Sometimes I wonder just how dumb credit card companies think we are. And then an article comes along that answers my question. Usually it’s “very.”
In this case, though, I’m going to have to add an extra “very” to that because this concept is so weird and unnecessary that it’s extra insulting. According to CNN Money, there’s a new card in town. It’s based on gold — more specifically, your gold.
Your credit limit is secured by deposits of gold bullion, which the company keeps for you. If you don’t have any gold lying around, collecting dust, the company has thoughtfully offered to sell you some.
The company keeps your bullion nice and safe in a big deposit center. Your credit limit is equal to 75 percent of the gold’s value. In other words, as the value of gold fluctuates, your credit limit may, as well. The last year or two, gold has been going up, up, up; so I suppose that means your limit will probably increase.
I’m curious, though, what happens if the value dips. Specifically, I wonder if you’ll be charged over-the-limit fees if market fluctuations make your limit smaller than your balance.
The real question, of course, is who would want this card? There’s an audience for every market, but I’m trying to understand why anyone would choose this route.
The first argument against this scheme is that you can get a normal, secured credit card. In fact, it’s a good way to start rebuilding your credit. You simply deposit a certain amount, and that is your limit. If your account becomes delinquent, the bank then has the money in abeyance. You don’t have to fuss with gold bullion or the associated fees that would certainly end up on your bill.
Beyond that, this quote from Curtis Arnold of Cardratings.com, “”If you don’t have cash but you do have gold bullion lying around and the price of gold remains high, this could make sense.”
Pardon my ignorance but why, exactly, would you have gold bullion lying around but no cash? I understand that you might want to hold onto gold as prices climb, but if you’re so desperately in need of a credit card that you’d put said bullion on the line… Perhaps you need to rethink your priorities?
There have got to be plenty of better ways to make use of your bullion — or, at the very least, to keep it safe from the hands of a credit card company. Your deposit is a security deposit, which means that it can be sold off if you fall behind.
If you get a normal secured card (and how many people with gold bullion actually need a secured card, by the way?) then, if the need arises, you can choose to sell off the bullion. You get to decide when, how and to whom it’s sold. With the gold-backed credit card, the company has all the power.
Finally, isn’t it a bit sad when our dollar is no longer backed by gold but random, scheming credit products are?
Have you ever had a secured credit card? Can you make any kind of argument for this latest product?
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{ 3 comments… read them below or add one }
This is pretty bizarre, but it reminded me for some reason of the members of the nobility in Victorian England who often owed their tailors and the wine merchant (though the butcher seemed to have expected to be paid regularly).
It also reminds me of the kind of people who buy gold from a company and then *let the company store it for them*. How would you ever know if they even *had* your gold or if they'd sold it to someone else?
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ipickuppennies Reply:
March 16th, 2010 at 6:29 am
Yeah I never quite understood the basics behind buying a tangible good and then having it stored where you can't keep an eye on it. Though, I suppose, the same could be said about money. Still, pointing to the banking system as an example is probably not terribly useful, given the last few years…
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Ha! I loved the "if you have gold bullion lying around" line too. I can't think of anyone who would have legitimate use for this type of card. I think gold is the new home equity loan – the speculation is insane. I recently saw the bouncer from the Jerry Springer Show on a commercial hawking some "CASH FOR GOLD" scam. If Jerry Springer's bouncer is doing it it MUST be a good idea:(
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Gold is just the next thing after credit (or now, I guess combined with credit) for people to misunderstand and misuse to lose themselves money.
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