What Changes With a Credit Card?

Despite the fact that the credit landscape in Mexico and the world has expanded with the birth and consolidation of startups, the possibility of having this financial product is still insufficient. The numbers say it all: according to the Consultative Group to Assist the Poor (CGAP), an independent research center dedicated to financial inclusion, only about 20 percent of adults in the world have access to credit. The figure drops to 8 percent in developing countries.

In Mexico, the situation is no better. According to the National Institute of Statistics and Geography (INEGI), only 27.5 percent of adults are users of formal credit. This figure reflects the enormous lag that prevents our country from advancing toward true financial inclusion. The problem, like many others, is multifactorial; however, much of this delay is due to the great complexity that users encounter when they knock on the door of financial institutions to access this type of product.

Fighting for financial inclusion is, without a doubt, a battle that cannot be left halfway. Its implementation and its fruits could completely change the reality of the country. The World Bank assures that this could help to achieve seven of the 17 Sustainable Development Goals proposed by the United Nations (UN), among which is the end of poverty, health and well-being and the reduction of inequalities.

A Door to a Better Life

It is easier to understand the benefits of financial inclusion for the world at a macro level if we analyze in detail how much a product like a credit card can change the life of a single person.

Let's talk, for example, about the visibility offered by having a credit account. By obtaining a card, people become part of the financial system and, thanks to this, they leave the world of anonymity to become not only subjects but also people who have managed to earn the trust of an institution.

By becoming accredited, users also have the opportunity to leave a trail of their payment behavior that will be a reference that can open many doors for them in the immediate future. This history is used by other institutions to consider the user as a possible candidate. For this reason, granting a first loan is practically opening the door so that people have the possibility of knowing and obtaining more financial products that can lighten their lives.

A credit card can radically change the lives of women, especially if they are heads of family. According to the National Survey on Household Finances, carried out in 2019, 65 percent of women have been forced to ask their family or friends for loans to cover unforeseen family expenses. The same survey reports another significant piece of data that illustrates the general situation of women: men have more mortgage, car, payroll, and bank loans, while women obtain loans from department stores, as well as group or solidarity loans. This gap is undoubtedly related to the difficulties women have in meeting the requirements to obtain the same credit as men, since there is a significant difference between the income of both.

Accessing a loan can represent for many women the possibility of managing their own finances for the first time and having the opportunity to provide themselves with necessary services that are often forgotten in their list of priorities, such as preventive health.

Credit also reduces the risk of accessing informal financing. According to the study Credit in Mexico: Products, Instruments and Evolution, published by the National Banking and Securities Commission (CNBV), financing in informal instruments is greater than formal. Of the former, the most common source is loans from family and friends, although unauthorized batches and savings banks organized by acquaintances are also common sources. This can put participants' money at risk and seriously damage their relationships.

Another benefit that credit cards have brought to people's lives is the ability to shop online safely. With the arrival of the COVID-19 pandemic, many people were able to purchase products and make payments virtually, without leaving home and without putting their health at risk. In addition, shopping online also allows you to make better use of time, reduce the risks of buying with cash, and have access to discounts and payment facilities.

As the World Bank constantly mentions, financial inclusion can help us combat the great injustices that humanity suffers daily, such as poverty, inequality and lack of access to health services. To reach these great goals, it is necessary to work hard so that all people have the same opportunities to access what a product like a credit card offers. The changes that this represents in the life of a single person are enormous and if we add each user, we can see that the well-being of many becomes a benefit for all.