What?
Well I won't argue with the semantics of that, because I'm sure having good credit is what everyone wants. I'm sure having a good credit rating is useful in order to get loans. It's essentially telling the lenders and banks, that you can be trusted to be given money.
Of course the people that were given credit and or charge cards were trusted to give money as well, and many are in debt well over their head. In fact some are so underwater, the banks will never see much of their money. So what happens then? No one wins. Credit history gets jacked. The Banks loan out less. There's less money to make the world go round.
So what would happen if everyone stopped using their credit cards. Let's say they were all paid off. What would the banks do to make money? How would they make money on interest? Well they'd raise interest rates for one on other type of loans (cars, boats, houses), but they would be hard pressed to get coin out of regular purchases.
I don't use a credit card. I haven't in years. I just use cash. If I don't have the coin, I'm not getting it. Do I really need something if I can't pay for it? Well I might I am sure, but to this point it is working out.
I can see the economy either slowing down because no one will be buying large screen televisions. With that being the case, television prices will drop because inventory will build up. In that respect, the economy might kick in.
The whole buy on credit situation puts this weird cloud on the quasi-free market system we have. They need it, but we may not. They force us to use it, but we do we really need it?
"What would the banks do to make money?"
ReplyDeleteYou need to put that question FIRST, as in 45 years ago before everyone was coerced into using credit cards. How DID the banks make money then? Oh, that's right, they didn't all think anyone above the level of teller should all earn a million $$ a year and that they should be worth billions; they didn't feel entitled! Holy sh_t, what a concept!!!!