Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 9 December 2024
Revision date: 17-Dec-2024
Length: 11 pages
Data source: Published sources
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Abstract
This is part of a case series. This case continues the story of Shane and Erin as they learn about credit cards. In the A case, 'Black Coffee and Black Cards (A),' Shane researched credit cards and explained the fine print from the disclosures to his wife Erin, a marketing manager in a baby-formula company. This case begins with Erin interested in choosing the best credit card that offers airline miles in order to earn a free beach trip. Three cards are presented with different options, though the annual percentage rate (APR) is unknown until an application is made. To compare the three offers, Shane attempts to measure the costs and benefits of each card assuming the couple spends as much as USD500 and pays 75% back (USD350) per month. This case reveals the complexity of the credit card business and the risks and rewards to consumers of credit card use. In particular, students should recognize that the risk of having a credit card is how it might influence their consumption behavior. Credit cards offer a variety of conveniences, but they are an expensive form of short-term debt that can become an onerous burden if used beyond the means of the card owner. Thus prudent use of credit cards is a key learning objective of both the A and B cases.
About
Abstract
This is part of a case series. This case continues the story of Shane and Erin as they learn about credit cards. In the A case, 'Black Coffee and Black Cards (A),' Shane researched credit cards and explained the fine print from the disclosures to his wife Erin, a marketing manager in a baby-formula company. This case begins with Erin interested in choosing the best credit card that offers airline miles in order to earn a free beach trip. Three cards are presented with different options, though the annual percentage rate (APR) is unknown until an application is made. To compare the three offers, Shane attempts to measure the costs and benefits of each card assuming the couple spends as much as USD500 and pays 75% back (USD350) per month. This case reveals the complexity of the credit card business and the risks and rewards to consumers of credit card use. In particular, students should recognize that the risk of having a credit card is how it might influence their consumption behavior. Credit cards offer a variety of conveniences, but they are an expensive form of short-term debt that can become an onerous burden if used beyond the means of the card owner. Thus prudent use of credit cards is a key learning objective of both the A and B cases.