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The National Credit Card

Posted on March 3, 2009 by Martin A. Sullivan
Document originally published in Tax Notes
on March 2, 2009.

Dear Valued Customer:

Congratulations! You qualify for our exciting new line of credit known as Pay-Go. You'll be glad to know that under this plan, there are none of those arbitrary dollar limits on how much you can borrow. Your credit is tailored to meet your individual needs.

Here's how it works: A few months before the beginning of each year, you tell us two key facts about your financial life. First, give us your good-faith estimate of how much you'll be spending under normal circumstances. Second, tell us how much you expect to be earning. The difference between the two is what is known as your baseline deficit. You can borrow this entire amount with no restrictions.

Now, nothing this good comes without rules to balance things out. You are a borrower who has acquired the status of "fiscally responsible." To keep good standing, you will be subject to tougher borrowing standards than any that have been available during the "loose money" standards of the last decade. That means any spending you do deliberately in excess of what you earn must be paid for with increased earnings. In other words, you may not borrow more than your baseline deficit simply because you cannot control your urge to spend.

We realize, however, that modern life is full of surprises that are beyond your control. And the Pay-Go plan reflects this reality with two nice features that provide the flexibility today's world requires:

    • Automatic adjustment for changing circumstances. Let's say that through no fault of your own, your budgeted estimates turn out to be less than accurate. For example, let's say that because of the economy, your employer freezes your salary at last year's level. Under our plan, you can simply borrow that additional shortfall.
    • Automatic adjustment for emergencies. Stuff happens. Suppose a hurricane destroys your uninsured vacation home on the Florida coast. Well, who could have known? You can borrow the entire amount you need to make things right. And here's the best part: There are no forms to fill out for each emergency. You simply call our 800 number and say, "Emergency," and our credit specialist will raise your credit limit for the extra money you need.

We know what you're thinking: This is too good to be true. Here are some frequently asked questions we often hear from newcomers to our plan.

"I computed my baseline deficit, and it seems really large. I appreciate your generosity, but shouldn't I be trying to cut back on this borrowing?" Your baseline spending and earning are normal and natural given your circumstances. Based on our extensive studies of borrowing behavior, we know that this is the best we can realistically expect of you. As long as you don't generally borrow more than you think you need to maintain your current standard of living, you meet the test of fiscal responsibility. This is the gold standard of modern finance.

"Over the years, I've really racked up some huge credit card bills. Should I really be adding more to my debt load?" Let bygones be gone. Under the Pay-Go plan, every year is a new beginning. As long as you follow the Pay-Go guidelines, we are ready to lend, even if your credit history is less than perfect. All that matters is that this year you stick to what you told us you need at the beginning of the year (barring emergencies, of course).

"I guess I am what they call a baby boomer. Instead of borrowing more, shouldn't I be saving for retirement and future healthcare expenses?" We often hear this from our clientele who are nearing retirement. Your financial conservatism is based on bedrock American values. But you shouldn't worry. We have faith that as the unsinkable American economy prospers, so will your income and your ability to repay future debts. This future prosperity is something number crunchers often miss in their economic models. But we all know it is there, just as sure as we all know America will always be the world's engine of innovation and economic growth.

Now is an especially good time to sign up for Pay-Go. This credit line is variable rate — which means credit rates are determined in financial markets. Currently, because most investors are scared of investing in real businesses, money from around the world is pouring into the United States and is available to you at extremely low rates. Your initial APR should be close to 1 percent.

So what are you waiting for? Experience the thrill and power of easy money while at the same time meeting all standards of fiscal responsibility. Apply online now for an instant online decision, or call our 800 number. Operators are standing by.

                              Sincerely,

                              Gilbert Moore II
                              Credit Specialist
                              American Credit Unlimited