169 – Let's Call a Spade a Spade: Credit is Debt

Have you ever wondered why a credit card isn't called a debt card like it should be? Think about it. That's what a credit card really does – it gives you debt. Well, I'll tell you why. Because it's not good marketing. And credit card companies know this.

In Myth 4 of my book, Straight Talk on your Money, I point out that financial institutions know we are guided by our emotions. Banks and credit card companies have manipulated you into thinking that credit is good, and they do it constantly.

Credit can also be used to describe a source of pride or honour like, 'you are a credit to your family.'

Here's another example: "I'm a good person because I have a high credit score." How many times has been idea been shared? That maintaining a good credit score means you're responsible with your money and you're not a reckless spender.

I disagree.

Although my focus today isn't on credit scores - I already discussed that on my podcast a couple weeks back, episode 167 - I will say that a credit score, which should (once again) really be called a debt score, is another example of using positive language (aka good marketing) to make us think differently about financial concepts than we're supposed to.

Calling it a credit card does not change the fact that it is really a debt card.

Personally, I'd rather be blunt with these terms. All I'd really like to accomplish is to have you consider being more honest about the terminology too. See how it affects your decision-making.

I share more details on why words matter in this podcast and why financial institutions benefit from their manipulation.