Credit cards/ charge accounts USED to be for convenience

[SoCalDem]

So you didn't have to carry all that CASH when you shopped.

There was an automatic assumption that you COULD afford what you were buying, and using the words "Charge It", proved that you were "extra-special, super-duper trustworthy". (There used to be very lengthy credit checks BEFORE you got an account or a card).

It was for CONVENIENCE.. Writing checks was perceived to be time consuming, and goodness!, what if you ran OUT of checks? No problem!, use your credit card or say "Charge It!".

It was also common "way back when" for people to send "their people" to large department stores to pick up things for them, using the credit account. That way they did not have to send cash with their employees.

My Aunt owned a boutique, and we would routinely order special things for special customers. We would call them, and they would send their maid/housekeeper in to pick up a bunch of things which they would try on in the privacy of their own bedroom, and would return the ones they did not want.

Farm communities probably used credit a lot , long before other communities, since farm income was cyclical, but of course farmers had collateral necessary to insure that the bills would get paid , when the crops came in.

Rampant plastic distribution came along when the malls & discount places cropped up. As soon as "shopping" became a hobby, credit got very loose.

[jobycom]

1. So was cash, so you wouldn't have to carry live pigs.

Making a minor point, that things change. We haven't learned to deal with the reality of credit as a form of money yet. It is. We are horribly misusing it, but it does not have to be evil. As a (former) medieval historian, I've read many accounts of how face-value money corrupted everything and would lead to disaster. It did, occassionally, too. But it is still a useful tool for people who use it properly.

Aside from that, I was just being a smart-ass. i would apologize, but I like being a smart-ass. :)

[SoCalDem]

2. especially if those pigs were a bit greasy:)

You KNOW I :loveya: the snarky :)

[frankly_fedup2]

3. I thought the first credit card was the Diner's Club in the 50's. I could

be wrong but it seems I watched something on the Discovery Channel about it. Back then the bill was to be paid before the end of the month and very little interest was added.

Now my kids get offers for credit at 29% interest rates. That should be illegal. It's like these payday loan places. You end up paying back twice what you borrowed.

I live in the state of Virginia and there are no caps on what interest any credit can charge you. As long as you sign on the dotted line and agree to a yearly fee, late fees of $50, and an interest rate of over 30%, you are pretty much screwed.

We need to get our congress to come down on some of these credit card companies. They are the main reason people file for bankruptcy and yet they can claim it as a total loss during tax time. In a way, with a bankruptcy the way George Bush has fixed them now, they not only get paid back by the debtor but they can also claim it as a loss at tax time. What a joke.

[SoCalDem]

4. I think it was, but individual stores had "in-house" accounts before that

and because they had to be paid in FULL every month, there was the assumption that you HAD the money to pay, so credit was truly just a convenience..not a necessity :)

I can still remember how it felt to be a teenager with a charge account at a store ..very heady experience to know that I could buy anything i wanted..(It was actually my Aunt's account, but she added me to the account):)

That's why credit cards advertise the way they do..they understand the psychology of ego :) It;s a real high to know that you are "approved", and you can have anything you want :)

It's not about the stuff..it's about the feeling.

[frankly_fedup2]

31. You're right about that feeling. I know if I'm down or in a bad mood, I can

go shopping and feel better . . . that is until I get home. I end up taking half of everything back. Most of the time I don't have to charge it but sometimes I do and I justify it in my mind because I hardly go shopping for myself. Even when I do, I end up buying for everyone else and just forget what I was wanting.

If we could just be debt free we could live a decent lifestyle. Not rich, not poor, but comfortable and would be able to travel (my pipe dream).

I have always dreamed of going to Capri Italy. Anyone been there and want to share?

[Greyhound]

21. Before the sheeple installed Raygun, 29% interest was illegal, and the people

that charged it were called loan sharks. Just dredging up a little history from the memory hole.

[SoCalDem]

24. Yep, the Mob had better interest rates

[frankly_fedup2]

30. I thought that too. Also, loan sharks are illegal; however, why isn't these

credit card interest rates illegal. This is something that needs to be changed. Now that the credit card companies have it (thanks to Dumbass)that even if you declare bankruptcy now, you still have to pay them back a certain percentage PLUS have bad credit for 10 years. Bush has done so much to help the people of this country. :sarcasm:

[SoCalDem]

32. They are legal because so many people NEED those cards now,

and will "pay" anything the charge. (the reality, is that so many people owe SO much, that they probably don't even care anymore, since they "know" they probably won't live long enough to ever pay OFF the card anyway)

I have always thought the cards' upper limit should be a percentage of the prime rate..and not some pie-in-the-sky number that the companies come up with :)

[EmmitFitzhume]

6. The credit card companies

are loving and promoting this trend as they get paid every time we use plastic to buy anything. I'm sure everyone has seen the Visa commercial where one guy uses cash instead of a Visa check/credit card and supposedly ruins the smooth flow in the cafeteria line. You have got to love those credit card companies. God forbid someone uses cash so they don't get their cut in the form of interchange fees. ($30.7 billion worth in 2005 and the largest fee there is). The ironic part is that even is you pay with cash you are still bearing the cost since interchange fees cause the price of all goods to be higher.

I have actually been working with http://www.unfaircreditcardfees.com/ on this issue. I would recommend checking out the site for some amazing statistics on how we are being fleeced by Visa and MasterCard. I'm all for companies making a profit for a service, but we passed that point long ago and now they are just raising the rates on everyone to fund rewards cards for the wealthy.

[progdonkey]

7. I was very surprised when I first learned about interchange fees when I was younger...

It just struck me as so insane that the vendor would pay the credit card company whenever a customer uses that particular credit card--I thought it would make much more sense for the credit card companies to pay the vendors a fee whenever one of their cards is used, in order to give an incentive to take their card over a competitor's. In reality, though, they don't need to make any incentives, of course, since people are going to want to use their cards, and so the pressure is on the vendor to take those cards if they want the business.

I wonder how much less charging would occur if the fees had to be paid by the customer who's charging. To me, that would be the most sensible: you can pay by cash or check at face value, or you can charge it, but pay a convenience charge for doing so. I know some vendors already do that, but it's hardly a universal thing, because it makes them less competitive against another vendor that doesn't force the customer to cover the interchange fee. That would be the most fair, though, I think.

On a side note, I personally never let a credit card balance carry over even a single month. I have a few credit cards, each with different rewards programs, and I just use the cards as a sort of rewards filter, where I regard it as paying in cash, but I get the points. ;-)

[SoCalDem]

11. When people started finding out about those fees, some would ask for and GET

a cash discount...but i think the CC companies fought and won a case, and they had to stop it.

i still ask for a cash discount, and when i show them the cash, it usually works. (on large purchases...I got $200 off on bedroom carpet)

[progdonkey]

16. hmm, that would never have occurred to me...

Probably since I've grown up with credit cards being so ubiquitous, that treating it differently from cash price-wise seems so foreign. I'll have to try that sometime, though I presume that would really only work at more local businesses, where bargaining would be easier than at, say, someplace like Best Buy. Makes sense, though. I'm sure vendors (especially local ones) would love to never have to take a single credit card, since they could lower their prices for everyone, and it's a whole lot less paperwork--cash goes in register, then safe, then transferred to the bank.

Wait, why do credit card companies exist, again? ;-)

[SoCalDem]

18. yep.. I always buy local whenever I can.. n/t

[Greyhound]

26. Good on you, thanks so much. n/t

[Greyhound]

28. If you get out of the metro areas in large parts of the country, many

proprietorships are charging the CC fees to their customers that use them, usually about 3% or a flat fee, whichever is more.

It pissed me off at first, then I thought about it from their perspective and went back to cash. Ironically, it's become kind of a rush to pull out a stack of Benjamins to make larger purchases. But that's just me.:shrug:

[EmmitFitzhume]

12. You're

what the good folks at Visa and MasterCard refer to as a deadbeat . . . someone who pays off their balance each month.

Basically, the agreements that merchants have with the credit card companies are similar to what you or I have with them, rates can be changed at any time and the language is extremely deceptive. They have written the interchange rules so that it's almost impossible for merchants to tell consumers how the fee costs them. Plus, the problem is that most consumers aren't fully aware of this fee. A little disclosure from the card companies would be nice.

[progdonkey]

17. shows how much they live in bizarro world...

Pay everything on time, regularly settle all your debts, be trustworthy and dependable... yup, that's a deadbeat alright. :eyes:

[jobycom]

20. That's a bit simplified, but yeah.

Their profit is quite hefty, but on the expense side, the CC companies have a massive computer network which can authorize transactions on any card, transfer funds electronically into a banking account for the merchant, scan every single credit card transaction in the world for fraudulent card numbers or stolen cards in an instant, even in extremely isolated locals. They also maintain a huge labor force for maintainance, administration, accounting, banking, sales, etc. And that's not even counting the massive amounts of money they must shuffle around in order to fund these transactions. It's not an expense-free industry even from the merchant end. And there's also the issue of risk--credit card companies are borrowing money like everyone else to fund the money people are borrowing from them. Some of the fee is a built-in insurance policy.

Then there's the whole borrower end, with the massive labor force, computer network, even greater level of risk, advertising and marketing and promotions, etc.

My employer pays around 1.5% for Visa, MC, and Discover, and almost 3% for American Express and Diner's Club. It's a ripoff on some level, but it's less expensive than taking those funds in checks, safer than dealing in cash, and it allows customers who couldn't afford our products to purchase them, thus increasing our sales. It's easily worth it. You say it drives up cash prices, but not in my experience. If we had to accept checks instead, prices would be much higher (And yeah, I'm in a position to know that for sure). One returned $800 check will destroy a day's profit. I suppose in industries that deal in smaller transactions where people could be expected to carry that amount in cash, it affects prices negatively.

The complaint I have is the way smaller businesses and especially startups are treated. Their rates are much higher, and the expense is difficult for many of them to bear. The alternative of not accepting credit cards is even more costly, given shopping habits in the US. CC companies offer better deals to bigger customers to keep their business, and take it out on smaller companies.

The whole rewards card market is complex. As with any industry, often the largest customers make the industry possible, and they get the best deals, while the smaller consumers bear a higher percentage of the expense per transaction. But it's not a simple 1 to 1 ratio. Take away the larger consumers, and the profit margin per transaction goes down, which drives up cost for everyone, including the smaller consumer. That's oversimplified, too, because there is also the issue of competition within the market, and the necessity of the product itself.

As you say, though, profits are obscene even with the high expenses, and the immense amount of capital it would take to introduce a new major credit card means there is no real competitive market to drive prices down. Legislation is the only solution. Unfortunately the trend in legislation over the past three decades has been to protecting the money, not the consumer. As was the case before the economic crash of the 30s.

[Occulus]

22. So... we pay a whole lot in fees because their computers have to count really well?

Isn't that, like, C++ Programming 101?

Somebody lied.

[jobycom]

27. So do you have anything to say, or you just like dropping one liners?

:shrug:

Seriously, you couldn't have read past the first line in my post.

[grasswire]

5. also way back when, stores had informal credit...

...without the middle man of the credit card industry. A department store would just keep track of your purchases, no card, no nothing, and bill you at the end of the month. And you could place phone orders and have things delivered to your home by the store's OWN trucks. The grocer, the butcher, etc. would also carry your purchases the same way. No cards, no IDs, nothing.

[soothsayer]

8. don't forget layaway! stores still have that, I think.

[SoCalDem]

14. Our K-mart ended layaway last year..so did walmart

I guess they decided it was not worth it to them anymore.

I used layaway a LOT when i was young.. Why pay NOW for a winter coat, when you could make payments from July to october:)

[Greyhound]

23. It's just the latest sqeeze they're putting on the underclass. n/t

[Matariki]

9. gee, this country club has gone to hell since the *common* people were let in.

i mean, even the MAIDS have credit cards these days. How do i, as a rich person, get to feel more 'extra-special' than common people if they have the same things as me?

at least that's what i think you're saying in your post?

[SoCalDem]

13. Nope.. it's about the psychology of credit..and how easing credit-worthiness

changed the whole landscape and LED people into debt, by giving people who cannot afford the "shopping hobby", credit.

[Matariki]

19. oh, sorry. i misread your post then.

it's not just 'shopping as a hobby' methinks. it's also people who's income isn't streching from paycheck to paycheck.

[Greyhound]

25. Used to be the gold card, then it was the platinum card, now it's a black card

that's reserved for the uber-rich. My guess is that it will be the implant chip next.

[earth mom]

10. Try paying with cash these days. Any amount over $50 is treated as if it were monopoly money.

How long before we are a cashless society and the powers that be monitor everything we buy or sell-that includes garage sale stuff too. :(

[EmmitFitzhume]

15. I hope it doesn't come to that

Although as I mentioned in a comment above, the credit card companies are certainly pushing for a "cashless society" so they get paid every time you buy anything. This is from a Visa exec in Europe, but is relevant here as well.

Cashless society by 2012, says Visa chief

Paying for goods with notes and coins could be consigned to history within five years, according to the chief executive of Visa Europe.

Peter Ayliffe said that, by 2012, using credit and debit cards should be cheaper and more convenient than cash.

Some retailers could soon start surcharging customers if they choose to buy products with cash, because of the greater cost of processing these payments, he warned.

Visa Europe briefed the British Retail Consortium last month on new "contactless" cards that can be waved in front of a scanner to make small payments.

However, the consortium dismissed this vision and claimed that card processing fees, which regulators are investigating, are still too high.

One member of the consurtium said that the estimated "interchange" fee charged to retailers amounts to some 4p for each transaction.

Nick Mourant, treasurer at Tesco, said: "There is a duopoly between Mastercard and Visa in the UK. Their setting of fees is anti-competitive."

http://news.independent.co.uk/business/news/article2347411.ece

[Greyhound]

29. Yep, that's the plan. Once they get rid of cash, their control of the economy will be absolute.

It will be like the old Soviet Union and we will be forced into the system or onto the black market. Sounds like fun, huh?

[MadHound]

33. If they go to an entirely cashless society, our economy will collapse

A large chunk of our economy is based in the national black market. Drugs, paying workers under the table, antique and collectable dealers, on and on the list goes. All of this is funded by nameless, traceless cash. In fact this black market sector is worth one trillion dollars annually. Yank the rug on that, and our whole economy will fall. Not to mention that all of those folks in all of those alphabet agencies in the government simply couldn't operate in a cashless society.

No, I think that we'll continue to have cash for the forseeable future.

[BlooInBloo]

34. Most ahistorical statement EVER.