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Ralph Nader > In the Public Interest > Credit Cards: Maybe You Do Want to Leave Home Without Them

The ever-widening embrace of the credit card is Convenience. Every day on the nation’s television screens and in newspapers and magazines, the credit card is promoted and the message is Convenience in many directions. “Charge It” is the password of the computerized economy on its wax toward making money little more than an electric pulse within a vast electronic funds transfer system.
Sellers rarely throw much light on the dark side of credit cards. The big banks relentlessly accentuate their positive without having to contend with their critic’s arguments regarding the downside of credit cards. So let’s imagine that one evening you turned on your television set and saw the following presentation by an organization known as the “Cash Payment Fans of America.”

“Friends, it is time to discredit credit cards — they are more trouble and risk than they are worth even if you never lose one or have one stolen. Sure some of you who are in the lower income or very high income categories rarely use credit cards. If you don’t have much cash, you don’t have much credit and if you have too much cash, you don’t need credit unless you are willing to pay big for a little record keeping ease.

“Eat for more and more customers, the credit card (or cards) is becoming a downright habit grinding into a debt addiction under high pressure salesmanship. At Sears, Roebuck, a staggering 51.7 percent of all sales are done on credit. By the summer of 1955, consumers were burdened by almost $504 billion in retail credit. One credit reporting company has 80 millions files on one-third of this nation’s consumers.

“So, why not consider the arguments against having a credit card. First, credit cards mean credit files on you and these files can be switched to an fro from insurance companies to potential employers to government agencies at high speeds. The privacy of millions of Americans have been invaded and the potential for worse misuse of this personal information grows with practice and computer capability to network. Although a federal law allows you, under certain conditions, to check and correct your file inside the credit-reporting companies, more errors are used than erased.

“Second, credit card use inflates prices in the economy and increases your exposure to inscrutable overcharges, stiff annual fees and outlandish interest rates. Sears, Montgomery Ward, and J.C. Penney charge interest at 21 percent or more. Citibank, Bank of America, and Chase Manhattan Bank hover around 19.3 percent interest. These skyhigh impositions prevail at a time of dropping interest rate; with the prime rate under 10 percent.

“Third, once you have to preserve your credit rating, you become vulnerable when you complain about a defective product or incomplete service. The sellers can arm-twist you into silence or surrender by promising to communicate your recalcitrance to the credit reporting firm. I won’t count the number of people who have written or told me they have swallowed their grievances to avoid such damage to your credit record, however unjustified or malicious.

“Fourth, aren’t you more prone to over-buy or engage in impulse buying when all you have to do is tap your credit line with a card? Somehow, consumers buy more prudently when they are paying by cash or. check. You’ve heard overextension of credit and all the woes that sink brings families; have you ever heard of overextension of cash?

“Finally, when you join the credit card set, you’re contributing to a two—class consumer society whereby more and more the cash customer, instead of receiving a discount, is squeezed and tormented into signing on a credit card application. Example: ever try to rent a car without a credit card?

“With every passing year, the credit card coercion becomes more varied and intense. So too will be the case with the push to bring consumers into the electronic funds system thereby eliminating any opportunity to stop payment on a fraudulent or defective sale.

“The automated payments economy is designed to produce the automated consumer complete with impulse, identification number, file and seller retribution system. Think about all sides of your credit card from your purchases out to the overall economy. You might just decide to leave home without it.”