Christmas is coming. Some people have beliefs that they must buy their kids, relations, and friends presents of a certain value. This is what sometimes can be the cause of people spending more than they have buy putting items on to their credit card knowing full well that they will not have the funds to pay it off when the bill arrives.
The credit industry and in particular the credit card industry has confused our thinking about credit. When you think of the word “credit” what do you think it means.
At a workshop I ran recently I asked the following questions which I took from a credit card statement and the response was interesting.
I showed the participants a credit card statement and asked them what they thought the following meant.
1) Credit card Limit $10,000.00
2) Available credit $9,283.00
3) Interest rate 16% per annum
Question 1 - was answered with comments such as –“ Credit Cards – I stay away from them because of the trouble I have got in with them.” “That is how much you have to spend on your card.” 
Question 2 This is how much I can spend. This is how much money I have left to spend.
Question 3 they all answered with 16% per annum interest payable
I kept probing because I wanted to see if anyone would come up with the following statement which is what I was hoping for.
I was wanting them to say that it wasn’t a credit card, that in fact it was a “debt card”. The credit card limit of $10,000 was how much debt they could get into.
The same with the available credit. I wanted them to see that this is how much more debt they could get in to.
When you look at your credit card statement next time – read it with different eyes. Read the headings as
Debt Card Statement
How much debt I can get into
How much more debt I can get into
How much extra I am being charged per year by using the banks money
So this Christmas, only purchase presents you can afford and avoid using your “get into debt card” if you don’t have the funds to pay it fully on the due date.
Sylvia’s book, Parents: How to stop your kids from going broke is available from www.silbo.co.nz, Paper Plus Stores, and Christian Bookshops. She is also available to speak with community groups and give tips on how to raise financially savvy kids.
