Discredit where discredit's due

Huge adverts have started appearing for an exciting new credit card, which has three pointy corners and a curved one. I don't know who is offering to provide this plastic marvel, but do they think we're completely stupid? The answer seems to be yes, judging by an admission from the man in charge of Barclays Bank last week that he would never borrow money on a credit card himself. Not only that: Matthew Barrett advises his own children not to do it because it's much too expensive.

The reason this is such a major gaffe is not Mr Barrett's reluctance to use his own product. Successful capitalists have always thrived on selling people rubbish they wouldn't dream of spending their own money on, from quack remedies to those horrible commemorative figurines advertised in weekend magazines. Mr Barrett's admission has been compared with the occasion when Gerald Ratner unwisely described one of his firm's products as "crap", but I never imagined that the jewellery firm boss wore his own signet rings or filled his house with gold-plated carriage clocks.

What is outrageous is the cynicism with which bank chiefs allow their companies to promote credit cards many of their customers can't really afford, concealing the real cost of interest rates and penalties in language that is almost impossible to understand. Mr Barrett can't even follow the formulae himself, responding to MPs who asked him how much it would cost to borrow a certain sum from Barclaycard with a baffled, "I'm sorry, you are confusing me". Four other bankers who appeared before the Commons Treasury Select Committee fared little better, giving every appearance of being unprepared for a PR-disaster-in-the-making. Their insouciance irritated MPs so much that they will doubtless be tempted into issuing warnings about safe credit, rather like the campaigns the government ran in the 1980s about safe sex. Mr Barrett, for example, is a personable man who earned £1.7m last year in salary and bonuses, but his interrogators clearly felt he was just the kind of stranger people should be wary of sharing too much plastic with.

In their defence, the credit card companies point out that half their customers pay off their balance in full each month - which means that the other half don't and pay ludicrous rates of interest; at a time when base rates have fallen to a 40-year low of 3.5 per cent, customers are still paying at least 14.9 per cent on their Barclaycards. Just as much to the point is who is doing the borrowing and as usual it isn't the rich, who are too canny about their finances to rely on credit cards. The effects of recklessly encouraging lower earners to run up credit on sofas, holidays and cars can be seen in the record £5bn debt being chased by bailiffs. It also shows up in the gradual transfer of wealth to the rich, as the proportion owned by the bottom half of the population has dropped from 12 per cent in 1976 to only 1 per cent now.

Should we blame credit card companies for this? They are certainly guilty of over-charging, offering cards much too widely, and employing aggressive and intrusive sales techniques. I've lost count of the number of letters from credit card companies I've thrown in the bin, and the other day a man even tried to sell me a card in my local Sainsbury's. "Do you pay off your balance every month?" he demanded as I picked up a basket, backing off rapidly when I told him it was none of his business. I go to a supermarket for soap powder, not financial advice.

More than anything, they are guilty of encouraging the notion that debt is good. The old fear of HP or "tick" has evaporated, creating an atmosphere where everyone, it seems, is encouraged to spend like David Beckham. Those of us who don't earn quite as much as the England captain can put it on a selection of around 300 credit cards, courtesy of that nice Mr Barrett and his friends from Royal Bank of Scotland, Lloyds TSB and so on. They are all wealthy, well set-up blokes and the lesson is that we should follow their example - and ignore their adverts.