Maybe you have one, maybe you know somebody that has one or maybe you’ve never heard of them before; whatever your situation, there is a new type of credit card technology amongst us and it’s something I think we should all be aware of.  It’s called the Emue card and, although a card that disappears when you spend too much money might seem like a good idea, Emue cards are not designed to bury their heads in the sand when you go overdrawn or any such cleverness.  In fact, despite the financial crushing many of us are receiving, the Emue card has little or nothing to do with helping people rebuild poor credit ratings or consolidate debt – as most “new” cards claim to do.

Instead, Emue cards are aimed at reducing credit card fraud – something that is rising during the depression.  Although the introduction of Chip and PIN technology helped reduce credit card crime in shops, the amount of card-not-present fraud (phone, internet and mail order fraud) has actually risen since the introduction of Chip and PIN; now making up over 50% of all credit card fraud, or over £324,000,000 in 2008 alone!  This is not surprising, given how easy it is to commit this kind of fraud; online and phone transactions simply required the buyer to enter the card number, expiry date, start date or issue number and the security code printed on the back of a card.  Obviously anybody in possession of any card can find this information within seconds and the card it to buy anything - irrelevant of whether they are the legal card owner or not.

The idea behind Emu cards is quite simple; they work in general just like normal credit or debit card except that they also require the user to enter a PIN code into the card - like a credit card terminal.  The Emu card, which is a battery-powered microcomputer, then creates and displays a different unique four-digit code every time it is used.  This code is then used during the transaction process, meaning that fraudsters cannot use the Emue card without knowing PIN code required to generate the code!  Trully a new age of credit card technology may have arrived!

In prehistoric times, man built tools from stone in a time we cunningly refer to as the Stone Age.  As time progressed, man started using bronze and eventually iron to shape the world around in, bringing about the Bronze and Iron Ages respectively.  Nowadays, many consider that we are living in the Plastic Age due to the abundance of uses for the oil-based material that we see all around us; on this desk alone the telephone, stapler, calculator, laptop and power-pack are all made, in part, from plastic!  However, as accurate a term as Plastic Age may be, I do wonder if we have misjudged just which kind of plastic is responsible for the world in which we currently find ourselves…  I wonder if the Plastic Age wouldn’t be more aptly named the Credit Age…

For it is true that we have built our new world on plastic; the plastic in our wallets that has allowed us to live outside of our means for so long that we have come to take our country’s incredible economic growth for granted.  It is this credit that has allowed us to build our lives; by all buying things that we can’t afford, we have created a land in which everybody has a lot of things, but still has no money.  Of course the economy is going to boom for a bit in such a situation; when everybody goes around buying things all the time, the economy grows – simply put.  Normally this is a sign of a prosperous nation and is something to be pleased by, but in the case of our latest boom, it is essentially down to the fact that we have been pretending that we are all very wealthy for so long that we have forgotten that, in actual fact, we are not.

But maybe the Plastic Age is a more suitable name after all; maybe it actually embraces the way in which we put things “on plastic” as a way of forgetting that we actually cannot afford them.  By calling this age Plastic, perhaps we are paying homage to the deceptive credit-based plastic that we have used to build the oil-based plastic word that we live in…

Last time we discovered that banks are cutting back on the amount of credit cards they issue and who they issue them to.  We also found out that consumers, especially in the USA, are using their credit cards more for small transactions, but less overall.  This seemed like a good move; small purchases are easier to repay on time and help cut down on the amount of interest and debt that consumers accumulate, allowing them to rebuild shattered credit ratings and continue to use their cards within their means.  However, is this enough to save the credit card industry?

With banks holding back credit and consumers starting to live more within their means, I wonder whether we could already have lived through the Credit Age?  Certainly the economic recession is terrifying to many of us, but I wonder whether this fear won’t just fade away when the dawning light of financial stability reappears – however many years in the future that may be.  For we should not underestimate just how great a change it would be for us to move away from living outside of our means.  The commonplace use of credit cards is not simply something that could disappear overnight; it is a lifestyle for so many that credit card spending is practically part of our cultural identity!  Should we expect this depression to teach us a hard lesson from which we will learn and grow, or should we be realistic and assume that the financial crisis will simply lead to a new system of credit into which we will all gratefully plunge ourselves?

We cannot deny the fact that most of us would rather live outside of our means and pretend that everything is fine when it really isn’t.  Our history of irresponsible borrowing and masses of ever-growing debts are tribute to these facts.  Perhaps the credit crunch will teach us a valuable lesson; maybe it is time for us to put our credit cards down after all…

As this blog has mentioned, credit cards have been around since . and have become a very large part of our lives.  However, the next two posts question whether we may have been witness to the peak of the credit card industry…

As the financial crisis worsens, anybody within the credit industry could be forgiven for pondering the future of credit cards.  Although we have come to take credit for granted, could the increased paranoia about lending and spending mean that banks have to reconsider just how many credit cards they are willing to provide to money-strapped public?  They are already raising interest rates and imposing strict rules on just who can and cannot get which kinds of credit cards, yet many think this is just the very start of the financial crisis!  Who knows what the overall impact on credit cards will be by the time things start to brighten up.

It’s not just the banks that may cut back on credit cards either; we, the people, may very well start leaving our credit cards at home as the financial situation worsens.  After all, the economic depression was caused by our reckless spending and has already consumed many a job, retirement plan and house; it should be obvious why even the most addicted credit consumer might start thinking twice about reaching for their plastic in times of need.  In fact, bank executives in America have confirmed a change in spending behaviour, claiming that more customers have started using their credit cards for small purchases like food and fuel, whilst holding back from purchasing expensive items altogether – this seems like a step in the “right” direction, doesn’t it?