Sleep On It

Everywhere that credit cards are accepted, their are signs showing very large discounts for using them. The movies offer two for one tickets if you have a certain bank's visa, restaurants offer 30% discounts, clothing stores offer discounts, even grocery stores give you 20%. the card varies from place to place- but i thought it was a bit unusual. Surely in the US you are not given discounts for pulling out the plastic. So I started to try to figure out why.....

So picture this. You have your money in the bank- maybe a significant amount that you have saved up for decades. The national debt is out of control (which of course would never happen in the US) and the government decides to take over all of the banks, take the money-your money- and use it to pay off the national debt. You are given a piece of paper- an IOU essentially- that says the money might one day be paid back- without interest- hopefully within the next ten years. Then ten years go by- and you are told that you will never get all of your money back.... but you can have maybe 60% of it back at some point.

Unfortunately, this is the reality for Argentines who trusted their money to the banks. The government defaulted on 100 billion of the people's money. As a result, no one trusts the banks or wants to put money in them. So the banks- to encourage you to use them- offer large incentives. While some people will use the banks, people with money use it to invest in businesses and real estate. It is a positive if you are trying to open a business and need a loan- you can find angel investors rather easily. The rest of the Argentines hide the money under their mattresses.

But it gets better..... since no one uses the banks, this is primarily a cash transaction country. So you go to an office to pay for your electric bill. You spend a day registering your car- paying several fees at different offices throughout the city. You wait in line for hours on pay day to cash your check from your employer- which luckily only happens once a month..... but on the same day for everyone. The side effects of not having a banking system that you trust go on and on..... And of course is something you take for granted as a US citizen.

The banks also recently wisened up. They realized that most of the people using the ATM machines were foreigners. Up until a month ago- there was no fee to withdraw cash from an atm. They just recently implemented an 11.50 peso fee at all of the ATM's - which are conveniently owned by only two companies.