The great Karl Dall once sang, "Money will be abolished... (I already know someone who has nothing left)" and claimed that he was the greatest thanks to his bank card. This is a song lyric from the late 80s, and it is fascinating how prophetically Mr. Dall illuminated the topic of "buying on credit."
And – what can one say? The man wasn't entirely wrong. When something seems unaffordable at first glance, we whip out our credit card and pay cashless.
What are the advantages?
The frontrunners with the most credit card users are likely the United States of America, where 72 percent of the total adult population possesses a credit card. Nearly half of all retail sales are made with them – and one might ask: "Why not? It's quite simple and super convenient."
True. Simply apply for a card at a bank offline or online (for example at Banknorwegian.de/kreditkarte/) and the shopping fun can begin. You swipe the card through the corresponding slot at the respective terminal, enter the PIN, optionally sign, and the annoying topic of "paying" is postponed to a later time.
Mind you, not disappeared, but postponed. Payment will definitely happen – usually within a month. Then a collective debit of all transactions that occurred during this period takes place. This results in the advantage that the bank grants a short-term loan – which is why the card is named accordingly.
And as with any loan, it depends on your own creditworthiness whether this is granted or not.
For example, with a very good credit rating, it is quite possible not to pay for the expansion of the Smart Home in cash immediately. If the service provider accepts the credit card instead, you are stating that payment will be made – at the latest by the end of the month – and that the service provider will definitely receive their remuneration.
What are the arguments against a credit card?
Of course, such a card also comes with massive disadvantages. For one thing, there is a high chance that those who do not have an overview of their finances will quickly overextend themselves monetarily. "Overextend" here naturally means "getting into debt." Accordingly, overdraft interest becomes due, and that is usually not particularly low. On the contrary.
Another disadvantage: It is quite possible to become a victim of data theft. There is the option of having a credit card that not only offers cashless payment but also contactless payment. This is quite practical for the card user, as you no longer have to provide a signature or enter a PIN (Personal Identification Number).
But it also pleases those data thieves equipped with corresponding reading devices, who can then read the information from the card and copy it onto a blank card. The magic word for this is RFID, i.e., "Radio Frequency Identification," meaning identification via electromagnetic waves.
Therefore, it would be advisable, if one owns such a cashless and contactless operating card, to keep it in appropriate RFID-protected wallets.
Another way credit card abuse can be committed: They manipulate the terminals or ATMs so that they have the combination of "credit card number" and "PIN" on tape or in the computer immediately.
And corresponding abuse can also be carried out via cybercrime. Either the criminals install malicious software on the computer or launch hacker attacks on the platforms. Or they commit data phishing.
And while we are on the subject of "data" – since every interaction with the Internet, including this one, leaves a data trail on the web, companies can draw conclusions about the user's behavior. In the best case, this "merely" means that you are bombarded with advertising, but in the worst case, further data about a person that could be important can be collected.
Another problem can raise its head with too much money in the financial environment: inflation, the devaluation of money.
And what happens when the option of card payment fails, can be admired live these days.
Conclusion
Well, at the moment we are rather facing a wave of price increases. Nevertheless, it is important to be careful when considering whether to buy things on credit.
