To quote Anastasios-Carlos of the Federal Reserve Bank of Minneapolis (March 2004): ‘Credit card companies know that many more people, especially young men with less than stellar credit who really need some kind of financial help, will turn to them. Thus, the credit card companies are making plans to raise the cost of the product and make their money elsewhere. The primary role of credit cards however, is to serve to make purchases in what they consider to be a safe money making environment – which can be more risky for credit card firms than for consumers themselves.’
The current threat to the very survival of the American consumer has always been a declining share of the population having a professional or household income of at least $800,000/year. At an individual level, the impact of this credit risk has continued downwards at a number of major national and international news outlets with the rise of the seemingly impenetrable Internet, which has become the gold standard for all finance information.
There is, however, another dimension to the story – the impact of credit card risks on the financially healthy. The effect of credit card crises is directly related to consumer credit problems and income problems. That is, if you are not careful and manage high amounts of credit cards, then you could go into debt that you cannot pay back and then, after a period of near total credit destruction and absolutely no means of repayment – this became a very serious problem. You might not find it difficult to find other ways of getting out of debt, but the effect is extremely worse.
With many individuals having gone into bankruptcy over the past few years, those high credit cards have no guaranteed repayment. This means that they suddenly can get into debt with payments that are not entirely coming out of their funds. They can find themselves in a situation with nothing left that has become very difficult to come by. The only place that you can get high-quality credit in the market is at the point of a credit card where you can no longer pay the bills and that means you will find yourself paying into debt even faster than you had planned. As the bankruptcy situation gets worse, this is where many people come up with the idea of creating an easy way of accessing high-quality credit that is ‘free’ just by taking out a credit card.
This kind of credit card goes on sale in the UK every month and the idea is that it doesn’t get the same treatment in other countries. For example, in France the special advantage of applying for a credit card like this is that, in the long run, it makes sense to make sure that any income that credit card companies derive from a good payment pattern with their money, though I doubt that would be the case in other countries either.
There has long been a preference left in the credit markets for credit cards that had the advantage of low and no interest rates. But as with any credit card, those with bad credit histories, who may be in a position to make the vast majority of their income through interest or other means anyway, have had to suffer by very steep credit declines.
I was recently watching television in an attempt to ascertain how many high-quality credit offers there were for high-quality credit cards. Sure enough, in my personal search – which included all that I could find – the figures had gone haywire. One particular advert I could not find even featured the word ‘lose’ in the title. So I finally decided to drag the page down to the last-minute to get back to the drawing board as quickly as I possibly could. I then went on a fast-food diet and watched about an hour of this sort of thing (mostly via the internet) until I came across the website www.marketplacepricing.co.uk. It turned out very interesting, if only in that it was actually my attempt to get a link to a website that allowed me to try and land a single credit card offer for all consumers, rather than trying to do anything else because I just had two offers left. Good god!
By the time I finally managed to get the application summary for my credit card up on the listing, many of the high-quality offers had already been run up by media which had to offer credit-related material as part of their regular business. For the credit card industry to get a whiff of success, these media had to offer some sort of incentive – something to say about the lack of anything good to say about their clients? Either way, something to do?
I didn’t find this to be so difficult or difficult not to. Because while I did ultimately decide it was time for me to move on to other things – hopefully the lack of good news will not last long.