Credit and debit cards at pumps could lead to disaster

How do I pay for gasoline? When I was a child, my father used to go up to a gas pump. A serviceman in a policeman hat would come out and put a pump in the gasoline tank. I would see the digits spin, until the terminate somewhere near $2 or $3. Then my father would pay the serviceman. When I got out of college and owned my first car, I would get gasoline on my own, getting out of my car and putting the pump in and pumping until it said something like $10. Then I would go into the establishment, which was now a small grocery or convenience store instead of a auto service station, and pay the $10. I would get gasoline like this all the way until well into the 21st Century.

Then a change occurred. I started getting out a card and sticking it into the pump. I now follow screen instructions, pumping in the gasoline, and getting a receipt. That is how much my credit or debit card was charged for the gasoline. Then I would drive away without having to go into the store. Usually the amount is now $25, or for my van, $45. How times have changed.

There is a danger here. As long as people went into the store or paid someone cash, higher gasoline prices would crimp people's desire to drive places. This would cause a needed decrease in demand, and a drop in gasoline prices. But if people are going to stick cards in machines and build up charges on a credit card, people are not going to conserve. The direct association between gasoline and money is no longer there. Drivers don't worry about money until their credit card bill comes.

And then people react in the usual way they react to credit card balances. They pay the minimum amount and interest starts accruing. If gasoline prices are going to be charged like this in an era of ever rising gasoline prices, this will cause serious trouble. People will keep charging bigger and bigger amounts as gasoline prices continue to go up. Demand will stay high, furthering bigger raises in gasoline prices. Eventually people will not be able to pay their credit balances, and bankruptcies and defaults will occur all over the place, and this could cause a string of bank failures. This could be exacerbated by inflation, causing the Fed to raise interest rates. In other words, we could have another Great Depression.

People need to start conserving now. Forget the credit card, and pay only with what you got. Else we are heading for a real monster of a financial crash.