Cash or credit?

Sep 15 2013, 12:08 IST
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SummaryEverywhere, there are signs telling us to avoid plastic. In reality, the opposite is happening.

Everywhere, there are signs telling us to avoid plastic. In reality, the opposite is happening. Standing in line at a department store counter to pay for my purchases, I was third in the queue. The two people in front of me, a man and a woman, both in their early 20s but not connected, had their wallets stuffed with credit cards. Each had at least four, if not more, from what I could see. Carrying so many cards, with the temptation of use and different charges and interest payments, is not very smart, but it’s become a status thing. “You don’t take American Express? No problem, I have Mastercard, or would you prefer Visa instead?” I get calls and emails from a variety of banks I have no dealings with, offering me credit cards with no annual subscription and all sorts of freebies. Plastic may be bad for the environment, but the type you carry in your wallet has an allure that’s difficult to resist, even though it may actually leave you in debt for most of your working life.

The beauty of credit cards is that the downside is subtly hidden while the benefits are plugged for all they are worth. Then there is the status thing; silver cards gave way to gold, which gave way to platinum, and now, there are black cards and even palladium and titanium. Dubai’s First Royale Mastercard is made from real gold and has a diamond set in the card. All the big players—Amex, Mastercard, Citibank and Visa, as well as leading banks, have VIP cards for their richest clients, which come with special services. All this is a long way from the origins of credit cards, in America, during the 1920s. It started with individual firms, mainly oil companies and hotel chains, issuing them to regular customers. It took another 20 years before companies started to accept each other’s cards. The early cards were printed on thick paper, but were easily counterfeited so metal, celluloid and fibres were experimented with before plastic took over. In 1950, Diners Club issued their credit card, strictly for paying restaurant bills. American Express issued their first credit card in 1958 and Bank of America followed with the BankAmericard (now Visa). The global economic crisis has changed the business plan and put an end to the days of handing out cards indiscriminately, hoping that the cardholders

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