Consumers Will Turn to Their Only Easy Money: Credit Cards

I got a phone call today at home from Chase. I have a Visa card with them. They call every once in a while to see if I want some Life Insurance or whatever else it is that they’re selling these days.

The sales woman began with: “Congratulations. You’ve been selected to receive a Chase Mastercard.”

Before I could respond she said, “…at the very low introductory rate of 0% interest rate.”

It was then that I cut her off and said, “I don’t want another credit card.”

She said, “What? How could you not want free money? Don’t you know what a great deal this is?”

The 0% rate would be a great deal for a customer who carried a balance (at least for the introductory period where they could roll over their other credit card balances into this new card with the lower rate.) But since I carry no balance, the 0% rate was meaningless to me.

The Chase saleswoman couldn’t understand that.

I said again, “I don’t want another credit card!”

But how many others took her up on the deal? Plenty, I’m sure.

Hm…maybe I should have invested in MasterCard stock after all?

And what about the upcoming Visa IPO?

The thing is- Visa and MasterCard just run the transactions. They don’t hold any of the underlying debt itself (like, say, Capital One- which is having to set aside extra reserves to cover their growing defaults.)

Visa and MasterCard are brilliant businesses. Now that the Housing ATM is coming to an end and Americans can no longer borrow off their homes, instead of lowering their standard of living or paying cash, they’ll simply charge even more. And MasterCard and Visa will get richer.

Another case in point: I returned an item to a Tuesday Morning over the weekend. I had paid for it in cash. So as the cashier was doing the transaction for the return on the register, a line formed. As she was paying the cash back to me another customer waiting in line remarked, “she paid cash? Who pays in cash for anything anymore? I charge everything.”

So he does.

The party must continue, housing bust be d*mned. The kids will have their iPhones for Christmas. Plastic will reign supreme.

MasterCard stock here I come.