Charge It!

Larry and I were fresh out of The Salvation Army’s Training School in 1978 when we got our first credit card together. Our initial purchase was a chest freezer that is still performing its faithful duty in our son’s garage. What little savings we had prior to entering the seminary had been used up by student loan payments and school expenses, and so a credit card cushion those forty years ago seemed like an awesome gift to us. 

We’ve kept that same credit card all these years, and we recently received correspondence from them, beginning with this line: “We’re excited to tell you about . . . a new feature of your account.” They ended their cover letter: “As always, we hope to be clear and helpful in explaining the changes to your account.” The following six pages (yes, I read them all) left me feeling like I had just tried to help the lovely Madelyn Simone with a third-grade math problem.

Bobby has a marble collection with 198 marbles. He then buys 44 more. He lost interest in his marbles, so he decides to switch to Legos and share his marbles with his 31 classmates (quite generous of Bobby). Estimate how many marbles each child gets. Why would I estimate? Why not just figure out the answer? Why is this so confusing? How do I explain this to an eight-year-old? I excelled in algebra and calculus back in the day, but by the time we get through these demon-designed word problems, I’m losing my marbles.

Here’s the deal, credit card company. You’ve already raised my APR by two percentage points over the last two years. After reading all your information, I still have no clue as to why I’d want to use your new “flex plan” if that interest rate is even higher than my regular one. 

Consumer credit card debt is a big deal in the United States. According to NerdWallet (what a great name!), the average credit card interest rate is 19.36 percent and the average household pays a total of $1,332.80 in credit card interest each year. Other figures from the Fed’s survey of consumer finances done in 2016 showed that in 2013, 38% of U.S. households had revolving credit card debt, and by December 2016, that had risen to 44%, with an average balance of $6081. 

There’s much to be said about credit cards and consumer debt, but I’ll leave any more analysis for the economists in our midst, who actually understand how the Federal Reserve, the stock market, and the consumer price index really work. What I do understand is this: confusion serves a purpose. Whether through payday lenders, credit card companies, or student loan services, the voluminous fine print of contracts and terms of enrollment can scare us off from being fully aware of our financial situations. 

But the strategic use of confusion-causing verbiage doesn’t stop there. It floods our television screens with advertisements for the medicine of the day, guaranteed to improve our lives in extraordinary ways, unless we happen to get one or more of the long list of potential side effects. And dare I mention the political ads that put a spin on “the other guy” in such a way to convince us the opponent is the spawn of the devil? Confusing for sure.

How do we figure out what’s legitimate? Back when people did anything to get their child a genuine Cabbage Patch doll, my friend’s daughter opened her gift on Christmas day. Initially, she was thrilled, but then devastated to discover it was counterfeit – no belly button. My friend had found an unreliable source – the trunk of a disreputable man’s car. 

In finance, in medical treatment options, in politics, and even in third grade math, the words of Isaac Newton help: “Truth is ever to be found in simplicity, and not in the multiplicity and confusion of things.” Consider the source of your information. Read the fine print, and ask questions if you don’t understand. And if, in the end, you still feel a bit confused, it’s not the end of the world. Robert Frost adds perspective, “I’m not confused, I’m just well mixed.”