Working Class Economist: Take Your Credit Card, Set It on Fire, and Piss on the Ashes

Welcome to Working Class Economist, a feature that will take a look at the economy through the people most affected by it but so rarely mentioned by policy wonks discussing interest rates or credit default swaps: people making less than 60,000 a year.

Today’s feature is all in the title: the abusive relationship you have with your credit card, and its pimp, the credit card company. Every year you hope whatever pocket prostitute you’re carrying around your wallet—Visa, Mastercard, American Express to name a few—will suddenly realize how good you are to it, and give up turning tricks. It’s never going to happen.

No matter how many movie tickets you pay for it with, or nice dinners you easily have the cash for but pay for a card with instead, or even expensive trips you book online with it and worry about paying for later, it’s just never going to come around to how well you treat it. You’re going to use it to pay for something you could have paid for with a debit card, check, and the increasingly extinct (but always good to you) cash money, and still wind up with the herpes of finance: debt interest.

I know people that owe more in credit card debt than they make in a year, and the big news to them is that they will probably owe just as much next year. Credit cards can charge up to 15 percent interest, and the minimum payments they ask for—even recommend you paying—might only cover that interest. Theoretically you could wind up paying a 5,000 credit card bill longer than you might pay for a car.

Now I’ve heard every excuse in the book. “It’s okay if I use my credit card for everything because you get reward points.” If you’re actually using your card enough to accumulate enough points it means you’ve paid a ton in credit card interest over the years. It’s the same as winning a “free” toaster after you’ve bought a much more expensive refrigerator. Even a seasoned hooker might through you a freebie every once and a while.

Another gem is “Well my debit card has no protection against identity theft and if someone uses my credit card illegally the money is insured,” which is technically true, but only technically. Most debit cards will also reimburse you for stolen funds if your card is jacked and clearly taken for a joyride—and not if you just lent it to your shifty cousin and they went on a shopping spree—and credit cards may still ask you to pay for purchases you can’t prove are fraud, which, by nature, is not easy to prove.

My personal favorite is “It’s alright to have credit card debt because I have a savings account,” which is math logic so bad you might be eligible for a job at the State Department. I’ll use the numbers a friend once gave me. She had a 5,000 dollar savings account that paid 1.5 percent positive interest (you would be lucky to get that these days) and 15,000 dollars in credit debt with a negative interest of 12.5 percent. The positive interest off one might buy you a pack of gum every Christmas, and the negative interest off the other is enough to bankrupt you.

Credit card debt disproportionately impacts the middle/lower class and young people, so I’m hoping anyone reading this will really listen. Send your credit card the way of the Sega Genesis before you spend an unnecessary amount of money every year on credit interest.