Put away the plastic: Smarter shoppers avoid credit

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    It’s a little piece of plastic, no bigger than a folded dollar bill, but it carries a spending limit of potentially unlimited funds. It’s the American consumer’s dearest friend: the credit card.In 2004, there were 1.3 billion cards issued in the United States, and, in 2005, consumer debt reached $2.2 trillion, according to CreditCards.com. It seems that credit cards have taken over as the dominant form of payment and a convenient way to take out a seemingly harmless loan every time consumers shop.

    What careless shoppers don’t realize is that credit card companies will try and deceive them by any means possible.

    These companies will issue misleading bills, tangle important clauses into indecipherable legal contracts and slap on excessive fees and charges. All the while, they’re luring you in with attractive but temporary offers. The battle between consumers and credit card companies seems to be snowballing as debt takes over people’s lives and wallets.

    It is time that companies reform their policies and make it so that the law is written in such a way that there is actually a check and balance system to see that these changes are properly maintained. But the most important change needs to come from the consumer.

    As a public, we need to be smarter shoppers. Sure, it’s easy to fill out an application advertised as a quick and easy process, but it should send up a red flag when you give away all your personal information with a four-page contract that follows. Companies undoubtedly paid someone to create and scrutinize the contract you’re agreeing to, so there is bound to be something important to be aware of before signing away information such as your social security number.

    Another weak point for consumers is that the credit card has made popular the mentality that it’s OK to spend money you don’t have. Then unpaid balances accrue interest and other fees, such as late fees, overcharge fees and default fees. We need to adopt the idea that it’s not a negative thing to budget ourselves – we don’t have to have everything all at once, otherwise there would be nothing left to enjoy.

    If consumers were to only spend the money they had in pocket or money they knew they would and could acquire by the time the bill was due, debt would be a much less serious issue. But instead, we’ve adopted our credit limit as our expendable income. In reality, this practice leads to no expendable income at all.

    There are many grievances the public has with credit cards, from high interest rates to unnecessary and often unexplained fees. As demonstrated by the numbers, American debt has spiraled out of control in the last 13 years – the $1 trillion mark for American debt was only reached in 1994, according to CreditCards.com, and it’s more than doubled in a little over a decade since.

    By the same token, credit card companies have grievances with the public. They hate it when consumers pay bills in full and on time – the industry actually has the nerve to label such customers as “deadbeats,” according to a PBS Frontline documentary.

    Wouldn’t it just throw their lives out of whack if more and more consumers began paying off their debts in an effective way and making on-time payments that were beneficial to themselves? If a real turnaround were to happen with the financial management of the American consumer, credit card companies would be powerless to stop it. After all, consumers should comply with the rules credit card companies set forth. And down the road, these companies would have no reason to trap consumers too smart for their games.

    Anahita Kalianivala is a freshman English and psychology major from Fort Worth. Her column appears Tuesdays.