Are credit cards going out of fashion? Hardly. But, creditors are tightening up. It’s becoming harder to qualify for credit, a situation unfamiliar to many.
The most revolutionary notion in commerce today is one of the oldest. If you want to buy something, you may actually have to pay for it. We are reverting from a “borrow and buy” economy to the “cash and carry” model of our grandparents.
This article humorously parallels the use of credit as follows:
Imagine that a restaurant, rather than charging $30 per meal, charged 50 cents per bite, with a waiter standing tableside collecting after each chomp. That would be an extremely unpleasant meal. But credit puts a safe distance between the ecstasy of consumption and the agony of payment, and thus makes us feel better.
So would it be so terrible if credit is harder to access? I guess it depends on who you ask…
The average consumer already carries quite a bit of debt and has very little savings. Restricted credit access may be a “blessing in disguise” if it becomes harder to overextend oneself. Goodbye, impromptu trips to Bermuda (or even just the mall)!
But, it could spell trouble if so called “good credit” is harder to reach. For example, in Geezeo’s Financial Aid group, members are discussing how it is becoming harder to get student loans. If I understand correctly, legally federally-sponsored educational loans must be granted. But, if you’re like many students and need “gap” loans to fill in between your personal resources and government loans, you could be faced with stiffer interest rates based on your credit score.
Creditors don’t usually garner a lot of sympathy. But, you can certainly imagine that recently they’ve been losing money on people who cannot pay them back. No wonder they’re tightening the belt!
Related:
Young Generations Feel the Pressure
Focus on Payoff to Eliminate Your Debt
Student Loan Justice
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