Credit Where Credit is Due
America has made credit a way of life. Advertisers use all kinds of gimmicks to sell their products utilizing debt as a form of payment. Tactics such as “90-Days-Same-As-Cash,” “No payments until the year 2010,” rebates and “easy terms” are just a few of the ploys used. Most advertisers sell their products with a payment plan rather than a lump sum price. Watch any television advertisement selling cars, and you will find that the car is always sold with a monthly payment, not the total price. The same holds true in a department store that handles large ticket items such as stoves and freezers. Since most people do not have any money on hand, a payment plan is the only way retailers can tempt most folks to buy.
Since most people do not have enough money to buy the things they want or need, the availability of credit has become extremely important. As a result, credit has become a status symbol in this country. You will find many colored credit cards on the market, each with its unique appeal to human self-esteem. The inference is that a gold platinum card makes you “somebody,” whereas a drab green card means that you are just one among the masses. Credit is the ticket to our dreams, or so most think. However, most lenders don’t show us that the dream purchased with credit slowly, but surely, becomes a choking nightmare.
Visa and MasterCard have successfully brainwashed millions into believing that “you deserve it” and “you should not leave home without it.” Ultimately, what they want is for you to use their card and not pay it off in the interest-free, 30-day period of time. They understand human nature only too well.
The 90-Days-Same-As-Cash appeal sounds harmless. I ask people all the time, “What makes you think you will be able to pay for something in 90 days when you can’t pay for it now? Is there going to be some windfall of money in the next few weeks?”
I had a friend who went to a local electronics store to look at computers. He was not planning to buy anything− he was just looking. He walked out with a computer and a 90-Days-Same-As-Cash agreement. Of course, in 90 days, he then found himself with a payment at 28% interest! He would never have bought the computer if he would have had to sign a 28% agreement at the time of purchase. Human nature is predictable and easily exploited by the retailers.
Let me make one point clear− someone wants you in debt! As an example, Sears Department Stores charge 21% interest on their credit cards. There is no bank that will pay a depositor 21% on their deposits. Sears has found a way to invest their money at 21% in a market that should normally be paying 8% interest. By the way, Sears makes more money on the interest from the credit card than on the mark-up on the retail item they sell to you. You may have also noticed that if you make a payment higher than the required amount due on the monthly credit card statement, the next monthly bill has a minimum payment of zero due. Sears is not ignorant; they don’t want you to pay the card off. If you have a balance of $4,500 on the card, it will take 33 years to pay it off if you make the minimum payment. Of course, this is assuming that you do not use the card again, which is normally a false assumption. If you are like the average consumer, Sears will have money coming in from you at 21% interest for most of your life.
To lenders, credit is a highly lucrative business! There are highly paid professionals with one job - to devise methods of extracting your money. Basically, the motivation behind advertising is to first cause you to want the item and then provide a way for you to obtain it.
The emergence of credit has become such an important issue in our society that the credit report has become highly esteemed as well. Protecting the credit report and correcting any bad credit has become big business. I tell many people who are in bad financial shape that the best thing they could ever do for themselves is destroy their credit. It manages to stop their self-destructive habits and end their reliance upon debt as their source of provision. No more credit means you have to pay with what you actually have (what a novel idea).
Again, families do not have disposable money. The federal government relies on this fact when it sets economic policy. When former President George H. W. Bush wanted to stimulate the economy in 1993, he reduced the withholding formula for payroll checks. This put more cash into the hands of the American worker, although it did not reduce taxes. President Bush knew that any money added to the paycheck of Americans would be spent, thus propelling the economy. The Federal Reserve stimulates the economy by lowering interest rates. If the entire truth were known concerning just how deeply this lifestyle of debt has affected our culture, we would be shocked.
America is an idolatrous nation. The “good life” in America is portrayed as a life of things and leisure. Actually, it is a life of selfishness and consumption. Of course, debt funds the American way of life as the attitudes in America become increasingly self-indulgent.
TAKE ACTION! If you have a history of “credit card overdose,” then it’s time to go cold turkey and stop relying on a false sense of security. Face the facts. Sure, I personally use a credit card to purchase most things, but I pay it off completely each month, disappointing my credit card company I’m sure. They don’t make any money off of me! However, there was a period in my life, when my wife and I would not allow ourselves to own a credit card, because we knew that it would end up owning us. America needs to wake up to the fact that they are slowly drowning themselves. Grab the life preserver, and get help setting up a plan to become debt-free. It all starts with you.
