Chen recently graduated from college and accepted a job in a new city. Furnishing his apartment has proven more costly than he anticipated. To assist him with making purchases, he applied for and received a credit card with a $ 5,000 credit limit. Chen planned to pay off the balance over six months. Six months later Chen finds that other expenses incurred in starting a new career have restricted him to making only minimum payments. Not only that, he has borrowed on his card to the full extent of its credit limit. Upon returning from work today, Chen finds a letter from the credit card company offering to increase his limit to $ 10,000 because he has been a good customer and has not missed a payment.
a. Discuss the ethics of credit card companies that offer to increase credit limits to individuals who make only minimum payments and who have maxed out their card.
b. Should Chen accept the credit card company’s offer?