Credit cards have often been a convenient form of short-term finance in which money can be borrowed quickly and repaid later. However, there is the worry that credit cards promote impulse purchases which result in some people being unable to repay their debt. This leads to the question of whether credit cards should simply be limited to those earning over the national average income or be available for everyone.


There are many benefits of credit cards. For example, if your washing machine breaks down but your next pay check doesn’t come until the next week, a credit card allows you to buy a new washing machine without the hassle of applying for a loan or not washing your clothes for a week. In this scenario, credit cards can be incredibly useful yet in reality, people are not as rational and often purchase things that are too costly for them given their salary.


With interest rates potentially up to 16%, it can become unaffordable for low-income groups to pay back their debt and this could cause further financial problems. A solution to this could be to limit credit cards to people earning above the national average income: £36,611. This means that although people will still be in credit card debt, they will be more able to pay it back and less likely to accumulate more debt. For people with lower incomes, they may have to use loans instead which perhaps ensure the person is able to pay the money back through more thorough credit checks.


However, some may argue limiting people’s availability of credit is unfair and doesn’t promote equality. Additionally, due to credit checks and ratings, credit card companies can ensure that the only people who are financially able will be able to use credit. This means that debts are minimised and people with lower incomes may still be able to purchase items using a credit card.


Credit cards are an immediate and efficient form of short-term borrowing but the wrong people using them can have large economic impacts and can result in long-term debt. Is it suitable to limit credit cards to only those earning over the national average income?


Written by Diya Khatri Nower Hill High School