Germans Shirk Red Ink, Shop Safe By Leaving Home Without Plastic

Shoppers in German stores during these final days before Christmas act like they are in the middle of a rugby scrum.

In department stores, the flow in the aisles goes at a cattle-drive pace. It's chaotic around the clothes racks, and especially turbulent in the toy section.

But amid this no-holds-barred atmosphere of gift procurement, a little order still exists at most cash registers, where the overwhelming majority of shoppers pay in cash - no matter how large the amount of their purchases.

The Christmas shopping season may highlight the fact, but Germans - consumers and retailers alike - are wary of credit cards all year long.

Most people do not possess credit cards, and a lot of stores and restaurants will not accept them. And even in the places that do nominally take cards, clerks may roll their eyes, and people waiting in line often grumble, when a consumer dares to pay with plastic.

The message to all is clear for all those who want to use Visa, MasterCard, or American Express: Leave home without it. Germany steadfastly remains a cash-driven society, and its people think nothing of going around with hundreds of deutsche marks in their wallets.

No matter how inconvenient this may seem to outsiders, especially credit-happy Americans, most Germans say they prefer it this way.

``If I had a credit card, I might spend more than I have and I could lose control of my finances,'' said Christel Schulz as she emerged from a downtown Bonn department store.

Ms. Schulz's comment is a common refrain in Germany. Although the German government has gone billions of dollars into the hole to finance the nation's reunification, personal debt is generally considered an anathema. Hence the reluctance to resort to credit cards.

``Germany is still more of a cash society than others,'' says Klaus Baader, a senior economist who monitors the German economy at Lehman Brothers' London office.

``People see credit cards not as a means of payment but as an extension of credit, and Germans are still relatively debt averse,'' Mr. Baader continues.

From the point of view of business owners, to accept credit cards means to incur extra costs, including commissions on charges, which cut into profit margins. The use of cards also slows cash flow.

Lacking the consumer pressure to take plastic, stores have little incentive to kick the cash-only habit. A few Bonn businesses that used to accept credit cards found the experience so disagreeable that they subsequently abandoned the practice.

``It was too expensive for us,'' said Rainer Blomer, co-owner of Blomer's clothing store in Bonn.

``Everything works fine now,'' Blomer continued, talking about the return to the cash-only policy. ``Most of our customers were very understanding.''

But a dearth of credit card usage doesn't mean that people shy from packing some kinds of plastic in their wallets. Many Germans do possess debit cards. Automated teller machines are located at banks and in many major department stores. Shoppers short on cash can plug debit cards into any of these machines and withdraw from their bank accounts.

``It's easy enough as it is,'' said Christopher Korber, a department-store salesman.

Experts have trouble identifying the root of Germans' reluctance to go into personal debt, and they are quick to point out that a little debt-phobia isn't so bad for individuals or the economy.

Baader, the Lehman Brothers analyst, explained that comparatively few people have experience in taking out major loans, and suggested that some may be intimidated by the prospect of personal debt.

More so than in other leading industrialized nations, Germans tend to rent rather than own their homes, he said, meaning many do not require significant financing help.

But Baader added that German traditional attitudes are changing. ``The savings ratio is dropping,'' he said. ``German households aren't being nearly as thrifty as they were.''

Given such a trend, the proliferation of credit cards in Germany would seem only a matter of time.

``Credit cards are still relatively new to Germany,'' said Blomer, the store owner. ``Credit cards will have a breakthrough here probably in a couple of years.''