Credit card debt can be deeply stressful for people buried under a perpetual mountain of debt. These consequences, however, don't stop with individuals. Credit card spending and the debt it produces affect the overall health of a society, its economy and its people. Particularly in an economy where consumers tend to rely on credit cards for necessities, the effects can be far-reaching.
Credit cards enable people to spend money they might otherwise be unable to spend. This can create a perpetual treadmill, in which everyone is living a higher standard of living than they can afford. This encourages others to attempt to keep up with this spending rate. Thus, credit card usage and credit card debt tend to beget more credit card usage and credit card debt, driving consumers further into financial trouble but teaching them that spending more than they make is normal. One 2011 study published in "The Journal of Marketing Research" found that having a credit card -- even one with a high balance -- encourages more spending, even among people with high self-control.
Credit card debt can lead to large-scale economic problems. Consumers in debt may lose confidence in the economy, spending less. But personal debt can also harm the economy by harming creditors. The 2008 bank bailout was due in part to consumers who could not repay their debts, and "The New York Times" reports that smaller-scale bank bailouts followed. This forces taxpayers to pay to prop up banks so that the banks do not go bankrupt, harming the economy.
Stress can decrease immunity and contribute to high blood pressure and other health problems. It also increases depression, anxiety and other mental health issues. A 2008 health poll conducted by The Associated Press and AOL Health, for example, found that consumers in debt tend to have more health problems. These health problems, in turn, affect society by increasing absenteeism at work, increasing the load on the healthcare system and increasing the number of people who have healthcare debt. CBS News reported in 2012 that healthcare costs play a role in 62 percent of bankruptcies, so credit card-induced health problems may also increase the load on bankruptcy courts.
Saving money is an important aspect of gaining financial freedom and protecting against emergencies. But credit card debt decreases the ability of consumers to save in two ways. First, they may be unable to save because they're paying exorbitant interest rates on credit cards. Second, credit cards serve as an emergency fund for some people. Decreased savings means less money given to banks and fewer consumers with the hope of gaining financial independence, saving for retirement or even taking a vacation.
- Journal of Marketing Research: Leave Home Without It? The Effects of Credit Card Debt and Available Credit on Spending
- NBC News: Debt Stress Causing Health Problems, Poll Finds
- CBS News: Issue Brief -- Health Care
- The New York Times: Don't Blink, or You'll Miss Another Bailout
- Social Science Research Network: The Growth and Diffusion of Credit Cards in Society
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