Home > Credit Cards > Why the Greek Debt Crisis Might Make You Want a Credit Card

Comments 0 Comments

You walk into your bank, ask for your money and you can only get a limited amount. What do you do to pay your bills, buy your groceries and put gas in your car? It’s a problem that’s plaguing Greeks recently, as the country’s debt crisis placed a 60-Euro cap on daily cash withdrawals to keep the banks supplied with enough cash.

Many consumers in this situation turn to debit or credit cards. In Greece right now, these transactions have not been capped, as cash withdrawals have, since transactions using plastic simply travel from Greek bank to Greek bank, and do not leave the economy entirely.

Of course, if you are Greek and don’t have a debit or credit card, and therefore rely on cash to make everyday purchases, you’re stuck with the 60-Euro per day cap on ATM transactions. That is, you can only get that much out of the bank after you’ve waited your turn in a long line with everyone else doing the same thing. For many Greeks, cash is king, so the withdrawal limits are severely impacting their ability to make everyday purchases.

Even with the deal announced Monday between the European Union and Greece, the bank closures and capital limits affecting Greek consumers remain unresolved. It helps to have a credit or debit card, but even places that normally accept such payments are reportedly demanding cash, out of concern that banks won’t be able to reconcile the transactions.

The burning question now in many Americans’ minds: Could ATM limits like this happen in the U.S.?

“It’s a legitimate question because everybody is talking about it, but this is not something that could happen here in the U.S.,” said Rob Strand, a senior economist at the American Bankers Association. He pointed to the financial crisis of 2008 and 2009, in which U.S. banks faced liquidity issues, and it still wasn’t like what’s happening in Greece. “Not since the FDIC was instituted in 1933 has it happened, not once.” The Federal Deposit Insurance Corp. insures each depositor for at least $250,000 per FDIC-insured institution.

The Greece Takeaway

Despite the fact that Americans likely don’t need to worry about facing the low-cash nightmare many Greeks are living through, there is a valuable takeaway here for consumers — the more tools in your wallet, the more prepared you are in case of a disaster.

You might sometime find yourself in a situation where your main form of payment is suddenly unavailable or somehow limited — a credit card machine is down, a merchant won’t accept your $100 bill, etc. That’s an argument for having financial flexibility. With access to a backup payment method, you can make necessary purchases, even if Plan A fails. That’s the idea behind the emergency credit card or keeping a little bit of cash in your wallet, just in case.

Having multiple payment methods can provide a measure of financial freedom. Just make sure you can keep it all organized, so you don’t spend beyond your means or miss any bill payments.

If you don’t already have a credit card and want to get one, you should know where your credit stands before you start shopping around. (You can get a free credit report snapshot from Credit.com.) There are credit cards with simple fee structures which can be a good fit if you’re just looking for a backup payment method. And if you check your credit only to find you don’t have a credit score at all (this is called a “thin file”), you can still get a credit card if you have no credit history.

More on Credit Cards:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team