Plastic money is 1980s currency

Press, 20 September 1980, Page 10

Plastic money is 1980s currency

News Item! “Trustee banks will sign with Visa. Account customers may soon receive this credit card.”

Does this signify a service or disservice? The very fact that this question might be asked indicates a discussion on “plastic money” is timely. Plastic money cards appear in three areas. Instore cards are for customer identification and for streamlining account orocessing. Many major retail stores now issue these. For people with names that are generally misspelt by busy salesclerks. they must prove a boon in simply preventing that.

Travel and Enter-* tainment Cards are represented in New Zealand by American Express, Diners Club and Carte Blanche. Originally these were not for use in paying for general merchandise, but this has changed. Pavment for goods, life <uid travel insurance, and cashing of oiit-of-town/country cheques can be done with your card. Cash advances, and personal loans of several thousand dollars are also instantly (almost) available to holders of certain cards.

Finally we have the

credit cards — Visa and Rankcard. These are issued by the trading banks and in the near future, by the trusteebanks as well.

The Visa organisation is the biggest credit card organisation worldwide. You can use your card in 140 countries. Bankcard is shortly to become part of the Mastercharge organisation, and so will-be the second largest, credit card organisation. How does it all work? First you have to apply for your card on the approved form. The Travel and Entertainment (T and El cards have gravitated “up-market" — in other

words they seek clients in higher-income brackets. Having caught you bigger fish, they treat you with special facilities . . . like exclusive members' lounges in certain cities, generous loan possibilities and enough special offers to block- your post box most commonly regular!

Bank' credit cards are available to all applicants who fill in the application form and meet minimum criteria which indicates ability and likelihood you will pay your debts. Joining fees and/or yearly charges may be made. For example, Visa card costs from $5 to $l2 a year, Bankcard is free, American Ex-* press costs $25 to join and $25 a year.

You will receive a small plastic card embossed with your name and code number. You sign on the space provided and off you go. Where the card symbol is displayed — you may use the card. A special form is filled in, the embossing of your card imprinted on it, and you sign in front of the clerk.

Signatures on card and form are compared, and some quick checking may be done if the purchase is large. This is to ensure you haven’t gone over your monthly credit limit, and that the card is in the right hands. You are given a copy of the purchase slip, the shop keeps one, and one goes to the card company processing. At the end of

the monthly billing period you receive- a statement, detailing (date, outlet, and amount) all your card purchases. With a T and E card you pay your statement at once, hut with a Visa or Bankcard you have a credit account. You may settle your bill within 25 days and pay nothing for what may amount to 55 days credit — depending when you made the purchase. But, after this, there is

some variance between cards. You must pay a minimum portion. With Visa you pay 11 per cent (IS per cent a year) each month on the balance outstanding thereafter. With Bankcard, you pay interest backdated to the original day of purchase.

It all sounds so simple—one wonders why everyone hasn’t got one. From your point of view, you have got instant, simple, recognised credit, which is as good as notes and coins, and better than cheques in many places. You save yourself time, energy and embarrassment which might otherwise occur if you want to buy something and find yourself short.

If you lose your card, vou have limited liability (usually $5O) if someone else uses it bfore you stop it — and the thief would have to forge your signature. And then you can get all that credit — up to 55 days free. This is better than loan or overdraft terms.

Why are people wary? First, there is the belief that the shops who accept credit cards will put up their prices to cover fees they pay to the card companies. This should not happen.

The card ’ companies have taken over their credit collection and debt risks, and the retail outlets’ savings should far outweigh the fees levied. Second, there is the fear that if we innocents get hold of credit cards, we lose control. We will be led astray as surely as if we had been given homing devices beamed in by evil retailers. Similar conspiracies were denounced when chequing accounts were advocated.

If you retain and add up vour purchase slips, — is this so different from keeping your cheque butt up to date? If you lose control with charge accounts, you may’ act similarly with credit cards — it is‘true. But it is you losing control — not the devil disguised in plastic.