Credit Cards: A Tool of Etiquette and Management

In the intricate web of modern societal management, various methods are employed to maintain order and influence behavior. Among these, economic mechanisms stand out, particularly those that tether certain social strata to financial institutions. In today's world, credit cards are not just a means of facilitating transactions but a sophisticated tool of economic management, shaping the lives and decisions of the middle and lower classes.

The essence of this method lies in creating dependence on banks. As people and businesses become more reliant on financial institutions, their autonomy diminishes. With fewer free funds, individuals find their capacity for independent decision-making and behavior significantly constrained. Market participants, whose survival hinges on financial entities like commercial banks, must carefully weigh every step, perpetually aware of the economic "sword of Damocles" hovering over them.

In Azerbaijan, this dependency is starkly evident. The working-age population stands at 5.1 million, yet the number of payment cards in circulation has reached 17.4 million, according to the Central Bank's data from the first quarter of 2024. This represents a 22.3% increase from the previous year, with debit cards rising by 22.8% and credit cards by 18.9%.

On average, there are about two payment cards per person, reflecting a significant penetration of banking services. However, the reality extends beyond mere statistics. Many individuals possess multiple credit cards, often juggling debt between them. This cycle can lead to a precarious financial situation, where continuous borrowing creates a seemingly insurmountable debt trap.

This scenario isn't limited to Azerbaijan. Globally, the use of credit cards is ubiquitous. In Turkey, for instance, the number of credit cards reached 118 million in 2023, with total bank cards numbering 400 million. In the United States, the pandemic accelerated the trend, pushing the number of credit cards to 511 million in 2021, amidst a population of 330 million.

Credit cards, while promoting cashless transactions and reducing the shadow economy, pose significant risks, especially for socially vulnerable groups. Families can break apart under financial strain, health issues can arise, and false hopes for future prosperity can lead to existential crises. The financial burden and stress of managing multiple debts can erode the fabric of society, undermining both personal and communal stability.

The allure of credit cards often begins innocently. They are marketed as convenient financial tools, offering a buffer for unexpected expenses. However, this initial reliance can evolve into habitual use, spurred by increasing credit limits and the ease of deferred payments. What starts as a safety net can quickly become a financial quagmire.

In Azerbaijan, this phenomenon is exacerbated by aggressive banking practices. Bank employees often encourage customers to take credit cards, framing them as harmless backup options that can be returned after a month. This tactic entices customers into a cycle of dependency, turning them into perpetual debtors and reliable revenue sources for banks.

While I acknowledge the benefits of credit cards in promoting financial inclusion and streamlining payments, it is crucial to approach their use with caution. Blind reliance on borrowed money can lead to severe consequences, both financially and psychologically. The recent surge in banking dependencies has played a notable role in family disintegration and personal distress.

As an economist, I do not advocate for complete avoidance of banking services. Instead, I urge responsible usage and prudent financial planning. It is vital for citizens to manage their finances wisely, avoiding the allure of easy credit and maintaining realistic expectations about their income and expenditure.

In conclusion, credit cards are a double-edged sword. They offer convenience and flexibility but can also lead to significant financial and social challenges. By understanding their role in economic management and exercising caution, individuals can harness their benefits while mitigating the risks, ensuring a balanced and sustainable financial future.

Recent statistics reveal a disquieting trend: the escalating impact of improper family budget planning and reliance on banking systems on the erosion of familial institutions.