During the past few weeks, I have been following the great hoo-hah (an economics term for "kerfuffle”) over credit cards. The hoo-hahers were obviously successful because you sure can't charge anyone 187% interest anymore.
We are talking about the death of free credit, friends. This nasty piece of legislative repression illuminates the fact that I am, in Wall Street parlance, a "freeloader.” Jan and I routinely commit the financial sin of paying our credit card bill before the due date.
(Note: To be absolutely accurate, which I am not noted for, this is a relatively new phenomenon. Jan took over paying the bills a few years ago and, almost simultaneously, our late charges miraculously disappeared.)
Those of us who simply swipe our cards and pay the bill have been a net loss to the kind folks who importune us with credit card offers several times a week. I heat my workshop with mail solicitations from Capital One alone.
It seems the government decided that extravagant fees buried in fine print, spontaneous interest changes and deceptive marketing were actions which, while fitting the character of an industry that invested hilariously imaginary debt derivatives (otherwise known as toxic assets), turned our mild-mannered citizenry into pitchfork-carrying peasants. I think it occurred to our leaders that it would be prudent to be seen with a pitchfork, as well. So they clamped down on the vilest practices, suddenly exposing the fact that without them, credit cards are a ludicrous idea—from the issuers' perspective. While some of us have known this for years, they were ludicrous in our favor.
Let's say I buy tax-deductible farm supplies, such as potato chips and Mountain Dew, at Rural King. My card is duly swiped, and Rural King pays about a 3% fee for the thrill of seeing me in the store. Then, nearly a month later, I get a statement for all my similar "farm supplies,” which I have to pay by the 12th of the following month. If I do so, all I owe is the 22¢ per-potato-chip cost.
In short, I've been using somebody else's money for about 45 days! Whoever thought this was a great business model had an MBA, I'll bet.
In petty retaliation, card companies are lashing out. One threat being publicized is the end of the "grace period”—or, as I think of it, instant free consumer loans.
Cards and cash. Paying for the credit card benefits I receive seems a little harsh, so I am considering the unthinkable: going cardless. My pulse is pounding at the very notion. It's like pondering giving up remote controls or relaxed-fit jeans.
Thanks to cards, I have been freed from cash, with which I have had, umm … issues. For instance, I lose it. I send it through the laundry. I never know where it goes—it possesses some memory-wiping property in my pockets.
And that's when I actually have any. Back in the dawn of time, I would frequently be ready to pay for my Big Mac and thrust my hand into an empty pocket. I would scan the crowd for acquaintances and walk about like Wimpy offering to pay back Tuesday for a hamburger today.
Even when I had cash, it wasn't simple. Since I tend to just cram loose bills into my front pocket and am loath to count out singles, I would dump onto the counter a wad of currency-like paper that was not only crumpled but also moist with manly sweat that had soaked down from my chiseled abs. Sometimes transmission fluid was involved.
The result was aghast order-takers donning surgical gloves to smooth out my payment so it would lay flat in the till. Contrast this with swiping my credit card briskly with no exchange of germs or filth.
Worst of all, going cardless would eliminate my Internet commerce. You can tell a serious online shopper when he has his card number memorized but can't rattle off his wife's cell phone number.
Speaking of the horror of devolving back to lame currency, I realize my lifestyle is built around virtual money. How will I buy gas? Walking into the store to pay will add years of wasted time. And consider the frustration of feeding bills into those little slots, only to have them spat back repeatedly.
I'm guessing card companies are figuring this out, as well, and my annual fee will be breathtaking, as freeloaders are kicked off the gravy train. If they end the grace period, I'll pay online every night. (Well, Jan will.)
On the other hand, maybe I will actually open one of those Capital One envelopes this week.
John Phipps farms in Illinois and is the host of "U.S. Farm Report.” Visit www.AgWeb.com for station listings. To view past columns, visit
www.FarmJournal.com or www.johnwphipps.com.
- Summer 2009