Credit Card Debt Management

Credit cards could be the new tobacco, according to MediaPost’s Marketing Daily. Not in the sense that we’re addicted to them, per se – more in the sense that we’re becoming ever more afraid of them. Looking 10 or 15 years down the road, it is possible that credit cards, once a socially accepted symbol of affluence and convenience, will be just another black mark in the pages of American history books.

For instance, certain cards in certain colors signify that you have a “really” good credit score or a “really” high income, just as Virginia Slims once signified that you were a “really” fashion-conscious smoker. Now, cigarettes are generally banned from most restaurants and public perception has tanked to the point where they are most associated with bad breath and a hacking cough. Could it be that credit cards too will someday be banned from restaurants (doubtful) and they will be most associated with “Sucker”? It is indeed possible, according to the Marketing Daily article, citing a vast study by more than 60 reputable organizations:

“And the anxiety consumers feel about debt is intense: More than one-third (36%) of Americans say they have felt at some point that their financial situation was out of control. People ages 30-49 are more likely than others to have felt this way (45%). Parents with kids under age 18 are also vulnerable (41%), as are African-Americans (46%).”

Will consumers get mad and cry foul at the big credit card companies like they have with big oil companies? Probably not, the article says. There is a familiarity and comfort with these brands and they are still strongly associated with convenience, by and large. And it is dangerous to paint the entire industry with a broad brush when some consumers (i.e. the responsible spenders) are not “over a barrel” with their credit cards, so to speak. However, I am of the mindset that consumers do have room for a little indignance at misleading and vague marketing, interest rates that skyrocket at the drop of a hat, and spending limits that fluctuate with whichever way the breeze blows. These practices fly under the radar with many folks because they haven’t been told or are too preoccupied to investigate how it might affect them.

Will the credit card industry be the new tobacco? No, probably not, and I doubt we’ll see Visa-sponsored Get Out Of Debt commercials anytime soon. But even if the industry can protect its public image, it should be subject to at least some regulation.

Going to the Olympics? You better be prepared, because most of Beijing won’t take American Express. Or Visa, or MasterCard or Discover, for that matter. It’s a cash city, one of the few major international business hubs where that is still the case.

In preparation for the Olympics on Aug. 8, the Chinese government supposedly made a push for more businesses in the country to accept credit cards. However, as the International Herald Tribune points out, that means Chinese credit cards only — at least that’s the case with about 55,000 businesses. Another 55,000 businesses apparently accept credit cards from around the world, but 55,000 is a drop in the bucket of Beijing commerce. According to reports, the vast majority of food, souvenirs, clothing, and even lodging may be obtained with cash and cash only — and plenty of it. The largest bill in China is equal to roughly $14 USD.

Another recent news story said journalists covering the Olympics are complaining about restrictions on web access — no sites that speak ill of the Chinese government in any way. Unrestricted web access for journalists was supposedly another issue being addressed by the Chinese government in preparation for this year’s Olympics. Interesting.

At any rate, first-time visitors to China are learning the fine art of foreign currency exchange, bank teller lines and ATM withdrawals. There are, however, a host of problems with that, including unreliable machines, daily withdrawal limits, limited ATM cash supply, and really long waiting lines. Toto, I don’t think we’re in Kansas anymore.

RapidAdvance and Humboldt Merchant Services have teamed up to revolutionize small business loans. Not sure of the interest rates on this option, but at least it’s interesting and gives small business owners more options.

RapidAdvance provides cash advances to businesses throughout the U.S., U.K. and Canada. Humboldt, meanwhile, is one of North America’s leading payment processors. Small- to mid-sized business owners will now have the option to get a loan, or “cash advance,” for business purposes. It might be to expand the business, purchase new equipment or inventory, etc.

Repayment of the cash advance would occur gradually, as a small portion of each transaction where the business owner is processing a customer’s credit card. These so-called merchant cash advances are unsecured loans with no business use restrictions, and have a high approval rating of about 80 percent, according to a press release.

It’s a good idea, supposing the fine print of the agreement would not defeat the purpose. One can’t help but wonder about that wonderful print everybody loves, the fees, the interest charges, the terms and conditions. One thing this venture does have going for it is that it joins together two reputable, well-established companies with proven track records of long-term stability and success. It’s not like it’s an uncertain new business venture.

However, with merchants already complaining about the merchants fees imposed by the credit card companies with each credit card transaction processed, one has to wonder whether business owners will really go for this. Will they be willing to have a loan repayment automatically deducted from their already slimming profits? It might be a tough sell indeed.