Link: http://www.vancouversun.com/business/fp/story.html?id=1393636
Summary
The recently announced news of probing credit and debit card fees from the Senate and Commons committe has brought the smiles back into small businesses. Consumers and retailers do not have to pay the increasingly high fee for their credit and debit cards. Also, businesses do not have to worry about the additional fees that comes along with it. Hence, the probing of credit and debit card fees will defininately relieve businesses of their financial issues and increase spending.
Relationship
Due to the popularity and the convience of credit and debit cards, it is reasonable that companies choose to use this method of payment more often than others. Though, this method of payment had a cost; consumers and businesses are required to pay interest and other additional fees. Now that the economy is in recession, prices are being increased and credit card interest rate shot up from 1.9% to 2.4%. This increase in interest is bad for economy as we learned in chapter 7. With economy already in recession, due to decrease in spending, having high interest rates will just add on to the problem. Not only will consumers stop spending, unemployment rates will increase. Businesses are already dealing with severe financial issues because they cannot generate enough money. Ultimately, banks will go bankrupt because businesses will not have the money to pay back loans.
Conclusion
Right now, I believe that we are heading the right direction with the decision of probing credit and debit card fees. This new system will definitately attract more businesses and consumers to spend. They no long will have to worry about interest rates and other additional fees when purchasing goods. Eventually, this will achieve stable businesses and increase in employment. An example would be car dealershops. Already, consumers are somewhat benefiting from the recession as interest rates for cars are lower; we no longer have to pay credit card fees to banks.
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1 comment:
In this current recession, the Canadian governments are finding ways to encourage consumers to spend more into the economy. I think the decision of probing credit and fees is a great start. I believe if more consumers were given more alternatives to pay in credit or credit cards, there will be more businesses. A consumer like me likes to have an option to pay in debit or credit since I might not always have cash in hand. Not only are the consumers are benefiting, the businesses are too. Businesses are earning more money since the interest rates and additional fees are going to being considered. Overall, I agree with you that this is a good method to help economy.
Michael Li
Block F
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