Two little words that are killing America

I’ve been wondering. How did we get into this mess? Foreclosure and bankruptcy are rampant and it no longer carries any social stigma because everyone’s doing it. But how did we get here…really?

What two little words changed history forever and could eventually lead to the complete fall of the American empire.  What two little words that are causing America to self-destruct?

“Charge it.

There, I said it. How did it happen and which bank really started it all?Credit cards are killing America

In 1948 John Biggins of the Flatbush National Bank of Brooklyn in New York invented the “Charg-It” (yes, without an e).  This program was between bank customers and local merchants. Merchants could deposit sales slips into the bank and the bank billed the customer who used the card. No interest. Simple.

While Mr. Biggins may have planted the seed of our self destruction, the Diner’s Club took it a step further in 1950 when Frank McNamara designed a charge program geared toward salesmen who dined out frequently and  introduced the paper Diner’s Club “Charge Card”.  Customers could eat without cash at any restaurant that would accept this card and were required to pay off the entire bill at the end of each month with no interest. Again…simple.

Americans liked this plan.  There were 200 original Diner’s Club card holders at the beginning of 1950.  By the end of 1950, there were 20,000..kinda like a virus.  (Interesting sidenote…McNamara thought this charge card thing was a fad and sold his shares to his 2 partners in 1952 for $200,000.)

Enter 1958 and Ralph Reed, CEO of American Express decides to jump into the Charge Card business targeting travel and entertainment purchases and offered their own purple paper card and filled requests for approximately 250,000 cards prior to it’s official launch date of October 1, 1958.  In 1959, they issued the first plastic Charge Card.  Again…all the billed charges had to be paid off at the end of the month. No interest was collected. Simple.

Now for the nail in the coffin.

In 1958, another bank decided to offer a card that would allow cardholder to carry a balance and accrue interest on their purchases.  The first official “Credit Card” was born and introduced in California.  The bank who gave birth to this card?

Bank of America.

Then in 1965, Bank of America saw the potential for some great revenue and introduced it’s BankAmericard Nationwide, expanding to the worldwide market in 1977 changing its name to Visa to remove the stigma of having “America” in its name.  The rest as they say..is history.

Today there are 576,400,000 credit cards in distribution in the United States.  At the end of 2009, there was over $876, BILLION in credit card debt in the US.

Are credit cards causing the fall of the America as we know it?  I guess that’s a little like saying guns kill people.

Come on, America. Exercise some self control. Stop acting like a two year old. Do you really need it all NOW, no matter what the cost?

I wonder what America would look like without credit cards.  Maybe the new slogan could be “Don’t lose your home…without it”

About Amy Jones Group

Amy Jones is the owner of Amy Jones Group Keller Williams Integrity First. The Amy Jones group has been recognized as the #1 Real Estate Team in Chandler by the Phoenix Business Journal and voted Best of Our Valley for 4 years.

The Amy Jones Group specializes in real estate in Chandler, Sun Lakes, Gilbert, Mesa, Tempe, Ahwatukee, and Phoenix.

Comments

  1. One of the greatest lessons learned, and few there are that learn it, is to delay instant gratification, to receive a greater reward later. Americans need to learn that lesson and stop falling into debt.

  2. A lot of what’s wrong in America can be attributed to our society’s unhealthy relationship to money. We buy everything we want because that’s what we think we’re entitled to. We think we deserve to have 3 cars, an RV, pool, ATVs, jetskis, boat, etc., and marketers have perfected the art of making us feel like a failure if we don’t attain and accumulate things. Marketers have mastered emotional manipulation, training us that the only way we can achieve happiness is to spend money. Buy, buy, buy. Spend, spend, spend. You need something bigger, better, faster, more. More, more, more!

    Lost along the way were lessons Americans have long forgotten — the value of hard work, living within ones means, buying only what you need vs. everything you want, the importance of savings and the discipline of thrift.

    Cheap and easy credit is only one contributing factor to the ugly financial reality facing Americans.

  3. Jeffry You are right on. It frustrates me to no end. I was called unAmerican due to my refusal to accumulate debt on my credit card. Can you believe that?

  4. Jon~ I don’t know how Americans lost their way. I think education in our schools might be the way to go as it seems either parents aren’t teaching money management or the kids just aren’t listening.

  5. Amen Amy! No one in the media or political sphere is talking about this.

    Personally I turned off the credit spigot in my life over 2 years ago. Partly out of choice, mostly out of necessity. It’s been very interesting. And Jon & Jeffrey are so right: delaying instant gratification takes practice & mindfulness but is very rewarding. I own fewer things but love them more.

    Oh, by the way I used to teach elementary school. Believe me, teachers feel so caught in the middle on this types of issue. Sometimes folks want teachers to teach life skills like money management. After they start, other folks bash them for interfering in family values and ignoring “the basics” of reading & writing. Oy! Aside from the few bad apples, most every teacher has great intentions. But modern-day teachers almost can’t win.

  6. So true, Heather, so true and congrats on killing the credit habit! I, luckily never got sucked into it. Have a credit card to get points for air travel and pay off the balance every month. The only interest I pay is on my house & car payment…and even that gripes me. I know teachers have it rough and can’t teach everything, but something certainly needs to be done. Credit is too easy to get and too easy to abuse. Thanks for your comment.