Is the consumer credit path embraced by Americans a wise course for consumers in developing nations around the world? List some of the competing arguments.
By 2025 or so, Chinese residents are expected to expand their credit card holdings from 331 million at the end of 2012 million to 1.1 billion and thereby pass the United States (536 million cards) as the world’s biggest credit card market by number of cards. Credit cards are becoming a commonplace shopping tool in the developing world. As a result, those consumers are joining Americans and other Westerners in struggling to repay their credit card debt. For ex ample, consumers in Turkey in recent years have embraced credit cards with enthusiasm, but having done so, they increasingly find themselves in a “debt trap” built by high interest rates (nearly 29 percent in 2011). Turkey has imposed some regulatory restraints, but consumer rights advocate, Turhan Cakar, foresees continuing problems: “Banks hand out cards too freely and then push a culture of consumption.” Critics are concerned that consumers around the globe will be caught up in a debt cycle they often do not understand and that they cannot escape.