The Death of the Credit Card Economy

By not using credit (I'm not taking this word game further). ;-)



Probably that they are scared given the economic downturn.



Perhaps, but sometimes what's good for the individual is bad for society, and vice versa. You won't find any argument from me to the effect that living on borrowed money is a good thing, but a collective awakening can cause more economic instability for all, and not just those who over extended themselves.

That's why I just don't care if this is a good thing or a bad thing to which individual and who is and is not using credit and able to control themselves how much. I'm following this as a potentially disruptive pattern to the economy on the whole and don't have a personal stake in the matter.

No, it is still credit. It's a loan for less than 30 days with no interest and the entity loaning the money gets its fee payment (2-5%) from the business you used the credit card at.

The business pays the fee because it is easier and more likely to sell items by accepting credit but safer than checks because it has built in security unlike checking these days.

The credit card won't go away. It may be forced to move toward the debit card as those with lesser credit are forced out of the system of being able to pay later but it certainly won't go away.

I understand the basic mechanisms of credit cards, and like I indicated above I'm not going to get into a logomachy over what should be counted as using "credit". These days almost all movement of capital involves "credit". Unless you are using cash you are using a form of credit.

Of course, not all credit is created equal and there is a world of a difference between using a grace period (which is not unlike any non-cash transaction) and actually spending beyond that billing cycle's means.

So yes she's using "credit" just like anyone does unless they pay in cash for everything (even checks are a form of credit). But that's not the kind of consumer credit and consumer behavior that is being impacted at all in what is discussed in the article and that kind of behavior isn't what's being referred to as a "credit card economy". After all, as long as she's paying her balance monthly her payment deferrals aren't inflating the overall money supply in the way that those who don't do.