Question

Presently cyber  crimes related to used of credit cards is increasing. Banks issued the credit cards without much knowledge of financial position of the user. Later such people unable to pay the bill and  default. Therefore, Credit Cards should only be restricted to people with income higher than the national average.

Please discuss.

Answer 1

Cyber crimes related to use of credit card has substantially increased because there is a large amount of people who are unable to pay their loan because of their lower amount of credit worthiness and such people are provided with a high amount of credit by the credit organisation and these people had to be restricted proactively by identifying their creditworthiness before they are issued with debt because that is leading to the lot of increasing default risk on the part of financial institution.

There has to be a better analysis of credit worthiness before issuing any loan to borrowers and there should be various criteria which are fixed in order to manage with credit risk associated with credit cards and there should be no criteria about respecting people with income higher than the national average because that will be restricting various people who are having a capability of growing their income higher than the national average so it can be said that credit card should be properly issued after analysing the creditworthiness and discounting the future earnings but it should not be fixed with the criteria that only people who are having the income higher than the national average should be the provided with credit card because that could lead to people who are having a capability of growing their income higher than the national average missing out on credit cards.