Without it we would probably fall into a deep depression because everyone's disposal income has a limit. If people borrow money on any scheme they can pay it back at a monthly affordable payment.
This is a simple and a thought out rule. This rule has guidelines, which are based on certain criteria for any individual borrowing. These are your incomes and your outgoings.
With this a lending facility can work out your debt to income ratios. This in itself tells the lender if you can afford it or not. Finance companies also use credit checks for past performance history using companies set up by the government, such as Experian
and Equifax.
The more you sell the more money you make. “Ask everyone who walks through the door today if they want a credit card”. (Says the Sales Director). Next time you go into your local bank, sit down and watch the cashiers. They will ask everyone.
Then if they decide they want to go ahead they will make it fit your personal circumstances and bend the rules in order to govern a commission based performance at the end of the month.
So borrowing used correctly is a means to help push forward the economy. With a strong economy the country becomes more developed at a faster rate.
But there needs to be a balance.
Credit cards offer students more disposal income, which in time will amount to dept. This dept will then be converted into a personal loan. From a personal loan to a secured loan and from a secured loan to a final add on to the mortgage. It's long and expensive process. That's the banks idea of making the largest amount of profit possible out of one borrowing facility.
Students don't need credit cards. They have grants, overdraft (small interest charge) and hardship funds. Its costing them enough as it is.
