I deserve some credit for learning lesson about store cards
I keep hearing that the recession is receding and that the economy shows signs of improving. Maybe it will grow to be true, little by little, and jobs and prosperity will return. 'Austerity'. It's strange how familiar we have become with this hair-shirt word. There is something monastic about it. It calls to mind the clean lines of Shaker furniture, minimalist decor or Victoria Beckham's disciplined, even severe, dress designs (though there's nothing austere about the price-tag of frocks at $2,000).
It also calls to mind some of the aphorisms that used to hold sway in a true age of austerity. 'Waste not, want not'. 'Wanton waste makes woeful want'. And, as my Auntie Dorothy used to say: "If you can't afford it – go without."
But all those attitudes belonged to the era before the credit card. It wasn't the Celtic Tiger boomtime that ditched old-style austerity: it was the credit card.
More specifically, I'd say it was the marketing of the Access Card in the 1970s, with its magical promise: "Taking the waiting out of wanting."
Just as the Clairol advert – 'Is it true blondes have more fun?' – created a generation of fake flaxenheads, so the credit card promise of instant gratification eroded all those prudent mottos about waiting until something could be afforded.
I suppose we should have been better prepared for the credit card revolution, but we're never well prepared for change, which often happens unexpectedly. For years, maybe for decades, I harboured a childish attitude to credit cards of various types, including store cards. At one point, I had 12 altogether, and at several points I maxed out on all of them.
Auntie Dorothy's words were of no avail as the credit card revolution transmitted the contrary message: 'If you can't afford it, charge it.' I hadn't the slightest understanding – nor did I wish to acquire any – of the principles of accumulated interest. Oh, some extra costs appeared at the end of each statement, but heck, that was just detail.
What kind of nit-picking tightwad cares about interest rates?
As for 'compound interest' – I hadn't considered the idea since I was at the back of the arithmetic class at school, secretly reading a fantasy magazine. It wasn't until my Hungarian brother-in-law emigrated to the United States, when Hungary was still under Communist rule, that I heard the word, or even thought about the concept.
What was it that most astonished Stefan about living in New York, I asked? Seeing movie stars in the streets of Manhattan? Stretch limos? Twenty-nine varieties of toothpaste? No. 'Compound interest'. Money could grow money. Debts could accumulate and multiply. An amazing idea, 'compound interest'.
I had such infantile attitudes that I thought the people who had pressed credit cards on me were being benevolently generous and displaying even more largesse when they'd send a message saying: 'We have extended your credit limit.' How wonderful. I could spend more.
And then, one day, I was turned down for a store card – by Brown Thomas, as it happens. I was outraged. Why couldn't I have another store card to add to my collection? Yet, what a favour they did me in refusing my application. It was the slow beginning of a maturing realism about credit and debt. This was further assisted by a wise and helpful bank manager called Colette O'Neill, at Allied Irish Banks. Colette sat me down one day in her office and asked me to bring along my credit card statements. She then went through them, adding up the alarming amount of interest I was paying out over the course of a year, just servicing the debt.
One by one, she weaned me off the habit, though it took some years.
Gradually, too, I came to understand another of Auntie Dorothy's sayings: "A fool and his money are easily parted." Other credit card addicts have gone through similar, and worse, experiences – being hounded by debt collectors when they can't pay back the amount due.
At a macro level, the credit card habit was doing the economy a favour, and the introduction of minimum payments opened up a whole new world of possibilities to consumers.
Borrowing and interest make the world go round. This is what launched capitalism. The Christian churches were originally against usury – money-lending – as is, in theory, Islam today.
But the merchants of Venice, and Lombardy, and Genoa, could only deliver the gorgeous spoils from the East, and the Spanish Main, with the help of bankers who lent money and extended credit. Unless someone borrows and someone spends, there is no trade.
The world of 'if you can't afford it, go without' was often one of punitive austerity. Those who craved a washing-machine or a car bought it on hire purchase, nicknamed 'the Kathleen Mavourneen', in Ireland, because, "it may be for years and it may be forever".
When fax machines first made their appearance in the 1980s, I acquired one on a hire purchase system. I once calculated that, in the end, it cost me something in the region of £20,000 sterling, over a number of years. Is it possible? Yes, it is.
I got sense about credit cards in the end, and am now down to two, since modern life is almost impossible without a credit card. Here's another old motto from Auntie Dorothy's era: 'Money is a good servant, but a bad master.'
I welcome the end of economic austerity, if that's where we're heading. But easy does it. Sometimes 'taking the waiting out of wanting' is a chimera; sometimes deferring the wanting serves us best.