For consumers, consumer credit can be used to improve their standard of living, cope with emergencies, and provide convenience.
1. Improvement of living standard: Consumer credit can help consumers to buy more goods and services within the scope of financial allowances, thus improving the quality of life. Through installment and prepayment, consumers can enjoy goods and services in advance to meet their personal and family needs.
2. Coping with emergencies: There are always some unexpected emergencies in life, such as illnesses and accidental injuries, which may bring financial pressure to the family. Consumer credit can play an emergency role at such times to help consumers get through the hard times. Consumers can use consumer credit to purchase medical equipment, pay for treatments, etc.
3, provide convenience: Consumer credit can simplify the shopping process and provide convenience. Consumers can make online payments and offline purchases through credit cards, chanting, and other consumer credit tools without having to carry cash. Consumer credit can also help consumers enjoy discounts and points in shopping and traveling, further improving their quality of life.
Drawbacks of the role of consumer credit
1. Leads to overspending
With the support of consumer credit, it is easier for consumers to buy the goods and services they desire, but this may also allow people to get caught in the trap of blind spending, especially during holidays and promotional activities, when consumers are easily lured by merchants to buy unnecessary goods. tempted to buy unnecessary goods, leading to debt.
2. Increasing the burden on families
While consumer credit provides consumers with purchasing power, installment payments and other methods essentially spread the burden of consumption into the future, which may lead to repayment difficulties in the event of future income problems for consumers, and thus affect the quality of family life and harmony.
3. Inducing Financial Risks
With the rapid development of the consumer credit market, competition among financial institutions has become more and more intense, and some financial institutions may be in pursuit of short-term interests, relaxing their credit vetting standards and leading to a rise in the non-performing loan rate. The use of credit funds by some consumers for high-risk investments or repayment of other debts may also exacerbate risks in the financial market.
4. Resource mismatch
The rapid expansion of market demand in the short term, driven by consumer credit, may lead to problems such as overcapacity and waste of resources. Moreover, over-reliance on consumer credit may lead to an imbalance in the consumption structure, further aggravating overcapacity and resource mismatch.
5. Exacerbating the social gap between the rich and the poor
Consumer credit makes it easier for consumers to buy high-value goods, but is limited to those with stable incomes. For low-income groups, consumer credit may exacerbate the stress of their lives, widening the gap between rich and poor.
In order to give full play to the positive effects of consumer credit while reducing its negative impacts, government departments and financial institutions should strengthen the supervision of consumer credit, guide consumers to establish a correct concept of consumption, and promote the sustainable and healthy development of the economy and society.