Thursday, November 20, 2008

Accounting 12- Chapter 14

http://www.cbc.ca/consumer/story/2008/09/08/consumer-behaviour.html

Summary:

This article is about a Marketing Professor named Priya Raghubir talking about credit cards. Raghubir says that credit card removes the “pain of paying” which means that consumers did not have to pay purchases by cash, but with credit. He also said that credit card could also be bad because they can cause people to underestimate purchase cost when buying many things at once. Raghubir also said that credit cards cause people to become vulnerable to huge amount of debts. In the end of this article, Raghubir stated that credit card may seem to remove the “pain of paying”, but it actually increased it.

Connection:

The connection between chapter 14 and this article is bank credit card (section 14.2). In this article, it states that people use to remove the “pain of paying”, but actually increase it. It somewhat connects with this 14.2 because people not only had to pay back the credits they had used to purchase goods with their credit card, but the bank also charges a annual fees and interest fee to cardholders; therefore, the “pain of paying” had increased for the cardholders.

Reflection:

I think credit cards are very useful because it helps people expensive goods without them carrying a whole bunch of cash. Even though it is very convenient, people still have to watch out for how much they are spending with the credit card or else they can get into a massive debt. That is why people should pay attention to their monthly credit card bill to get a general idea of how much they are spending. It is always good to remember not to over use credit cards.