Credit Cards? Yikes!

By frankMarch 13th, 2012News and Official Updates4 Comments

Okay, maybe it’s off the subject, but I can’t keep quiet about this.  I was out doing my book tour and flying across the country on various airlines, and during every flight the flight attendants made a big announcement about teaming up with some major bank to offer an exclusive credit card to the airline’s customers.  Oh, they offered thousands of frequent flyer miles and other perks to get you hooked and they went down the aisle passing out applications, and of course they made it look like they were doing us all a big favor, but friends, I must in good conscience remind you what credit cards are for.  They are dressed up like a big favor and convenience for you the consumer, but don’t be enticed by all that stuff.  If the banks and in this case, the airlines, weren’t making money off these things, they wouldn’t be offering them.

In a nutshell, this is why banks and businesses offer credit cards: They are counting on you carrying a balance on your card so that they can collect interest and fees from you, and all you have to do is look at the big skyscrapers and private jets the banks own and the millions of people hopelessly in debt across this country to see for  yourself that their plan is working.  As a matter of fact, the banks prefer issuing credit cards to the people who are least likely to pay them off so that they can leech interest and fees and penalties from these people … well, forever, for the rest of their lives if possible.  Credit cards are not a service as much as they are a snare, a means to – pardon me for sounding a little “lefty” here, but it’s true – oppress the poor, those most easily seduced by the promise of having something they can’t afford.  This is why you get credit card applications in the mail even if you have a poor credit rating; this is why the credit card companies have booths set up on college campuses to get young, careless college kids hooked; this is why the big stores offer you discounts on your purchases if  you fill out an application for a credit card.  They are not doing you a favor.  They are doing it for the money – YOUR money.

As the scripture says, the borrower is slave to the lender, and in this case it’s no joke, it’s no game.  The moment you slap down that credit card to buy something, the lender has his shackles around your leg.  So please be aware and have wisdom.  If you want something, save up and pay for it.  Don’t go into debt, and don’t let the banks – and in this immediate case, their buddies the airlines – own you, your money, and your future.

In the interest of full disclosure, yes I carry a credit card issued by my investment firm, but you’ll find this interesting (pardon the pun): the card we carried used to function as a debit card; anything we spent with the card was automatically drawn from our bank account and paid off so we never had an outstanding balance and paid interest on it.  Well, after the big financial collapse in 2008, my investment firm was bought out by a big bank – which is a whole other story –  and guess what?  Our debit card was discontinued and in its place we were issued – you guessed it! – a credit card that did not draw from our bank account to pay it off but required us to write a check each month. Now why would they do that?  Let me guess: To create a disincentive so it would be extra trouble to pay off the balance each month.  Well, they did provide some steps – another hassle – to arrange automatic pay-off every month, but that process took a while and I’m sure they were hoping we wouldn’t get around to it but rather fall into a behavior pattern more to their benefit. Very subtle, very crafty, but it’s all about the money.

So, all that to say, be wise and don’t get hooked.

There.  I wanted to make this big announcement on the plane, but thought I’d be better off saying it here.

Thanks.

Frank

  1. Blake says:

    Amen, brother! I’ve heard someone liken such practices to the money changers that Jesus drove out of the temple.

  2. Angelia Phillips/femmeflashpoint says:

    Mr. Peretti,

    Hope you weren’t subjected to the pitch every time you boarded. If so, my sympathies, and hope you didn’t have to endure a frisking by the TSA either.

    I’ll spread this one around. It’s great advice. :)

    Thx much!

  3. Carolyn says:

    Very insightful – this will be a great help to many who fall victim to this enticing snare…

    However, may I respectfully suggest an alternative approach that works for me…

    My father taught me to pay my credit card bill in full every month without fail, and I do. I never, ever spend more than I can afford to pay off. I also use only the “no fee” type of credit cards (which means many of these pitches, very likely including the one that the airline subjected you to, are tossed out by me as the cards have an annual fee that I refuse to pay). My no fee cards offer me free groceries and merchandise discounts, which I take advantage of to purchase things that I need.

    I put everything that I purchase onto my cards to accumulate these points… nothing is purchased with cash or debit card unless I have to (i.e. the store does not accept the credit card).

    I call this approach “good stewardship” of the resources God has entrusted me with. Of course, I would definitely say this approach is absolutely not for everyone… you have to be disciplined, and you must resist purchasing what you cannot afford. Anyone following this approach must rigorously commit to paying the cards in full, on time every single month (I use computerized reminders that tell me when my bill is ready to pay, and I go in on the day after the bill is cut, review the bill (in case I need to report any invalid charges) and set up the automated one time payment from my bank account to go over four business days in advance of the bill due date.

    Carolyn

    BTW… love your books (both the ones for children as well as those for adults)… and am very much looking forward to meeting you on the cruise (this will be the third MWS cruise for my husband and I… and yes, that final cruise payment goes on the credit card too… :) )

  4. The company that holds our mortgage sends us credit offers continually, although we are on the do-not-send list. They send it to every member in our house, including my college-age daughter. They send one to my business with my husband’s name on it (because he’s an accountant, I guess they think the business is his.) They can overlook the rule because they have a “business” relationship with us.

    We paid all of our credit cards off when we took a Dave Ramsey course in 2003. We paid off all debt except our house. We are paying for my daughter’s college as she goes, which we would never been able to do if we had not paid off that credit card debt.

    The airline my daughter rides home from college sends a card to her constantly. She took the Dave Ramsey course with us and uses a debit card. These companies want us back in debt. We were paying a lot for fees that we now get to spend on things a lot more useful.

    My dream is to pay off our house so I will have more to give to a special organization that helps children and families who are poor. You can’t give as much if you owe.

    I agree. The credit card companies are not doing you a favor.

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