
The man who sold the world on credit cards - imartin2k
http://www.csmonitor.com/Business/Saving-Money/2017/0215/Meet-the-man-who-sold-the-world-on-credit-cards
======
kayoone
Especially in some european countries like Germany, where CCs are not very
popular and can't be used in a lot of places, it's easy to think that they are
ultimately bad because people get this false feeling of thinking they can
afford things they actually can't or shouldn't. And for the individual that is
probably true.

On the other hand, the economics effects of credit cards, or credit/loans in
general can't be understated. Some industries and therefor technological
advances like cars or housing for example, would never be where they are
without credits/loans.

In the same way i think that a lof of things like computers, tvs, holidays
would never get bought without the existence of credit cards. And in the end
all of that feeds the gigantic banking industry and can also be seen as the
base of everything thats wrong with our financial system, as shown in the 2009
crash.

~~~
gpvos
Does someone have a list of countries where _credit cards_ (as opposed to
debit cards) are actually popular (apart from the US?) I'm in the Netherlands,
and I only use mine for international online payments, and I have it with me
as a backup (but seldom use it) while travelling abroad. And even then, it's
automatically paid off in full every month, so the credit function isn't
really doing much. For the rest I use cash, or have a debit card from my bank,
which is accepted in most European countries. As for acceptance, hotels and
restaurants, and tourist-oriented shops generally accept it, but otherwise
almost no-one. (Edit: added emphasis on credit cards as opposed to debit
cards.)

~~~
Drakim
Norway here, it's super popular. The only place in my entire life that I was
not using a credit card regularly at was the local flea market, but last time
I went there they even had one of those portable credit card things.
Otherwise, I use it to pay for food, taxi, bars, just everything.

Even if I need to send some money to a friend to pay for my share of the
pizza, we use an app that lets us send money between credit cards.

I haven't carried coins on me for more than a year. I do have one backup bill
hidden away in my wallet just in case things go sour.

~~~
petters
That's the thing, debit cards are so common in Scandinavia so many people call
them "credit cards" ("kreditkort") even though they're really not.

~~~
digi_owl
Likely because most of them come with the option of making payments via either
the VISA or Mastercard network if the national system is not an option
(traveling, some bars and restaurants, online purchases).

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janvdberg
There is also an interesting 99% invisible episode about this:
[http://99percentinvisible.org/episode/the-fresno-
drop/](http://99percentinvisible.org/episode/the-fresno-drop/)

~~~
tradersam
For anyone who hasn't listened to this episode, I highly recommend it.
Incredibly informative about the history and nature of credit cards, and how
they've evolved over time.

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muninn_
I've see a lot of comments about credit cards and people mentioning stuff like
it's better to use a debit card and to "pay the balance off in full each
month", but you are absolutely incorrect. Now it is true, obviously, that you
should pay the balance off in full every month, not doing so is how the credit
card companies make money, but using your credit card is nearly universally
better Jan debit for two reasons:

1\. At least in the US, you receive cash back for using a credit card. As an
example, many cards offer 1-2% straight up cash back. Even if you used it in
the most inefficient manner, such as just getting the cash back instead of
discounted airfare or something, that's a lifetime of saving 1-2% on all your
purchases. That's huge.

2\. Protection. It's simple. If I use a card and get scammed (mostly happening
in Europe I might add), then if I used a debit card it is my money that has
been stolen and now I have to get it back. If I use the credit card? It's the
banks money.

Now I know obviously that there are people who don't pay their bills, lose
their job, or whatever and that's how the companies make money, and maybe if
we all used cash things would be cheaper or something, but unless there is a
serious movement in that direction you should always use a credit card, even
the most basic one you can.

I'll also mention that this doesn't cover the plethora of various benefits
that you can use for different cards: automatic extension of warranties on
purchases made with credit cards, automatic rental car insurance, etc....

~~~
jacobolus
The “cash back” is getting pulled right out of merchants’ wallets. If you’re
patronizing small local businesses, then using such cards is not very
neighborly.

~~~
muninn_
Pretty sure that Visa et all. charges a fee regardless of debit/credit cards.
There is a difference in the amount charged, perhaps. If a business wants to
give me a discount for using cash that might make me consider doing so.
Supporting small business, which is something I try to do, is still business.
Keep that in mind.

~~~
hibikir
There is no perhaps about it: Every card out there that gives a decent amount
of cash back has a very large interchange fee. The very best ones are easily a
percent and a half more than the cheapest ones. Now, the small business might
not be paying the fees in such a way that paying with a different credit card
costs a different amount of money, but then that just means their payment
processor is averaging fees out, and different averages would make the
processor charge more overall. Still, using a credit card with foot benefits
to you means higher prices in the long run.

This doesn't really happen in the EU due to a relative recent ruling
standardizing fees, but that's also what makes America's super cards not be
issued by their banks.

Credit cards, and payments in general, might seem really easy to model on the
outside, but the whole space is a gigantic rabbit hole. That is why companies
that abstract much of it away are valuable for even large merchants.

~~~
muninn_
Hmm. So I don't disagree with your premise but details like "America's super
cards are not issued by their banks" is incorrect. Cards like the Chase
Sapphire Reserve exist

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nicolas_t
Seems that there's a lot of confusion between credit cards and debit cards and
usage in Europe and US.

In some countries (including the US), a credit card is a card that you pay at
the end of the month. You have a statement and you have to pay for that
statement. If you so choose you can pay less and pay at least the "minimum
payment", in that case you pay interest rate on the remaining money.

There are debit cards, with debit cards the amount is directly debited from
your account as you use it.

Then in a lot of European countries, we have cards that we call credit cards
which are actually deferred debit cards. The money you've spent is debited
from your account on a fixed date at the end of the month. You have a credit
line in that until it's debited at the end of the month, you're effectively
borrowing money but since it debits your account, you're expected to pay it in
full.

Often this is associated with overdraft facilities on the bank account which
means that at the end of the month, if the money to pay the credit card bill
is not your account, the account will be overdrawn and you will pay interest
(which are similar to the interest rates for credit cards in the US, around
18%)...

So, the European system with deferred debit cards is different but in practice
has a bit of the same issues with overpaying and high interest rates. It's
just that the credit line is tied to the bank account and not the credit card.

~~~
GordonS
> in a lot of European countries, we have cards that we call credit cards
> which are actually deferred debit cards. The money you've spent is debited
> from your account on a fixed date at the end of the month

Interesting, I'm in the UK and have never heard of this kind of card.

~~~
FooBarWidget
I am in the Netherlands and this is exactly how all of my credit cards work. I
have never seen a credit card that does not work this way.

~~~
gpvos
For both credit cards issued by ING you can choose to pay only partly at the
end of the month, and have revolving credit. Most people don't choose this
though, as far as I know. I didn't check the other banks.

------
webmaven
I am a bit surprised at the amount of credit (pun unintended) given here to
Simmons, completely ignoring the contributions of Dee Hock[0] who started the
BankAmeriCard[1] revolving credit system that later became Visa.

[0]
[https://en.wikipedia.org/wiki/Dee_Hock](https://en.wikipedia.org/wiki/Dee_Hock)

[1] [http://about.bankofamerica.com/en-us/our-story/birth-of-
mode...](http://about.bankofamerica.com/en-us/our-story/birth-of-modern-
credit-card.html)

------
losteverything
I recall my mother making a purchase over $50 (fancy dress clothing) and the
store had to call in for approval.

When did magnetic stripes and swiping become mainstream?

How about calling cards. I believe I sat across from the man who "invented "
the calling card as we knew it.

------
redsummer
The method I spend money (offline) is in this order:

1 - Apple Pay (if available)

2 - Debit Card

3 - Credit Card

And cash for small amount if it makes tipping easier, or they don't take
anything else. I only use Credit Cards for car hire, where it seems to be
obligatory. Online I always use debit card.

~~~
thereisnospork
Why debit over credit? My understanding has always been that credit offers a
higher degree of fraud protection, plus better rewards and no interest if you
have the discipline to not carry a balance.

~~~
lacampbell
My understanding is in the US you can actually make money/rewards if you use a
credit card and make sure to pay it off monthly. That's not the case in many
countries.

How do credit cars offer better degrees of fraud protections?

~~~
bluedino
in the us debit cards take the money out of your account while credit cards
must be paid - dispute or fradludlent transactions don't wipe your savings
out, they can stay on and a balance until you clear the situation up with the
card company if you use credit

~~~
lacampbell
Interesting. My technique for debit cars is not to keep it attached to
accounts with a lot of money. I transfer the money with internet banking, then
use the debit card immediately - on an as needed basis. It's certainly not
attached to my entire savings at any given point in my wallet.

