Some years ago, there were too many stores in town, and they were worried that they were not making enough money!!

http://globaleconomicanalysis.blogspot.com/2011/11/country-by-country-per-capita-retail.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Someone said, "I've got an idea: how be we give people a little piece of plastic ... that'll let them buy now ('using their good credit') ... and pay later!"!

"Great idea!!", said all who heard of that fine idea.

So they made a lot of these cards (millions) and distributed them to the public.

They called them, "credit cards"!

But - wait a minute!

The moment before you used one, you had no debt: the moment after you used it - you had debt!

So - they're "debt card"s, right?

And most of the mainline ones charge about 128% (dratted keyboard! that was supposed to be 18%) annual rate on balances that run past the first billing date (and usually on additions from the date of purchase).

Not only that ... most of the purchases made by most users are for non-deductible merchandise/services. Which means that they must earn about 24% pre-tax income, pay 5 - 6% tax, and have 18% after-tax money in hand to pay the interest, before paying any of the principal.

For those who follow the path of low or least resistance and pay just the minimum or slightly more, do you have any idea how long it takes to pay off that amount in full? And the amount of interest that was paid?

Not only that - many who use store-issued cards pay little attention to the interest rate charged on their unpaid balances: it's about 28% for many, over 30% for some.

Which means that a person in 20% income tax rate must earn pre-tax 35%, pay 7% income tax, then have 28% in hand to pay just the interest on that loan.

Question: when you're using someone else's money at 25% ... doesn't that mean that for every 4 hours that you must work to pay off the loan in a year ...

... you're working one hour for free, for the privilege of buying the item before you could pay cash for it?

Sorry - the 35% only applies to balances running over the first billing period on store-issued "credit" (read "debt") cards.

ole joyfuelled