Cash Is the New Threat While Plastic Is the Cancer In Your Purse.

Do you remember the saying “Don’t leave home without it”. Well, those days are gone for good. It is perfectly fine to leave home without your credit or debit card.


Recently I stopped by the local store to get a few items to get me by for a day or so. I picked up some items and took them into one of the cash registers with few customers waiting on the line. The cashier completed scanning the customer’s item in front of me and I assume hit the total button on the register. All of a sudden, the cash register starts playing a sound that we normally hear from winning a lottery. The customer behind me and I immediately assumed the person just hit a jock pot for some sort of store prize. We were wrong. The cashier immediately turned into the customer and told him that he is approved for a Master Card, and continues to ask him if he wanted to apply for it. The customer laughed and replied by saying “you guys never quit to keep us in debt”. I was a little puzzled by the whole drama for the few minutes I stand there and watch what was going on. I decided to ask the cashier how the customer in front of me managed to get the happy musical sound as if he was wining a prize. The cashier replied by saying that it is the computer that recognized the customer that he is a cash customer. The information came from the store card he scanned. The little store card that we use to get a few cents off from our purchase is a tool that collects data about our shopping behavior, what type of items we purchase, and whether we use plastic or cash. Many stores use those cards to attract customers. Safeway, fry’s smart final, staples and others provide their own cards.

Store membership cards are good, customers get discounts on some items, but what I did not understand is that why stores or merchants push their customers to use credit or debit cards. Merchants pay fee to card issuers per purchase. Some issuers charge merchants a fixed fee and other charge a predetermined percentage per transaction. Merchants benefit from customers using cash and lose money when customer’s use plastics. It is not merchants want to pay transaction expenses by pushing credit cards but it is because of the influence of card issuers like big banks, credit card companies such as Visa, MasterCard, and Amex had significant power and influence on merchants. Therefore, merchants have no choice but to follow the orders of big banks and credit card companies’ desire.

Have you watched lately the TV news, using cash to buy airline ticket can land you in a terrorist suspect list. The mighty dollar is now part of a profiling criteria to identify who is a terrorist or not. This poor profiling of using cash as a terrorist shows how far being banks and credit card companies with their junior associates called credit reporting companies gang up against consumers to suck part of every dollar consumed.

The credit system is setup to transfer wealth from consumers to the few big financial institutions constantly while maintaining a high level of debt on consumers. Of course, they claim use of card or credit increase the overall economy. It is true the use of plastic facilitates business and contributes to the growth of economy. At the same time, it also contributes to increased economic inequality leading to the status where the rich get richer and the majority of the people grow poorer.

According to Moody's economy.com, the study on use of card found that, on average, increasing card usage by just 1 percent translates to a 0.024 percent increase in GDP. This equates to $15 billion in additional GDP globally for every 1 percent increase. The article continued by saying that card usage contributed by 270 billion to US economy and 1.1 trillion dollar to the world economy from 2003 to 2008.

Let us see how this economic growth translates to those companies who benefits for consumers higher debt.

Credit Card Companies:

As of May 6, 2010, the market capitalization of Visa was 69.6 billion.

Master Card had a market capitalization of 30 billion dollars.

American Express had a market capitalization of 50.92 Billion dollars

Big Banks:

As of may 6, 2010, Bank of America had a market capitalization of 163.32 Billion dollars

JP Morgan Chase had a market capitalization of 162.24 Billion dollars

Wells Fargo had a market capitalization of 162.31 Billion

Citigroup had a market capitalization of 115.63 Billion

Credit reporting companies

Equifax

Experian

TransUnion

Credit Reporting Companies are private companies and they do not list their market value, but one can assume they share substantial amount of consumer’s money through fees and charges each time a consumer or a company wants personal data from consumers.

It is not too difficult to realize how a web of financial institutions controls our lives through a system that is designed to keep the public under water and dependent economically. These companies decide who is worth being a person in getting their service. They write the rules how much interest we have to pay, who they can keep as a customer or for that matter that can have a job. Companies had begun acquiring credit report information before they even consider candidates for a job. Imagine, after the great recession of 2008, and 2009, very few people will meet their sleazy credit scores. Can we afford to continue this losing route? No law or regulation will be significant enough to change his or her way of doing business. These financial companies have all the tools they want to continue business as usual. They control the representatives, they control the communication apparatus, and they have the lobbying power to influence political and public outcomes. However, there is one thing they are scared of, that is consumers cutting up credit cards and using cash for transactions. If people use cash, they can only spend based on how much they have. On the other hand, if people use plastics, they will spend not only on what they plan but also on what they see now. When customers spend emotionally, they spend more than they have and in turn more money for the credit card issuers with a higher interest and associated fees income. If customers use cash for any transaction that means big banks will generate less money from fees and interest. That means credit card companies such Visa and MasterCard generate less revenue from issuing the cards. That means less money for credit reporting companies and debt collectors, financial advisors.

I do not expect many people will give up their addiction of plastics but for those who want to be free of financial slavery the outcome is very sweet.



Be the first and reclaim your true independence.

If we are serious about changing our way, cut up and throw those cards into recycling bins.