Thursday, October 23, 2008
Is Credit Credible?
In the wake of the ongoing financial disaster that has washed up on both sides of the Atlantic, people have been talking a lot about credit, and the culture thereof. Before I go too far, I would like to point out that I understand virtually nothing about high finance, or even low finance, and the reason that I am not rushing to find out so that I can protect my assets is that I don’t have any.
But one thing I do understand is credit cards, and it has recently come to my attention that a French credit card is really only a distant cousin to an American credit card, and that it is much more closely related to the American debit card. In other words, American-style credit cards, where you basically take out a loan from a bank (and not necessarily the one where you have your account) and pay it back with interest, do not exist here. This came as a shock to me. Somehow, after living here for eight years, I never fully absorbed this information. “You mean, people here actually save up their money before they spend it?!” We red-blooded American types charge out and spend on our credit cards and then worry about saving up to pay off the bill. Then the race is on to see if we can pay off the bill before we end up paying horrendous amounts of interest. This behavior, which seems utterly normal to me, strikes my French friends as irresponsible and reckless. “Who, me?” I ask, dumbfounded. Here I always thought I was a pretty prudent spender who was very careful with what little money I possessed.
Suddenly, I was forced to face the fact that I am indeed a willing participant in the very Culture of Credit that it seems is menacing the financial planet with death and destruction. Don’t get me wrong: I don’t run up huge credit card bills (yes, I kept my US cards when I moved here) and then pay tons of interest. But I do rely on them for buying things I can’t exactly afford and then paying them back when I can. I usually pay them off within six months, often much sooner. Does that mean I am afflicted with that dreaded Credit Mentality that the European press says affects 99.9% of Americans? I never thought so, but when you look at French people (and Europeans in general), I have to admit that unlike them, I look at credit as a Friendly Helper, and not as the Dark Lord of Financial Instability, like they do.
From what I’ve gathered, credit is considered unseemly here, something that only fools and scoundrels engage in. French people may have cards marked Visa or MasterCard, but when they use those cards, the money is debited directly from their bank accounts. At most, you can get a 30-day deferral. You can find some American-style cards that offer credit in an alliance of stores, but these cards are frowned upon by the general public. I was discussing this phenomenon with my dad, who is over 80, and he remarked that when he was young, in the pre-Visa/MasterCard era, the very same anti-credit attitude existed in the States.
Upon reflection, I have to admit that there is something to be said for actually taking responsibility for your bank account and buying things according to your present reality, rather than your misty future. On the other hand, if I think of all the things I couldn’t have done without one, I still feel grateful to my credit card for giving me a chance to take that Flamenco workshop in Spain, or having that holiday in the Greek islands. I know it’s not responsible, and I know it’s not sensible. But it’s just so much fun. I’m beginning to think I’m a lot more American than I ever realized…