Question

Why aren’t credit cards included in m1 or m2 definition of money?

Answer 1

Credit cards are not considered to be part in the m1 and m2 definition of money. Because the M1 definition of money revolves around money which are in the hands of the public and written checks, while the M2 definition of money revolves around savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds. Which also includes the M1 in the M2. While, the M3 definition of money refers to the balances in institutional money funds, repurchase accountabilities dispensed by depository establishments, and the Eurodollar. It also includes M1 and M2. Credit cards are not considered to be in M1 and M2 definitions of money, since credit cards becomes part of the money transaction only, during the payment of your credit card bill.