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Chapter 1 Summary:

Charting the Social and Economic Currents of the Credit Card Society

“There is Magic in the World. It is in your Wallet. VISA.”

VISA, Its Everywhere You Want to Be.” From resolving currency exchange problems during your European vacation or financing that “priceless” anniversary moment to mundane matters such as paying for gas at the speed pump or making last minute airline reservations on-line for an important business trip, credit cards have assumed a central role in our daily lives. In fact, with the ascendance of the post-industrial economy, bank credit cards have become an essential technological and financial tool for commercial transactions as well as an increasingly important macro-economic tool for U.S. policy-makers. In the process, they are contributing to the most neglected feature of contemporary American inequality: access and cost of consumer credit.

The “democratization” of consumer credit began during the restructuring of the U.S. economy (featuring falling real wages and employment disruptions) and the financial distress of the U.S. banking system in the 1980s. The aggressive marketing of consumer credit was facilitated by the dramatic increase in the cost of borrowing and advances in computer technology. Significantly, these promotional campaigns emphasize that the “magic of plastic” helps to simplify the stresses of modern life by providing universal access to money as well as other “exclusive” membership services. Furthermore, in order to encourage the social acceptance of consumer debt, the credit card industry has systematically penetrated the cultural core of American society. This includes sponsoring major sports events and establishing marketing agreements with national institutions, professional associations, colleges, and even religious groups.

Today, the convenience of bank credit cards fundamentally influences our life-styles. But, at what cost? The idyllic wonderland of consumer credit too often belies a reality of unknown sacrifices and enduring debt. Past financial difficulties may deny a home mortgage or even a job offer. Fraudulent use or accounting errors may create emotional and economic distress. Privacy issues concerning consumer information and assaults over ATM cash are rarely mentioned. Caveat emptor! More importantly, the credit card industry is playing a crucial role in transforming American consumer attitudes. The promotion of “immediate gratification” ruptures the cognitive connection between earnings/saving and credit/debt that has traditionally shaped consumer behavior. It is this “cognitive disconnect,” with its siren song “Buy, buy, buy. It could be free, free, free” that constitutes the cornerstone of the Credit Card Nation.

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