The global economic downturn of recent times resulting from the Covid-19 epidemic has had its impact regionally as well. This has resulted in businesses raising prices to recoup lost revenue.
For those of us trapped in past habits of spending more than we make, we have simply not learnt our lessons well.
I bumped into Haider, a long-time acquaintance at a Saudi supermarket checkout stand recently. He was just ahead of me in the queue, and when his turn came to pay for his purchases, I noticed he had pulled out a credit card to settle the bill.
“Haider, isn’t that a bit dense, paying for your groceries with a credit card? Why don’t you just use a debit card to settle matters?” the writer in me wanted to know. “Why bother yourself with monthly dues and extra bills that you can do without?”
As we walked out of the store, he took me aside and explained. “Tariq, it’s a few days till the end of the month when my salary is due, and frankly I am low on cash. After paying rent, my car instalment, monthly payments on furniture I bought recently and other bills, there is not much left in the kitty. It has been a while since I could stretch my salary all the way through to month’s end. And with today’s rising prices, my wallet has really taken a beating. Credit cards pull me through these times, and I do not have to pay it all back at once; just a nominal minimum amount.”
'You will be paying on this forever'
Now I know Haider and he holds a prominent post at a multinational company. “But surely Haider, your company is not paying you peanuts, and the rollover balance on your credit card will not do you any good. Especially on goods long purchased and consumed. You will be paying on this forever!”
“I know, I know, but I feel so trapped now. Just recently, a bank called me and offered a new set of credit cards if they could transfer the existing balance on several cards I have. I have several credit cards and they are close to being all maxed out. This bank claims that this move would help manage my various monthly payments into one small sum due to them. I think that would relieve some of the financial pressure.”
“Haider, you know you are jumping from the proverbial frying pan into the fire if you do decide to go ahead with such a move. If you have not managed with your existing credit providers, what makes you think that such a move would help you anymore?” Advising him to get some credit management counselling was on the tip of my tongue before I realised that we do not have such a facility in Saudi Arabia that I know of, and I just wished him success before parting.
Credit marketing has been growing significantly in the past decade in the region awash with petrodollars. Unfortunately, it has turned more into exploitation of most salaried individuals who are lured by the quick and easy ways to acquire just about everything, and more often on items they can do without.
‘Pay as you play’
Just a couple of decades or so ago, our society had operated under the ‘pay as you play’ concept. If you did not have the money then, you either had to forget about it or else set aside something monthly until you collected the full balance. Or gather up enough courage to go borrow from a family member. And you had better prepare a good reason for your need. There was no easy money for quick access to material things that in some cases were not a necessity.
But in competing with the rest of the world, our lenders have in recent years made it possible for one to practically hock away his future for all things desirable. Credit is well and good used wisely. But the growing number of those complaining of the monthly credit squeeze indicates that ‘easy money’ is taking its toll.
And it is not just banks. Almost any major retail establishment you visit has set up or contracted credit facilitating agencies to ensure that you do not leave their store without purchasing the newer and bigger and better whatever. In that the product will make you bigger or better is highly unlikely.
What makes it more alarming is that our educational institutions do not prepare the fast-growing youth population of this country to be credit savvy.
In our quest to play today, how many of us are being set up for a lot of grief tomorrow?
Tariq A. Al Maeena is a Saudi sociopolitical commentator.