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Credit Addictions

BY Connie Gentry

Spending money we don’t have. It’s a national habit.

In fact, I’m willing to bet all the money I don’t have that just about everyone reading this column is guilty to some degree. I’ll even go deeper in the hole and suggest that credit addictions are more pervasive and more problematic than substance abuse.

Not to belittle the perils of substance addictions or oversimplify the impacts of geopolitical events, but I’m convinced that excessive indebtedness is the root of our current economic evils.

Who should take ownership of this problem? Obviously the buck stops with each individual consumer; but as an industry, retailers also have to acknowledge their roles in enabling the crippling credit habit.

That’s why I tremble in trepidation when I hear executives like Anabel Perez, president and CEO of Miami-based NovoPayment, talk about the ways that using prepaid, reloadable cards will enable unbanked consumers in Latin America to establish financial histories and ultimately qualify for credit. (See story on page 127.)

The fundamental problem with credit accounts is that they empower people to live far beyond their means. The U.S. economy is painfully aware of the consequences of that philosophy—so now we’re going to encourage similarly ill-gotten lifestyles in emerging markets?

However, credit in and of itself is not the problem—the problem is the “addiction,” or extended use of credit to a degree that debt far outweighs earnings. It is incumbent on any business extending credit, whether it is a bank or a retailer, to become more selective in its lending practices.

Actually, I would agree that the benefits of prepaid, reloadable cards far outweigh any chance that they might lead to credit abuse and I applaud Perez for her role in promoting the adoption of electronic payments throughout Latin America.

On the home front, both domestically speaking and literally in my own personal home, prepaid, reloadable cards present an exceptional opportunity for conditioning all of us, especially “emerging” consumers like teens and young adults, to spend wisely in an increasingly cash-less society. (See the Facecard story on page 130 for an example of this growing trend.)

The beauty of prepaid, reloadable cards is that they empower consumers to enjoy all the conveniences of electronic transactions while preventing them from spending more than has been deposited to the debit account. The costs of purchasing and reloading cards are also reasonable.

Although service fees are associated with prepaid, reloadable cards, these costs pale beside the interchange rates charged by the major credit-card companies. Additionally, these service costs are blatantly obvious to the consumers who are paying them vs. the hidden interchange fees that consumers are oblivious to.

Encouraging consumers to spend what they don’t have is just one problematic characteristic of credit cards—and admittedly, it’s a rather esoteric, philosophical debate.

The bigger problem that merits immediate decisions are those interchange fees being imposed on every credit-card company transaction, including signature-debit transactions.

Last month, the Food Marketing Institute and the National Retail Federation endorsed the Credit Card Fair Fee Act, legislation that would allow retailers to negotiate with credit-card companies to reduce interchange fees.

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Survey: Businesses want to go green, but afraid of costs

BY CSA STAFF

DELRAY BEACH, Fla. According to a survey of 2,500 business professionals by Office Depot, half of all respondents are interested in making their offices “greener.”

While 50% of those surveyed said they’d like to have a greener office, more than half (55%) said they did not associate going green with saving money.

According to Yalmaz Siddiqui, director of environmental strategy for Office Depot, There is actually a range of cost scenarios that a business could face when deciding to go green, he explained. Some choices, like remanufactured cartridges, cost less; some require an upfront investment but come with long term cost savings, like compact fluorescent lights; some products entail no price difference; and some green ideas do cost more. The trick is to understand the different options and not assume that going green will always result in higher costs.

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Toys ‘R’ Us to be exclusive retailer of ‘Soul Bubbles’ Nintendo DS game

BY CSA STAFF

REDWOOD CITY, Calif. Toys “R” Us will be the exclusive retailer of Soul Bubbles, a new game for Nintendo DS created by Eidos Interactive.

“Creative and refreshing, Soul Bubbles is a unique game that DS owners won’t want to miss,” said Robert Lindsey, evp of sales and marketing for Eidos Inc. “This is a charming story combined with gameplay that pushes the capabilities of the Nintendo DS is sure to engage all puzzle gaming fans.”

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