A Fad Gone Bad

I sometimes get funny looks when I pay for things with cash (my favorite way) that other people usually pay for with a card. I bought a TV for $600 cash the other day, and, frankly, the cashier looked at me like I was some sort of criminal!

Credit was first used in Assyria, Babylon and Egypt 3,000 years ago. The bill of exchange – the forerunner of banknotes – was established in the 14th Century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed in the 17th Century.

By 1950, Diners Club and American Express launched their charge cards in the USA. In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.

And now credit cards are everywhere. It seems everyone has one, including many who shouldn’t!

By the late 1990s total credit card debt owed by U.S. households averaged out to $6,000 per family. Why the drastic popularity? How can thirty years make such a difference? Is it because people love the idea that credit delays the reality of paying? A dance now, pay the piper later mentality?

Personally I think that something more sinister is at the bottom of the proliferation of credit cards.

Credit card companies are everywhere. They are on campuses trying to hook kids who don’t even work yet. They sponsor sporting events and continually sell us on what can be achieved with their card. Branding, branding, branding. Will it ever stop?

Credit card companies send between 3 billion and 5 billion (yes billion!) direct mail solicitations (all unwanted) each year in the U.S. alone.

Hey don’t get me wrong. I’ve got one too. I keep it in my wallet for emergencies. I don’t use it to make regular purchases, because that, after all, is what cash is for. At the same time, I leave no paper trail.

No big bank can “paper mine” me. They have little or no information on the nature of my purchases so they can’t sell my name to others for additional unwanted solicitations.

They don’t know how often I eat out, fill up my car, or what kind of shirts I wear. And frankly it’s not a big deal that they don’t know what my preferences are, but in a world where privacy seems ever fleeting, it’s a small victory for me.

My favorite victory over these insidious purveyors of credit is paying my bill on time. That really gets them. No interest payment undermines their existence, and I like that. I like that a lot.