Given the current housing slump, high gasoline prices, and general uncertainty about the economy, you might think that consumers would be leery of taking on any additional debt. However, if Federal Reserve figures are any indication, charge cards are more popular than ever.
The statistics indicate that credit cards are preferred to both cash and checks. In 2003, electronic payments from credit and debit cards rose to 44 billion—up from 15 billion in the mid-’90s. In addition, from 1999 to 2005, credit card terminals basically tripled in number to 6.8 million.
Why the avalanche of credit card transactions? Consumer security might be a top reason. It is simply safer to carry and use a credit card than to carry cash—which can be stolen and used without a trace. In addition, it’s a great deal easier for someone to get away with using a stolen check than using a stolen credit card.
Some observers, however, believe that electronic payments could drive up the price of goods, since each transaction carries a fee which may then be passed onto the consumer. However, it may just be that consumers are willing to live with higher prices in exchange for the convenience that credit card offer.
Businesses see higher credit card usage as a victory because consumers tend to spend more when they’re using plastic. And that means a better bottom line for retailers and other businesses. In addition, according to the Federal Reserve, processing credit cards is far less expensive than processing checks—another plus for business.
Moreover, industry observers predict that new security measures are on the horizon—procedures that could make credit card use even safer for both businesses and consumers alike. With the myriad of advantages that credit cards offer, usage of the cards may continue to skyrocket in the years ahead, moving our nation closer to the “paperless society” envisioned by trend-watchers.
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