Just watched Frontline on PBS. The topic is “Secret history of the credit card”. I thought it provides some very useful information. We all know the US economy is very much depependent on consumer spending. And the credit cards are used more and more by consumers. I remember a story my “American mom” told me. When her own kids were little and they asked their mom for something, they thought everything can be bought with that “magic plastic card”. Personally I applied and received my first credit card shortly after I attended the graduate school in Rolla. I had been through “low interest” balance transfers and paid interest on those loans from time to time. Other than that I do pay off my monthly balance regularly. But I did notice I tend to spend more freely with the credit cards, e.g., recently I spent quite a bit on the espresso at Borders, Panera Bread and Star Bucks. Another reason I use credit card is some of them offer cash bonus for purchase on gas, geocery, etc. I don’t consider myself a “very profitable customer” for the credit card companies.
Until today I have not connectted the dot of two things: consumer spending and credit card usage. It worries me more is China is catching up with the consumerism rather quickly. Last summer I went back to Shanghai and saw increasing acceptance of credit cards. I even used my US credit card to book vacation on Ctrip. It’s convenient but later on I saw there is a 1% charge for using outside the US. A friend from Shanghai used credit card for his US trip too. I can see the convenience here because he is on business trip.
Just for the fun: I found out if I pay the minimum monthly payment on my “low interest” balance on my credit card, it will take 54 months (4 and a half years) to pay off. Now I have more desire to pay off that loan more aggressively.