It is believed that on the grounds of excessive usage and imprudent use of the credit card, many are in debt. As a result, banks should avoid issuing them to individuals who lack the ability to pay their debts. My view on this is that this rule is not enough to stop irresponsibility with credit cards, more laws should be made to support it.
If checks are made on persons with credit cards, it would help the banks know when an individual can no longer pay his debts. Anyone can lose their job at any time or, for entrepreneurs, have their business closed down, which might make the person go into debt with the financial institution owing to overutilization of their credit card. If checks are made, the bank would easily catch this and stop the individual from using his card till he gets a new job. Furthermore, this would allow the bank more opportunities to make more by investing in other persons or businesses.
Another consideration is putting a threshold on spending on every credit card. If there is a bar on how much customers can spend on their credit card, the bank would be helping their customers with self control concerning their spending. The threshold should be something that can be paid from their income in a month or two and should only be shifted if the customer’s income increases or the customer has built a credible financial behaviour.
To conclude, Financial institutions should not just rely on the criteria that makes them issue a credit card but should put other rules in place such as making checks on their customer’s ability to pay back their debts and putting a spending threshold on all cards depending on the income of the individual.