of stress and

anxiety among the older, middle-aged to senior, citizens (p. 257).

Credit cards can also affect the happiness of people. Money, both real and

plastic, is understood by people as a tool to be used in order to attain happiness and

satisfaction. In fact, even during childhood, parents unknowingly train their children into

this ideology by giving them rewards when something considered as 'good' is

accomplished. As most of the population is raised in this manner, it was only inevitable

that money is seen as a form of happiness by most of the population (Hoyer &

3
Maclinnis, 2010, 336-337). This is most especially true in the case of credit cards. It was

said that people experience more satisfaction when they pay through credit cards than

by cash. The reason for this is because, by paying through electronic money, the feeling

of happiness experienced through shopping is more evident. It was also said that credit

card shopping can also decrease the dissatisfaction experienced by consumers when

they shop. It was explained that when people purchase through the use of their cards,

their awareness of money or their caution towards spending money diminishes

(Raghubir & Srivastava, 2008). Also, many people say that they find a sense of mental

ease whenever they shop - whether it is done through a store or online (Yarrow &

O'Donnell, 2009, p. 53). Aside from this, shoppers also impulsively shop to reach a

sense of fulfillment or to cater to their own satisfaction, albeit subconsciously (Arnould,

Price & Zinkahn, 2002, p.349).

Second, credit cards can affect the social relationships of people. This can be

seen, most especially, when card holders experience the negative effects of overusing

their credit cards (Dilworth, 2011). Accordingly, these cards affect the dynamics of a

family and, also, the relationships of members of within the family. The presence of

credit cards affects how households choose to spend or account for their money

(Johansen & Tigre, n.d.). This may be seen in a positive light when the accounting is

well taken cared-off by the whole family or by the spouses. It was observed that couples

who know how to manage the use of credit cards prove to have stable and well-off

financial standings even after so many years of marriage (RTI, 2009). The opposite can

be said of those couples who do not. Those who do not balance their credit well may

eventually experience family problems. There have been many cases where credit card

4
debt eventually leads to the divorce of married couples (Chu, 2006). However, the

equation does not stop there since the act of divorce also affects their children as

individuals. Aside from affecting the relationship of couples, it also affects the

relationship of children to their parents. In fact, students hide their social misdeeds from

the eyes of their parents by acquiring their own credit cards. However, the secrecy of

this act may eventually lead to familial tension (Manning, 2000, p. 192). Aside from

family tension, having no proper adult to look through the student's credit card

expenditure may result to the student not properly managing their financial accounts,

resulting to an eventual amassment of debt - a debt which may eventually lead a parent

and their child into a familial discord. However, in another case, credit cards can also

help strengthen the familial bonds between children and parents. This is done by some

college students who acquire credit cards to help their families with their finances

(Manning, 2000, p. 187). In a case study, it was mentioned that college students were

more likely to help their families with their debts by providing their families with money

taken from credit card loans rather than from money earned through part-time work

(Manning, 2000, p. 191).

Credit cards also affect the relationship people have with their peers. This is most

evident in student settings. Students often feel the pressure of needing to have the

same experiences and privileges as their peers. They give into this pressure and avail

the services of credit cards, since they see owning and using credit cards as the main

contributor that could help them feel as if they belong with the rest of their peers who

unhesitatingly spend with the use of credit cards (Manning, 2000, pp. 178 - 179). This is

further supported by Yarrow and O'Donnell (2009). In their book, it was stated that the

5
items people purchase state more than what a person can state concerning themselves.

It also further explained that the clothes a person wears helps them connect and be a

part of a group. From this, it was inferred that teens do not shop for need or want; they

shop in order to belong (p. 50). Aside from the pressure of peers and wanting to belong,

college students have also said to have used their credit cards in order to financially aid

their friends (Manning, 2000, p. 187).

Lastly, credit cards affect the culture, economy, and international relations of a

country. Credit cards positively and negatively affect the culture of a nation.

Credit cards can help in increasing the effects of some values to a population. For

example, credit cards promote the value of prudence. Since card owners who regularly

paid their bills are rewarded with varieties of discounts and freebies, a sense of

awareness and self-caution is established within the card holders (Manning, 2000,

p.119). Credit cards can also be seen a form of unifier or as a tool of solidarity between

the people of a nation. This can be seen in social networking sites and online forums

where people converse or relate with each other their own credit card experiences when

news concerning people suffering due to credit card debt or news concerning

unnecessary credit card shopping by celebrities or politicians come to light (Manning,

2000, p. 29). The effect of credit cards to a country's culture, however, is most evident in

the context of America. It was said that the value of a person is even judged or

assessed through their credit points. It was discovered that many young adults base the

degree of their self-worth through their credit scores. Even middle-aged adults from the

States, when interviewed about their self-worth, answered in terms of how much leeway

6
the creditors would give them whenever they borrowed money (Pealoza & Barnhart,

2011).

Credit cards help in the economic growth of a country. Generally, credit can

provide the country monetary support when needed, which can be repaid when the

economy of the country regains its strength. In comparison to other countries who do

not greatly utilize the use of credit, countries, whose population always makes use of

credit, more often have sturdier economic growth; examples of these countries are the

United States and the United Kingdom (Finlay, 2009, pp. 5-6). Besides this, the

existence of credit cards has made the system of borrowing and lending more

convenient. This convenience in borrowing and lending eventually leads to an increase

of consumption of goods. When the increase in rate of purchases occurs, the value of

property also increases. This, in turn, would result to more jobs offers and more

investments made by businesses in order to keep up with the increasing demand of the

public (Duncan, 2011). However, credit cards still have adhering effects to the nation. In

fact, in a survey by the United Kingdom, it was seen that despite the country's stable

economic system many households still encountered monetary problems (Kempson,

2002, p. 28).

Credit cards also affect the international relationships of a nation with other

countries. For example, the usage of credit cards may have helped the American card

distributors in dominating the global market (Manning, 2000, p.300). Another example is

the American recession experienced in 2008. America experienced recession due to its

citizens over use of credit cards. Other countries were also affected by the recession of

America. The most affected of all countries was India wherein a 7.4% drop was reported

7
to have occurred. Other countries that were also affected were Singapore, Germany,

Indonesia, France, Thailand, the United Kingdom, Australia, Thailand, Malaysia,

Taiwan, and the Philippines (Khor, 2008).

This paper has presented facts concerning the effects of credit cards to the

psychology and to the social lives of people, and, also, some of their effects to a nation.

From these facts, many conclusions can be brought up, however, the one factor that

remains clear is that despite the convenience and help credit cards have contributed to

human kind, usage of these cards without proper restraint and planning will eventually

lead people into the state that the purpose of these cards has tried to keep us away

from - an inconvenient life. While many books have pointed out that credit card

providers should be made accountable for the harsh terms and conditions set for their

products, the responsibility should not only be placed on their heads. Many of the

problems caused by credit cards are mostly due to debt, a result of overspending and

mismanagement of financial accounts, and not only due to the regulations set by the

providers. However, this does not mean that the blame is on the credit card holders

themselves. Assigning blames on groups of people or to systems do not help in

preventing more occurrences of debt from happening. In order to decrease the number

of debts or bankruptcies, it is most recommended for more studies and research to be

conducted so that the intrinsic need of consumers will be more understood. By

understanding the nature of human beings, people will hopefully be able to find ways to

control or regulate their subconscious urges, and, as a result, decrease the chances of

bankruptcies and other financial misfortunes from happening.

8
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