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THE ROAD TO DEBT SLAVERY
Posted by: Darrell Castle
March 09, 2010
Topic: Bankruptcy
If you are one of the millions of people who live in debt slavery chances are that credit cards helped get you there. Do you remember when there were no credit cards? If you do, you were born before 1950. It was that year that Frank McNamara, while having dinner at a New York restaurant, was embarrassed to find that he had no money to pay for his meal. While waiting for his wife to arrive and rescue him with cash, he dreamed up what became Diners Club, and the world hasn't been the same since.
McNamara's invention was predated by Edward Bellamy's 1888 Sci-Fi novel "Looking Backward" which envisioned a world of the future where cash would be replaced by credit cards that would allow people to purchase "whatever he desires, whenever he desires it." In Bellamy's socialist utopia, you never had to pay anyone back for your purchases. That is unfortunately, not the case today unless you are willing to go through bankruptcy. Credit card issuers are quite insistent on being paid back, though they are happy should you take your time in doing so, provided you pay an interest rate that now averages more than 14.7 percent. Almost half of Americans pay only the minimum due each month on their credit card bills. If you're late even by a day, your interest rate increases to over 20 percent.
Paul C. Wright, in an article for Global Research entitled "Looming Crises: America's Credit Card Bubble Burst" points out that America used to be a nation of savers. Saving money used to be valued as a prudent exercise. The conventional wisdom was to set aside 10 percent of your income as savings for emergencies. Before the credit culture, Americans put large portions of their income in the bank to fund their children's college education, take vacations and for retirement. When they had to pay for something they paid with cash. If credit was required, it was in the form of installment loans, not revolving credit. Now cash is out of fashion and credit is king. In 2005, 164 million American credit card holders charged $2 trillion to their credit cards which amounts to $12,500 for each card holder. By 2008, consumer debt increased by seven times, while the savings rate was seven times lower than in 1980.
Credit card companies used to make their money by charging fees for the use of the cards. They eventually hit on the idea of charging interest on the outstanding debt in a revolving fashion. The combination of annual fees and compounding interest led to the rise of companies like Visa and Mastercard. Credit became a trap in which Americans maintained their standard of living which was being eaten by inflation, through the use of credit. When credit collapsed in the fall of 2008, the house of cards started to fall.
Don't stay in bondage to debt for the rest of your life. Get out now before it's too late.
