Family Management Essay

1. What information in the documentary most surprised you? The thing that most surprised me was the amount of credit cards that a household. I am currently stressed out by having one credit card, I could not even imagine multiplying that stress by 8. I understand that adults with families need credit cards to help buy necessities for their families, but I think that if you are going to take on the responsibilities of owning a credit card, you should make sure you are able to pay more then just the minimum amount. That is another thing that surprised me, the fact that 35 million people only pay the minimum amount due is really shocking because people should be well aware by now how much money they are actually loosing by doing that. 2. Do you think the government should have a role in regulating both who can get credit cards and what interest and fees consumers should pay? If so, who should be the regulators? Who would benefit from such regulation? Who would lose? Explain. I don’t think the government should have a role in regulating who can get a credit card or the interest rate or fees. When people sign up for a credit card, they are well aware of the responsibility that they are taking on. Everyone knows their limit and how much interest they are charged, so if you cant afford to pay something off on time you should not buy it. I don’t think people should blame the banks if they are being charged interest on their purchases; it is their responsibility to be able to keep track of their income and their spending. Even though the bank is making money off of people who do not pay their bills on time, they are the ones lending money to people and they need to make some profit to, like every other business out there. 3. How, according to the four â€Å"normal consumers† in the documentary, does owning a credit card or credit cards affect purchasing decisions? Owning a credit card or multiple credit cards give the illusion of having more money then you actually do. The credit card makes people think that paying it later isn’t a big deal, when actually it buries people in huge sums of debt. Buying something for $500 and only making minimum payments for it can actually end up being double the price (depending on your interest rate). I was brought up thinking that credit cards are for emergencies and emergencies only, but now that I have one I find myself tempted to by things that are not even close to a necessity, and because of this piece of plastic, I also find that I convince myself not to worry and that I will pay it off later. It affects the purchasing decision by giving the illusion of money that most people don’t have, people have a hard time distinguishing the difference of their wants and their needs. Since there is an option to do a minimum payment, the majority of people are taking that route. 4. Who loses and gains the most from credit card companies’ policies? The people who gain from credit card companies are the ‘dead beats’, also known as the people who pay off their entire credit card bill at the end of the month. The reason that they are the gainers is because they are the ones who never have to pay interest, therefore the credit card companies are not making any money off of them and are basically just lending money to these people. The people that pay of their entire bill at the end of the month not only don’t have to pay interest, but they also gain benefits and good credit rates, depending on what that bank offers. The people that lose from credit cards are the people that only make the minimum payments. The downfall with only paying the minimum payments is that they are gaining interest of the balance spent, so they are constantly loosing money. They may think that they are saving money because they are not spending a lot on payments, but in the long run they are paying double the amount. 5. Has the documentary influenced how you might use credit cards in the future? Explain† (Frontline, 2008). Definitely, I’ve always thought I had a good concept on the whole credit card situation, but looking at the video has made me realize how much money I am actually loosing. I’ve always paid more then the minimum payment but still, I would much rather be one of the â€Å"dead beats†. Being in school makes that next to impossible though since I cannot work as much as I’d like to. This video makes me more conscious of the purchases that I make and it also makes me want to pay off my credit card off immediately! Being a student has put me into a lot of debt, I hope that once I have a career in place I will be able to pay off all of my debts.