Away from the Referendum debate life goes on all around us and it’s interesting to note that this week credit cards celebrate their 50th Birthday. The way we use them has changed dramatically since the first Barclaycard was introduced in 1966. In the early days your likely credit limit was £100 and you had to pay your bill in full at the end of every month. Nowadays you might have a credit limit of £5000 or so and you can maintain that debt for as long as you like, as long as you continue to make regular monthly payments. Given that the average interest rate charged today is around 20% APR, although many cards still charge significantly more than this, it’s rarely a good thing to keep a balance for any longer than you absolutely need to.
The introduction of the credit card revolutionised the way we spend money, and they continue to be a really convenient way to shop. They also give great consumer protection since, under Section 75 of the Consumer Credit Act, the credit card company is equally responsible for problems with goods and services that you buy and you can take complaints to them rather than the retailer or manufacturer.
The problem today is, of course, that while millions of people use credit cards for convenience and regularly pay off the balance in its entirety at the end of the month, millions of others build up high levels of debt that they can’t then afford to repay. They then end up making minimum payments every month meaning that even the smallest debts can take years to clear.
It is interesting to guess where the development of credit cards will take us but already it is suggested that they will overtake cash as the most popular form of payment method in the next five years or so. Modern technology might mean that they are eventually replaced by our phones as the most popular payment method, or it might be that rather than using a card we will have a credit card app on our phone or tablet. Or maybe even in our thumbs!
