Living on Credit

Consumer Credit Card Debt. Enough of Showing off!

Get yourself a credit card and all your troubles, whether connected with finances or social status, will be gone. And it makes no sense arguing against this statement as very many people do find relief, though temporal sometimes, once they get hold of a plastic. Why do so many people apply for credit cards? What is the real reason for their overwhelming desire to become owner of a small plastic thing and forget about the ever valued hard cash?

Our investigation has shown discouraging results. People live on credit to show off what they can afford, forgetting that they get into possession of things and services belonging to big businesses and lenders making revenues at people's competition in wealth and status.

They have identified the reason for the mounting credit card debt as the rise in unemployment numbers, but is it really so? Hardly. Yes, the unemployment rate has risen a little but it is still steadfastly low, at about 5% as reported in January, 2008.

They also site the sub-prime mortgage crisis as a reason for households being crippled by debt, and it does sound more like truth, but still is only half of it.

Meanwhile American households continue to accumulate thousands in credit card debt and, what's more terrifying, to receive hundreds of credit card offers by mail offering guaranteed approval.

There must be some key and true factor that makes customers end up in the evil spiral of revolving debt, lasting and hurting. Let's see.

According to a series of observations, almost no one today, whether he or she browses the internet in search of a credit card or gets an offer by mail, can miss a credit card application with enticing terms and rates.

Well, what's bad about it if an applicant is fully aware of the responsibility he/she acquires with a credit card and knows exactly what benefit he/she plans to make out of the deal? There are people, however, who strive for a certain credit card not because of its 0% on purchases, advantageous rewards program and a heap of additional options but simply because it gives him/her the status of a cardholder and guaranteed approval.

Instead of using an initially lucrative credit card deal to advantage, following the principle rules of credit management, people just start living on credit and borrowing money to show off, to prove themselves and others that they have all the material goods for luxurious life.

But they don't seem to realize that they have also borrowed time to pay this wealthy life back to the bank or credit company. Very often they can't, the unemployment rate is not to blame, the sub-prime lending crisis has not affected everyone.

Very many people have lost the value of real money and have become too dependant on the materialistic lifestyle. Credit cards can give a giddy feeling of having all at once and most customers give in to the bewitching advertisement and heavy marketing moving the credit card industry farther.

It's become more a matter of prestige than usefulness to have a plastic and as long as this attitude is maintained, we will accumulate debt regardless of the fatal consequences it may lead us to.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.