View Full Version : Consumer Credit meltdown

Tim Horton
04-06-2011, 01:47 PM
Hope this doesn't get lost here.........
But with several things on the news, and the most recent post about Krogers Grocery losing consumer data, it makes me think.

There have been many "breaches" of consumer info over several years now. Breaches by employees loosing laptops, computer glitches of many kinds, theft crimes of opportunity, and general stupidity on the part of the holders of this info.

It is entirely possible someone, or group could assemble this info in a way to cause a MAJOR financial incident that could essentially shut down the consumer credit system. That being, no automatic payments, no credit card over the phone or net, no card swipe at the store. You get the idea.

About the only thing that will work will be cash, money orders, and back to the old system of checks through the mail and how checks cleared. And all the fraud that came along with checks.

This could be more crippling to the US than an armed attack of any kind.
Any thoughts, facts, new info, ideas ?

Or do I need more to do ??????????????

04-06-2011, 05:46 PM
Don't know about anything "new".

Suggestion as to what to do.

Go back to the "old", now, to the extent you can.

(1) Keep some paper money and coins in a secure, but accessible location. That does not mean a safety deposit box at the bank. Figure out the most secure place within your surroundings. Even if it's a GLASS peanut butter jar in the hollow of a tree. Often a $10 bill or a roll of dimes will work when nothing "modern" will.

(2) We still pay bills by check. Even though it's tempting from a convenience standpoint, we don't use on-line bill payment nor auto draft of our account. So, it won't be a problem for us to continue to do that, if on-line/auto fails for some reason. Same thing with on-line ordering. Decided a long time ago not to do it. If I can't pick up the phone and place a voice order with company A, I'll call company B or do without. (Or send in a written order form & be patient, till it (whatever it may be) comes to my house.)

(3) One concession to convenience is that we put most of our routine shopping trips on a single credit card. That cuts down on writing checks, as 1 check per month keeps that bill paid. We don't carry a balance on it.

Additionally, we have a second credit card, that's only used once in a while for a small purchase to keep it active. If our primary card gets hacked, the backup card can be used while getting the problem resolved with the primary card.

In summary, to the extent you can, go back to handling your own money much the way it was done back in the 50's before plastic/electronics became the lure & convenient "standard". If you're already in the 50's, it won't hurt as much, IMHO, that it will, to go back in time, in one billing cycle.

Call me "old fashioned", if you must. That's OK, cause that's what I am. :) Hoping that'll make whatever the future has in store a little easier just because I am just that.


04-06-2011, 06:22 PM
Interesting perspective, Lee.

For the sake of discussion, here's another way to look at things.

Checks go through many hands, especially when mailed. The post office loses things, and their sorting machines have been known to "eat" stuff. Not to mention an occasional lazy or dishonest postal employee. If your check gets lost, they first you'll know of it will be the "overdue" notice from the payee. If it does get to its destination, it has to be manually processed by some minimum wage letter opener, who may never have learned to read, but who will have access to your account number, which will be processed according to the level of sophistication of the company he/she works for, possibly keyboarded (with the attendant typo errors possible).

Compare that to an online order. Only you and the computer you're talking to get the payment information, unless you've been seriously hacked, in which case you should have many warning signs. You get a confirmation number to prove you made payment. You should check your credit card information online frequently, and the debit should show up on the online statement within 48 hours, and you can confirm the accuracy of the transaction and correct it immediately if need be. If the merchant misbehaves, you can appeal through the credit card company, another path to keep you secure. Most credit cards have several layers of security and guarantees for suitable merchandise. With a check in the mail, you're totally on your own.

If you have your credit card with the same bank as your checking account, you can pay the bill online, and get a confirmation number that will prove you actually did pay, even if the card or bank make some sort of machine error. These things usually are never even seen by human-type people, and if they are, it is by certified employees of the bank who have background checks and who are closely monitored by their employers, who are ever-suspicious of fraud.

Just a different way of looking at things...

04-06-2011, 07:00 PM
Intersting subject -
I was the first person everybody knew that went on the internet, I was also one of the first to use a bank debit card, and online bill paying. I have trusted the electronic money system from day #1 because if the big banks and the US Treasury use electronic fund transfers, then so will I. They are the biggest guns out there and if they want to play the electric money game, then count me in...

The one thing that has been really interesting is the electronic signatures that can be used for legal reasons, like filing applications and tax returns - my 4-digit PIN is now who I am, I have no name anymore! That's okay too because I like being lost in the shuffle of the big crowd.

My ultimate hope is that the grid collapses someday and all that data and money will be lost forever :p

04-07-2011, 09:59 AM
Grumble and Bonny, one thing you left out of your replies is cash. Cash on hand in physical form (leaving the dollar devaluation out for now as that applies regardless of the payment method) could be the only method of trade in a worst case situation. I've seen that in short duration situations where storms took out the power.

Checks - over the years, we've only had a couple of situations where the check got lost in the mail. Couple of years ago, an insurance payment didn't arrive on time. Insurance co called us. Put payment on our credit card and stopped payment on the check. Couple of weeks later, we received an envelope with the original battered envelope and check enclosed.

Further, there's been a couple of times when producing the canceled check has resolved problems. We paid, money received but not credited to us.

Maybe we've been fortunate in that regard. Another aspect of my "old fashioned" thinking is - if it ain't broke, don't fix it. :)

My viewpoint, in part, is due to being directly involved with the movement to a paperless society. Everything from how to get a 5k Vic20 up to 8k, replacing flopply disk drives in the original IBM PC to implementing intergrated communications servers and to software systems analysis & design.

While I've been away from it for a few years, I have a pretty good idea of what's under the hood. Just as one loose wire can prevent a car from starting, doesn't take much (one kid in a basement with a computer) to wreck havoc. We see indications of it almost every day. Kroger, mentioned in another thread is an example. News reports of security breaches from foreign sources. And, etc.

My viewpoint, in part, is also due to an old fashioned stubborn streak of trying to be self-reliant and independent. Sure, I lose in terms of "convenience". Just as I'd lose convenience if, for some reason, I can't use the microwave tomorrow. But, I'm not dependent on that little box. There are probably a dozen ways I can still make coffee in the morning, already in place, here. The equivalents of having a cash on hand reserve, using paper checks, placing phone orders, etc. as mentioned earlier.

Just 2 more cents. Time for another cup of coffee. :)


04-07-2011, 02:13 PM
Good post, Lee. And philosophically, I agree with you. Especially the part about trying to make as many transactions as possible "off the record" by using cash.

As a practical matter though, for me it just isn't possible. If I want or need an item, chances are the price locally will be much higher than it would be in some far off corner of the country, even if the item can be found locally (which isn't often). If I really need the item, buying the item with a check in the mail is a lengthy process (3-7 days for the check to get there, another week for it to clear, and at least another week for the item to get shipped to me, possibly as long as three weeks total). Using a credit card, and if I'm willing to pay the extra shipping charge, I can have the item in three days, not three weeks.

Cash. Yep, it seems silly to me to not have enough cash on hand to be able to get by for at least a month. But folks should build that on-hand stockpile of cash slowly, least Homeland Security decides to find out why a person suddenly withdrew a reportable amount of cash. When I built my house, had some healthy amounts of money going through my bank, and I know I attracted their attention. The normally friendly people at the bank suddenly began asking me unusual questions and were decidedly UNfriendly and suspicious of a sudden. And they are required by law to NOT tell me that my account was flagged and being watched. After a year, it got so bad that I had to change banks, even though the house was built and the cash flow was back to normal. If you really-really want to attract the attention of gov't snoopers, try using a lot of cash.

For those of you who live in a populated area, and who can make most of your transactions face-to-face, cash and checks are fine, within reason. For me, the internet is a godsend.

EDIT: More hazards of cash:
-you know those metal strips in paper bills? Well, those set off metal detectors if you carry "too much" money.
-if you get stopped for a broken taillight, and have a "suspicious amount" of money in your car, that money gets confiscated, and usually is divided among the LE agencies who can make a claim on it. It is next to impossible to get it back, and even if you do, chances are the legal fees will exceed the amount of money stolen from you.
-I've read that just about every used bill in circulation has trace amounts of cocaine on it, and that sniffer dogs will alert. That means that your car can also be confiscated as "evidence" of drug transport. Moral: carry only new, uncirculated cash.
-Catch 22 -- carrying too much cash in new, uncirculated bills is suspicious, and can be evidence of money laundering or possibly counterfeiting.

04-08-2011, 04:20 AM
Back in the day and even in this day such quaint payment methods as money orders, bank drafts and Western Union, certified cheques, escrow manage to keep the actual cash requirements really low.

The only people I have found who are unwilling to accept cash or some version of paper are car rentals, and newspapers (duh).

04-08-2011, 08:22 AM
Grumble, I may have left a false impression or two in my posts.

I'm not advocating going to all cash, at this point. Advocating to have a stash of cash available if the need arises. If the grid goes down for whatever reason, short term or long term, often cash will work when other payment methods don't.

For example, if the scanners/computers go down at the grocery store, they can still accept cash. (Providing they have someone who knows how to manually total a bill -- topic for another thread.) Plus, cash fits into the "barter" system. Neighbor has apples, I have dollars. We barter for the exchange of them. Unless the rules change, county tax office has to accept cash in payment of our property taxes. One of my biggest worries in a long term SHTF. If economic forces wipe out our little retirement investment, the county can seize our home for non payment of taxes. A well secured and accessible cash box set aside for this purpose (among others) brings a bit more security with regards to our home.

Pardon me for being blunt here. Only a fool carries a big wad of bills around with them as a matter of routine. Why wave a red flag at a bull needlessly? Thus, we DO use checks and credit cards and will do so as long as they're the practical method of payment to avoid carrying a paper sack full of dollars. Especially for some of the reasons that you mentioned. If I need $50 in cash at the hardware store, I won't put $500 in my pocket.

Agree about quietly building a cash reserve. There's no point in raising those red flags when there are simple and legal ways to avoid them. For example, if you have enough money in the bank to cover expenses, simply cashing a payroll check at the grocery store rather than depositing it in the bank first. If on direct deposit, writing a check for $50 more than the purchase at your local mom & pop gas station shouldn't "alert" anyone to what you're doing.

On another note, if I need something that's cross country, I pick up the phone and call to order. Payment is made via credit card. Even pay for express shipping, if the need justifies the extra expense. I drew the line at punching in my cc numbers into an on-line order system. But that's just me. :) Too many snoops are tracking my on-line activities. While security may keep my cc number secret, is the fact that I did a transaction with xyz company a secret, as well? If I don't order on-line, it's a little harder to find out that I'm doing business with Acme Whatever. Not that I care who knows I ordered a gardening book. It's just nobody's business. It's just the principle involved.

FWIW, my primary concern, is that people are becoming so accustomed to paperless transactions that they won't be able to quickly transition back to the good old days, if/when the need arises. Are some people to the point they don't even have a few paper checks in the back of their dresser drawer? Along with a few stamps & envelopes? What will they do if a national crisis closes the banks even for only a few days? Are we getting to the point that people don't even know how to write a check? We are getting to the point that some people, working retail, don't know how to give change back in a cash sale, if the amount isn't calculated for them at the bottom of the tape. (sigh)

Dame, I can't think of anyone around here who doesn't accept cash payment. Unless maybe the motel, down the road a piece, when making a reservation. Never stayed there, so don't know for sure about them.

In closing, paperless money transactions, are much like electricity. While we have it, use it. Use it with reasonable restraint for all the reasons we should do just that. Just be prepared to do without when the lights don't come on at the flip of a switch. Cash and paper checks = candles and oil lamps. It's good to eat supper once in a while with an oil lamp in the center of the table.

Thanks for letting me ramble this morning, while the coffee kicks in. :)


04-08-2011, 02:52 PM
Lee: "In closing, paperless money transactions, are much like electricity. While we have it, use it. Use it with reasonable restraint for all the reasons we should do just that. Just be prepared to do without when the lights don't come on at the flip of a switch. Cash and paper checks = candles and oil lamps. It's good to eat supper once in a while with an oil lamp in the center of the table. "

Amigo, that was about the best synopsis and conclusion of a discussion that could be written. Excellent.