CREDIT CARDS

DEFINITION

A card (usually plastic) that assures a seller that the person using it has a satisfactory credit rating and that the issuer will see to it that the seller receives payment for the merchandise delivered.


Excuse me for asking, but has anyone noticed recently that you can’t do anything without a credit card? And given that we use telephones and the internet to buy so much “stuff,” it isn’t surprising, it’s just the way that payments have developed. Except, on the whole, you are buying things on credit (with someone else’s money), unless you have a payment card with the right symbol on it, to take the money out of your bank account.


I don’t have a credit card. I can’t get one because I do not have an address where I have lived for the past X years. I rarely operate a bank account, do not have a full time job, and I will not pass their computer scoring test.


I’m sure none of you really think about your credit cards, you just accept that this is something you need to have in order to get on in the world. It probably doesn’t even occur to you that the person you have borrowed from (even if you pay it back on time every month) is a money lender, the same as the loan sharks who operate in back streets, and charge massive amounts of interest.

This loan shark has a smiling face, a glossy brochure, a massive advertising campaign, and a huge clientele. They may not threaten to break your legs if you don’t pay them back, but they will attempt to ruin your life by making sure you can never borrow again. And given that our whole life is based around buying things we can’t afford, this is could be a major blow to most people.

So why do you need them? Well, when you first get the card, there’s a good credit limit on it so you can “Start Spending Immediately!” But just remember, you’ll still have to start paying it back at the end of next month.

Some people are not good with money. I know from personal experience how easy it is to spend money on credit cards. You feel like an instant big shot, all that cash at your disposal, and you didn’t have to work a single day for it. Fantastic! So it’s straight down to the shops; new clothes, maybe a holiday, maybe a gift for your partner. It’s so easy. Phone up. Apply on-line. A decision in sixty seconds. And if the computer gives you a good score, you’re in business. A shiny new card with your chosen symbol will be delivered to your home, ready to start spending!

And then it’s gone – you’re up to your credit limit. Except now, the smiley, shiny credit card loan shark wants to start getting its money back. Can’t pay? First you start getting the “courtesy” phone call, then the more insistent phone call, followed by the first letter, then the second letter, then the third letter, then the solicitor’s letter, then the second solicitor’s letter, followed finally by a summons, followed by a court appearance where the bailiffs will then be authorised to remove your “stuff” up to the value of the debt owed. Suddenly the whole smiley, shiny, plastic experience isn’t so much fun. Gone are the images of happy people in the ads using their plastic; all you have now is worry and trouble in your life.

You may not believe it, but this is all your own fault; not the fault of the credit card companies who have made you to take a card under false pretences. It’s not the fault of the system, nor the government. This is of your own making, or should I say, your brain’s.

You see, when you got your new plastic, your brain gave you some great ideas about what to spend it on. You engaged with the pleasure, and before you knew it, you were down the shops spending. Yippee. Look at all the lovely new things I bought!

It is not that the money lenders are evil, they are just filling a demand. They know you are addicted to buying things. They know you just can’t help buying things you want but can’t afford. They’re just helping you achieve that dream – albeit a false one.

Imagine it. All the trouble you get into because you just can’t help doing what your brain tells you to do. Buying products you don’t need, to get an instant hit of pleasure. Remember the pleasure hit you get from drugs, or alcohol, or a cigarette? Well it’s the same with shopping. Especially if you can get something you don’t have to save for. So there it is. Credit cards. A non-essential item in your wallet, used for buying pleasure. Until you have to pay it back…

Please think about this carefully with me. We get into debt because we want; we desire. There is no magical spell that forces you to do these things, just an inability to detach from a brain that has become addicted to certain behaviours.

What do you think about it? Do you think “credit cards are essential,” “I couldn’t get by without them,” “they are a necessary evil,” “I don’t have any problems with them, they’re just more convenient.” Would you agree with any of those statements?

I am sure many of you reading this don’t get into debt. You just use the credit card to pay for goods, because (a) it’s easier than carrying cash, (b) because you get points, and maybe (c) because you use it when paying over the internet. For you, the last few paragraphs were meaningless; probably because you are either very, very careful with credit and don’t like paying interest, or you have plenty of money!


Whatever the case, there are definitely more people out there using credit cards as a way to get things they can’t afford, and not paying off the balance every month, or these card companies wouldn’t be in business. It’s the interest you pay that pays for their fancy advertising, the offices all over the world, their staff, and their sponsorship of sporting and art events! How else do you think they get their money? You give it to them!

Your inability to resist spending money keeps these giants in the money lending industry in business.
Your best bet is to cut all of these cards up. I did. Do you want to support a loan shark? To make him richer, while you get poorer?

In the beginning, you may find it difficult to come to terms with the fact that you won’t be able to just put things on your silver, gold, or platinum card; that you won’t be able to show off to your friends with your impressive array of shiny plastic. The shiny piece of plastic which obviously means that you are of a higher status than everyone else. Why? Because only people with excellent credit ratings get access to the exclusive club of being able to borrow, borrow, borrow!

What an achievement. What a remarkable step forward in the progress of the human race! An ability to borrow money, which resulted from a favourable result in a computer software program. Think about how absurd this is. Our success as humans is measured by a credit scoring program.

Without a good credit rating, you can’t do anything these days. Well, that’s what they tell you, but actually what it means is, you can’t borrow!

These days, everything is done on credit; from houses to cars – all expensive items. And the only way the companies can get you to buy them, is to loan you the money! How many people do you think can afford to buy even a small new car with cash? What about a house? That would be ridiculous; no normal, hard working family could afford to pay cash for a house. They would never be able to save up the amount of money needed.

We will cover housing in more detail in another topic but suffice to say that giving up credit cards will not break the cycle of debt we all find ourselves in straight away, but it’s a good start to ridding ourselves of something that is chaining us to misery.

From a historical point of view, credit cards are a new thing, and so is credit scoring. Both have only come into existence in the last 40 years or so, and wouldn’t exist without computers being able to check on people and their financial history.

So how did we pay for things before we had credit cards? Well, it will probably come as no surprise to you that after the second world war, people were pretty poor. They had little; economies of the world were decimated by war (except those companies who supplied the technology and weaponry for the war, who seemed to become rich, funnily enough).

People were not addicted to shopping, they bought what they could afford; mainly simple things they needed, like food and to pay bills, with a little left over for clothing and other items they needed. You notice I use the word need here, because although there may have been desire, they couldn’t buy anything they didn’t have cash for.

As economies were slowly rebuilt, and people became richer (in the westernised economies) they were encouraged to spend, spend, spend; and spend they did! The governments told people it was their right. The economy was booming and so it was only right that people could buy what they wanted when they wanted it. The only problem was, they still needed to earn the cash before they could buy it. So, fuelled by the desire to “liberate” people from not getting what they wanted when they wanted it, the credit card was born.

Suddenly, people could buy things they also wanted, and the more they spent, the more the economy grew. They wanted stuff, the companies supplied it, everybody was happy; and when people are spending, the government is happy. Win-win. The employees are happy because they have jobs, because people want to buy their companies’ products. The employers are happy because the more they sell the more money they made. The government is happy because not only do they get the employees and employers tax contributions, they also get the sales tax from all the goods they were buying! Wow! Life sure is sweet! All fuelled by borrowing at outrageous rates of interest.

Loans were something people thought about very carefully before taking, but credit cards just involved filling out an anonymous form, and waiting a few days until your new piece of shiny came in the post.

Borrowing without borrowing.

A subtle loan, I would call it.

The use of credit cards proliferated throughout the world as the most acceptable currency for everything, from renting a car, to paying for a hotel room, and paying for dinner amongst other things. It also meant you didn’t have to worry about carrying cash on you all the time. This has worked well in the credit card companies’ favour; after all, who would carry around two thousand dollars in cash with them at all times? Well, with a credit card you can, enabling you to impulse buy whenever you feel like it.

“Hmm, I really fancy that new wide screen television, but I haven’t got any cash.”

“Oh Yes You Have!” shouts the credit card.

“Oh yes!” says you. “I can afford it, I have a credit card.”

“While you’re at it,” shouts the credit card, “why don’t you buy that flashy dvd player as well, you’ve still got plenty of credit left!”


Instant gratification. Win-win. You get what you want, the retailer gets a sale, and the credit card company hopes you can’t pay it back by the end of the month!

But let’s stop looking at the negative. It can’t be all bad, can it? And anyway, how the heck am I supposed to pay for my cheap flight online? How can I pay for my hotel when I am in a country where I feel uncomfortable carrying cash in case I get robbed? Surely for this alone, it is a good thing?

I can see the positive side of such a system, although it has encouraged many more cases of fraud. Every year millions (maybe billions) is stolen from peoples credit cards, by various methods. Somebody has to pay for all this fraud, and it’s sure not going to be the chief executives of the card companies, it’s going to be you and me.

So how do we embrace the word-wide system which relies on credit cards for guarantee of payment, without borrowing money?

Part of the attraction for retailers to accept these cards is that once they have your number, they can subsequently charge any outstanding amounts to your card afterwards, such as if you run up a bill at a hotel, or rent a car, but most other items we buy are one-off payments.

What we need is a way of carrying cash that is in an electronic format for convenience and personal security, but is prepaid rather than borrowing the money. What could we possibly use that enables us to do that? Oh yes! It already exists. It’s called your debit card, and your lovely bank will issue you one of these so you can access your own money! You may even choose to use a pre-pay credit card which requires no bank account. You just have to ask.

It may not be the best solution, but it’s an instant way to stop borrowing money just so you can pay for a flight or something else on the internet (something I imagine will continue to expand as a preferred method for purchasing goods).

Of course, it would be nice if there was a global payment system that was run on a not-for-profit basis. “Don’t be ridiculous!” shout the economists. But why not? The only people who would suffer are the credit card companies and their well paid ad agencies. It’s not such a big deal. Who would run it? Who would manage it? These are questions we must pose ourselves. There is no easy solution to a system that has been in place for many years, although new methods of payment are springing up on the web all the time, but most of them still require you to load them up with cash from your credit card, so they are not an ideal solution either.

Like many difficult tasks in life, this will be hard, but ultimately worth freeing ourselves from. A mind concerned with debt will never have the space to contemplate anything else. Debt consumes you with worry. There is no place for anything else. It is time to break free of the smiles and the shiny plastic enticing you to spend, spend, spend. It’s not your money, it never was and never will be.

So, until we can come up with a new method for payments which is not controlled by several loan sharks around the world, switch to using your debit card. Use your own money. You never know, saving for things you really want may be an enlightening experience, as you will have to practice that long forgotten art. Patience.

“BOO!” shouts you, “Stop spoiling our Fun. We like credit cards, we want them, we need them, they are part of who we are. It’s not fair that we should think of giving them up.”

Can you not see how quickly and so intensely we have become so addicted to credit cards? They’ve only been going for about forty years and the whole developed world is addicted. Don’t worry, if you come from a less economically prosperous country, just give it a few years and soon you will be able to experience the pleasure of spending money you don’t have. I bet you can’t wait.

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