Twelve and a half years after Steve Jobs borrows technology already in use by Palm and Handspring to create the iPhone, Apple has today invented the credit card. Now, some will say, “wait a minute, credit cards have been around for decades.” But that would be incorrect. There has never been a credit card made of titanium before! An actual metal card, not plastic.
I’m kidding. It really is garbage, as the video above goes into. In fact, cashback cards in general are garbage, something he doesn’t go into. Cashback is a gimmick. The card issuers count on you charging things and then forgetting to pay the cards off each month. They don’t make money unless you pay them interest for carrying a balance from month to month.
The solution to the credit problem is not to have any credit cards. Use cards tied to your bank accounts, issued by your bank or credit union (I try to only use credit unions myself) and only use credit when absolutely necessary. Then pay back the entire amount as fast as possible in order to reduce your own costs. If you have to have a card to do certain kinds of transactions, have one card to do those transactions with and then pay that card off before the issuer can charge you for the carry-over balance.
60% of reward cards holders don’t pay off their balances each month. That statistic troubles personal finance experts, because credit card interest rates are at a 25-year high.NPR
It would really be nice to have enough money (as the youtuber above clearly has) to be able to resist the urge to put essentials on credit. To go on a spending spree and not have to worry about doing without essentials later. If you cannot afford to buy essentials, you cannot afford to have that temptation lying around. Cut up the cards and never look back.
The concept of customers paying different merchants using the same card was expanded in 1950 by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first “general purpose” charge card and required the entire bill to be paid with each statement. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that later acquired credit card features).Wikipedia, the free encyclopedia
The US government has taken to issuing charge cards to people who qualify for benefits these days. I’m not sure what I think of this development other than that it is a way to get funds into the hands of the unbanked, a serious problem in poverty stricken areas. And as long as the card only works up to the point where the benefits end, that shouldn’t be a problem. What would be a problem is the government issuing cards that could then be used to tie more poor people to debt that they will never be able to pay off. That would be a problem.
So, there you have it. Apple creates the charge card in 2019, about 150 years after the idea is first proposed in speculative fiction, and about 60 years after the first general charge card is introduced into the consuming population. Just in case you thought Steve Jobs was full of himself when he claimed to create the smartphone. Apple creates Paypal for Apple, joining the leagues of credit card issuers that are only a benefit to the wealthy who can pay their cards off regularly. Charge cards which are just another cross for the poor to be hung on, unless those poor are lucky enough to qualify for government benefits. In which case, track your balance! (the one solid word of financial advice offered in the video) But, you know, shiney new overpriced technology. We’re all excited to see it. Can’t you tell?
A h/t is due to the Economist Radio episode Money talks: From bad to wurst-Germany’s economy shrinks where I first heard of this latest offering from Apple.