Credit Cards, debt of a Nation
Initially, it was Frank McNamara of New York’s Hamilton Credit Corporation that come up with the idea of giving affluent businessmen a convenient way to charge some of their business related expenses.
In 1950, he issued the original Diners Club card. It was made of pasteboard with the customer’s name on one side and a list of twenty-seven restaurants that accepted it on the other. In 1955 the pasteboard card was replaced by one fabricated from plastic.
American Express began issuing cards in 1958 followed by The BankAmericard, issued by the Bank of America. Soon, smaller banks joined the BankAmericard system. In 1977 the card underwent a name change and became Visa.
By the 1990’s Visa was the largest credit card in use with nearly 400 million cards in circulation and more than 12 million businesses that accepted it. In 1967, City Bank of New York issued the Everything card. Eventually it took on the name that it has to this day, Mastercard.
Early credit cards were simply used as a convenience, in substitution of cash. You charged and consequently paid in full when the bill arrived. But during the 1960’s everything changed forever.
The credit card took hold of the American consumers wallet with a consumer empowerment never before experienced. The credit card allowed the consumer to use money that had not yet been earned. By doing this, the credit card took a firm hold of the user’s future. Now, instead of paying the bill at the end of the month, the bills began to come month, after month, after month.
In 1965, only 5 million cards were in circulation; by 1996, U.S. consumers had nearly 1.4 billion cards, which rang up approximately $991 billion in credit card charges annually.
I would argue that credit card companies and their marketing strategies are as cancerous to our society and our young, as the tobacco industry is to our overall health.
Now, I’m not going to tell you that all credit is bad. Nor am I going to tell you that all debt is bad. There is good debt and bad debt, just as there is good credit and bad credit. The key to mastering one’s finances lies in the ability to distinguish between the two and the adherence to a basic formula.
This can be initiated by setting up a budget and projecting future costs. From there, it’s a simple matter of controlling your spending (easier said than done for most). It does, however, require discipline and in most of our cases, change. This is where it gets complicated. In order to change your situation, you must change your behavior patterns. Again, this is no easy task as it is something that you have been doing “or have been conditioned to do” your whole life.
Traditionally, people do not like change. Usually, a person will not change unless forced to. As you begin down that road to becoming debt free, remember to “force yourself” into the necessary changes in your spending behavior. You owe it to your spouse, your children and, most importantly, you owe it to yourself.
And none of this can change as long as we continue to crave instant gratification, have the availability to obtain credit easily, (at much higher available lines of credit than we should be entitled to) or as long as we continue not to make finances an integral part of our children’s overall education (as well as our own).
Responsible financial planning is every bit as important as other academic pursuits but old habits cannot be broken without the desire to change and the willingness to adhere to take action.
To learn more about your options and managing you debt, log onto www.debtreliefoptions.com.
Jon Noble
Staff writer
Debt Relief Options
asktheexperts@debtreliefoptions.com
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