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Teaching
Smart Money Management: Credit Card Addiction? By Laura Enock August 11, 2009 CUES' Credit Union
Management's Web-only "Teaching Smart Money Management" column
runs the second Tuesday of each month. My name is Laura and I'm
an alcoholic. Actually, that's not true.
I can't even finish a glass of wine without getting a headache. Opening a bottle
of wine is really not going to hurt me, unless you count the headache. But what if I really had
an alcohol problem? What if a single drink meant
another, and then another? Even if it was behind me, from what I understand,
it's not safe to pour that first drink, or smoke a single cigarette, even if
I haven't fed the addiction in the last 20 years. Which brings me to the subject
of credit cards. Personally, my husband and
I stopped using them when we bought our house. It was a decision we made and,
other than the two store charge cards I carry and pay off as soon as I make
a purchase, we have no credit card debt. There's a reason for that. With a credit card in my
pocket, the mall is so much more tempting. Like a seasoned drinker or smoker,
you can really lose sight of reality: How much money do I really have available
to spend this month, this week, this year? Yes, if I were absolutely responsible
about it, I could carry the card and only use it for what I need and for what
I can afford. But having been in a situation where I (yep, I admit it) abused
credit, do I really want to open myself up to an old temptation? One where I
am fully aware of my personal weakness? To me, the most responsible thing I
could possibly do was to stop using the cards, pay them off, and switch exclusively
to debit cards. Maybe other people can carry credit cards without spending more
than they have. Maybe I can. But I'm not going to take the risk of finding out. How about your members?
It may be a little extreme
to compare excessive spending with excessive drinking. But if a member got in
trouble with credit cards in the past, should you really be marketing credit
cards to her? Or should your financial literacy efforts include a call to those
at risk for abusing credit to practice complete abstinence? I know not everyone will
agree with me on this. Credit cards are just credit cards, not good or bad.
Used correctly, they can be wonderfully convenient and actually get you the
"inside scoop" on savings opportunities in some instances. But before
embarking on a financial literacy curriculum, ask yourself what comes first:
your members' financial well-being or your credit union's marketing goals? Sure, you'd love to have
more members carrying your credit card in their wallets. And you may even have
specific marketing goals surrounding that wish. But keep in mind that even if
your rate and terms are better than anything else that's out there, your member
may be better off without any credit cards. And if that's the case, let your
members know you appreciate their membership, want all their financial business
and welcome them at the credit union. But be forthright and let them know that
a credit card is not in their best interest. At the very least, don't market
it aggressively to a member who would be better off without it. A box of cigarettes comes
with a warning from the surgeon general. Bottles of wine tell you that drinking
can harm the baby of a pregnant woman. Even some over-the-counter and prescription
medications warn patients not to drive a car or operate heavy machinery while
being treated. There is no such warning on credit cards, but they could truly
be hazardous to the financial well-being of many of your members. I'm not advising anyone
to stop offering credit cards. For many Americans, the best deal on a credit
card is the offer they'll get from their credit union. And most of your members
are probably using credit cards responsibly. However, for those of your members
who don't, won't or can't, your financial literacy program should make it clear
that life without credit cards is still a life. A very good life, actually.
In some cases, life can be even better without them than with them. Laura M. Enock is CEO of CUVA and publisher of www.CUcontent.com, a newsletter and Web site content service for credit unions. She can be reached at laura@CUcontent.com.
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