The End of the Credit Card?

Are the days of the credit card, as we know it today, numbered?

This may be the next big shoe to drop in the current financial mess. Indeed, it has already started. The card issuers are notifying their riskiest customers that their credit lines are being cut to about what they owe. In other words, those proud of themselves for not being maxed out may soon find themselves instantly maxed.

Could you function without a credit card?  You may have to someday. But think about it – would that be such a bad thing? We’ve heard a lot about predatory lending over the past few months, but the credit card could be the most predatory instrument of them all. How many Americans are indentured servants to some card issuer?

In the interests of full disclosure, we have credit cards in our family, and more often than not, have had running balances of various sizes. We have never missed a payment in more than 30 years, and the card companies have always treated us fairly.  But for many of us, the running balance is an institutional part of our finances.

The current crisis is all about credit. There’s nothing evil about credit per se, it’s just a tool. But misusing it has become a way of life. The banks and other card issuers have been dangling the bait in front of us for a long time, and we’ve taken it. Now it’s crunch time, and they’re likely going to pull in their lines. And the regulatory fever that’s coming may make it very hard for many of us to get a credit card in the future.

Credit cards began their lives as charge cards many years ago. You had to pay off the balance at the end of each month. How many of us do that today?

Maybe there’s a stop on the gravy train short of cold turkey. Suppose your credit card company gave you a credit line for each quarter, and you had to pay it down to zero by the end of the quarter, or not get the next one? 

The mess this country is in – indeed, the mess we have put the rest of the world in – can onlybe  cleaned up by a massive shift in thinking, and for many of us, it has to start at home. This is the only kind of “trickle up” economics that is going to save us.

There, now I’ve said it.