A modest proposal: Ban credit cards...
Well why not?
What if they outlawed credit cards? Would the world end? Would it be financial Armageddon? Would we shuffle from food line to water queue in our now-tattered $250 blue jeans?
It's never gonna happen, we know. So play along with me here. I'm not talking about business credit. That's an altogether different animal (currently in hibernation). I'm talking consumer debt. This idea that we can have the McMansion AND the boat AND the trips AND the kitchen remodel because we could, up until just a bit ago, borrow all that money to do so.
And look where we are today.
What if we *had* to live within our means again? What if we couldn't buy whatever we wanted because we didn't have credit cards? Would it suck? Heck yeah. But only because we've gotten so used to having credit, and being able to buy those cute shoes or fund our student film or buy that iPhone because it's so cool and you just gotta have it.
In other words, what would happen if we couldn't have all that...stuff...unless we actually had the cash for it? We'd have to get used to saving again. Saving actual dollars (while they're still worth anything at all, I mean). What if you had to do the now unimaginable and save a 20% cash downpayment before buying a new house? Wouldn't that kind of thinking actually help our economy down the road? A nation of savers is a good thing, isn't it?
We wouldn't be so in debt. We wouldn't have so much superfluous stuff. We might work less and live more. Thrift might come back into style.
Being truly forced to live within our means would really foul up our carefully-crafted consumer society, true. But as I'm told, many generations of people have managed to do so. My dad tells me that in the '60s you went to the bank on a Friday with your paycheck, and took out enough cash to get through until the next week. If you ran out...well...tough luck.
So set me straight please. Why couldn't we just ban credit cards forever? It's just a thought, given today's financial meltdown...caused by the credit crisis.
What if they outlawed credit cards? Would the world end? Would it be financial Armageddon? Would we shuffle from food line to water queue in our now-tattered $250 blue jeans?
It's never gonna happen, we know. So play along with me here. I'm not talking about business credit. That's an altogether different animal (currently in hibernation). I'm talking consumer debt. This idea that we can have the McMansion AND the boat AND the trips AND the kitchen remodel because we could, up until just a bit ago, borrow all that money to do so.
And look where we are today.
What if we *had* to live within our means again? What if we couldn't buy whatever we wanted because we didn't have credit cards? Would it suck? Heck yeah. But only because we've gotten so used to having credit, and being able to buy those cute shoes or fund our student film or buy that iPhone because it's so cool and you just gotta have it.In other words, what would happen if we couldn't have all that...stuff...unless we actually had the cash for it? We'd have to get used to saving again. Saving actual dollars (while they're still worth anything at all, I mean). What if you had to do the now unimaginable and save a 20% cash downpayment before buying a new house? Wouldn't that kind of thinking actually help our economy down the road? A nation of savers is a good thing, isn't it?
We wouldn't be so in debt. We wouldn't have so much superfluous stuff. We might work less and live more. Thrift might come back into style.
Being truly forced to live within our means would really foul up our carefully-crafted consumer society, true. But as I'm told, many generations of people have managed to do so. My dad tells me that in the '60s you went to the bank on a Friday with your paycheck, and took out enough cash to get through until the next week. If you ran out...well...tough luck.
So set me straight please. Why couldn't we just ban credit cards forever? It's just a thought, given today's financial meltdown...caused by the credit crisis.
Reader Comments (Page 1 of 1)
9-29-2008 @ 7:49PM
Jim said...
Hey I'm all for it!!!!! In 1998 I was down $28,000 in credit cards and was jumping from frying pan to frying pan, hardly having time to buy anything else. But I managed to get out, took me 6 long years and trust me, I'll never own a "credit" card ever again. I just rely on a ATM/Bank Credit Card, if my account doesn't have the money I better not buy anything. The absolute best feeling in the world, you gotta save for those "special" projects. Adjustments perhaps, but sooo very quite around the house, no ringing phones, very little mail..life is good!!!!!!!!!!
Reply
9-29-2008 @ 11:36PM
Sudden said...
Great idea, but if we do get rid of the credit card and only have debit cards, how would the poor banks make all their profit?
Reply
9-30-2008 @ 7:03AM
Morgan said...
Business use credit cards to manage cash flow. You would remove what these small companies who make unique products that touch our lives in our homes ever day. It would be stupid to ban credit cards for the sheer fact of people not being responsible.
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9-30-2008 @ 10:50AM
Bas said...
I'm ok with it personally - we already save up for the things we want. The huge problem of this is that our entire economy is based on rampant consumerism. Remember after 9/11 when we were all supposed to go out and spend to help the economy, otherwise the "terrorists would have won?" If the vast majority of the American public decided to put a moritorium on all spending outside of bare necessities, our economy really would take a nosedive - moving "money" around is the only real growth industry we've had in this country for a long time.
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9-30-2008 @ 4:03PM
ThatHollie said...
If you try to ban all things that stupid people are unable to handle properly, you will eventually find that it is not possible to make life idiot-proof.
Reply
9-30-2008 @ 7:52PM
Kathy C said...
Credit cards are double edge sword: they can "save" you for the moment but will sink you in the end. My husband's family owned business has been feeling the severe money crunch now for over two years. There were weeks (and weeks) when payroll could not be made. Once you use up your entire life savings just to live on week to week, and God forbid illness hits like it did us.....without credit cards we never would have made it (along with the help of his parents). My husband has been forced into early retirement because of his illness but the money concerns are still there. The smartest thing we did was taking out a Home Equity loan and paying off our two credit cards. Why? Much better interest rates than what the credit card companies "offered" and the monthly payment has been cut in half. We will never again resort to using credit cards and have made a committment to get back to how it used to be: save, save, save. If we do not have the money, tough.
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10-01-2008 @ 9:53AM
Arlene said...
We use credit cards so we can write just a few checks each month. All of our credit cards are ALWAYS paid off each month. We never spend more than we can pay.
People are encouraged to spend. We just got a tax refund a few months ago to encourage consumers to spend.
Maybe we were born in a different era.
Reply
10-01-2008 @ 11:06AM
getwau said...
CASH! Piles of cold hard cash is the best way to weather the current economic situation. I discovered one of the best books you'll ever find about finance, "How to Become Filthy Rich on Your Current Income" at www.how-to-become-rich.com. If people read books like this one we wouldn’t have the current
situation we do.
Reply
10-01-2008 @ 11:08AM
getwau said...
CASH! Piles of cold hard cash is the best way to weather the current economic situation. I discovered one of the best books you'll ever find about finance, "How to Become Filthy Rich on Your Current Income" at www.how-to-become-rich.com. If people read books like this one we wouldn’t have the current
situation we do.
Reply
10-04-2008 @ 10:51PM
TomPain said...
The market supplies what we demand. I agree that you can't keep banning stuff that's dangerous or bad for us if misused. That's different than banning/outlawing things or practices that are predatory or falsely represented. It's not snake oil. The fine print (tiny!) spells out the risk and consequences. IF you connect the dots, you'll see exactly what trouble you can get into. Just like sub-prime mortgages - if you can only afford an $80,000 house why would you think you can afford a $180,000 house? But I will say this - all that easy credit has driven our economy over the last 25 years, big time! I hear people say, "We should go back to cash only..." or "There was a time when if you didn't have the money, you didn't buy it..." Yeah, that sounds great and everything, but I'm not ready to devolve back to an agrarian society either. Thanks but sharecropping the plantation land doesn't appeal to me. Now if you'll excuse me I have to go look into closing out my pathetic 401k that's in full nose-dive so that I can pay off my overwhelming $20K of unsecured credit card debt.
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10-12-2008 @ 9:31PM
Ron said...
all this crap about credit cards really gets me ticked off. No one forces anyone to use them. The intest rates and terms are worse than loan sharking and are goverment and their reps are to blame . the bankis were losing money on the cards in the 80s because inflation was running high ( also caused by the gov ) so they lobbied in washington to remove the caps on interest rate (usery was considered any thing over 12% ) In states That had caps the banks move their card divisons to states That had none. All the teaser rates and mail offers are desigened to get you hooked on using credit . The banks do not want you to have or use cash . they can track every thing you purchase what you buy and how you spend you income and then market and target you for purchases base on your spending profile. Time to wake up . over 30 years and through constant messages like " for eveyrthing else theirs master card" they have the majority of us believing we cant get along with out them. You would be surprised how much you would save by using cash . its still king Something else to think about. You only have the use of the banks money the first time you use it. After that your borrowing against your own funds which you have already paid back with intrest. Best advice i ever received --- live on less then you earn -but never limit your income. Have a lot more to say on the subject but not enough time or space here
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10-13-2008 @ 10:14AM
flex said...
it is an excellent idea. Because those credit cards companies were making enormous profits of those people who did not understand the credit concepts.now look at where we are today, who's going to rescue those who are affected the most by the meltdown credit crisis in our financial market? Once again our government shows the sign of weakness when it come to those who corrupt the system. but left out the consumers struggling by themselves. let's go back in a couple weeks ago to see how many rescue packages they had made those guys. how many do they made to hose consumers? none. let's eliminate the credit system, our people will live better with cash
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