Once, people bought things for cash. You bought as much as you could with the money in your pocket. Now, with the Internet and the growth of credit cards, you do not even have to leave the house to spend your money, including money you do not have yet.
Credit cards are wonderful if they are properly managed. If you pay with a credit card, and are careful to pay off the balance when each statement arrives, you not only have the convenience of not writing a check, but you have the use of the money from the date of purchase until the card balance becomes due, and you may be awarded airline miles or some other benefit for using the card.
If credit cards are not carefully managed, they can lead to large problems. When you hand over green dollars, you see them leave your hand and the bulge in your wallet diminishes. Charging on a credit card is easy and painless, and the credit card balance can creep up on you.
Credit cards are expensive. First, they add to the cost of doing business for the merchant, because the card issuer charges a percentage. Second, they are expensive to the user if they are not paid off, because the interest charged on a credit card may be very large.
One card company, to test the market, mailed invitations to apply for cards with an initial rate of almost 80 percent. These cards were available to persons with very bad credit records. Many people applied for the cards.
Massachusetts law defines 20% as the rate beyond which a loan may constitute usury. A loan which is usurious may subject to the lender to criminal penalties, and may be uncollectible, but there are many exceptions to the law. You will run into perfectly legal very high rates in many contexts.
If you use credit cards, use them wisely. Read the small print, and understand the charges involved. If you are married, and your spouse is careless with credit cards, make sure that the card is in your spouse's name alone, so if there is a default you are not involved.
