Wednesday, October 10, 2007

Credit Card Companies are not your friend

In 1949 Frank McNamara was having dinner w/ one of the Bloomingdale's. As he reached for his wallet to pay for the meal, he realized he had no cash. He had to call his wife to bring him some. He vowed that that would never happen again. He then developed a credit card that could be used at more than one store.....Diner's Club. They would collect the $ from borrowers and pay that money to the store charging the store a 7% fee for th service. There was NO INTEREST charged to the customer. It took until 1958 for American Express and Bank Americard (later called Visa) to arrive.

The Sears store in 1910 has an advertisement saying that you shouldn't buy anything on credit. Now Sears not only owns Discover, but they make more $ on credit than merchandise. Would that really classify them as a retailer? I would say they are more of a financial institution.

Statistics on credit cards:

*According to USA Today, 63% of bankruptcy filers blame credit card bills and 89% of filers STILL get offers.

*Ram Research Corp. states there are over 50 million Discover cards, 49 million Citibank Visas, and 48 million American Express.

*According to Wall Street Journal there are over 63 million Sears cards with over 700,000 applications per month.

*Credit card issuers sent out 4 billion pieces of mail last year to 93 million households, which is an average of more than 43 offers going to each household, as reported by Ladies Home Journal.

*Capitol One and MBNA, two of the major issuers, spend $60-$70 million each quarter on credit card offers, according to CardWeb, Inc.

*USA Today notes that Citibank, the largest issuer of Visa, will spend $700 million this year just marketing credit cards to your high school and college students.

*Colleges can earn $50,000 to $100,000 per year just to allow a credit card company to operate on campus. Credit card have become a rite of passage into adulthood.

*According to American Express, 33% of consumers use plastic more frequently today than five years ago.

*According to the Federal Reserve Board, consumers' outstanding debt on credit cards and other revolving loans has grown continuously over the last decade hitting $1.5 trillion last year.

*Cards that offer airline miles as rewards say that 75% of airline miles are never redeemed.


No comments: