I think when the credit card “house of cards” falls it will be worse than the mortgage crisis we’re still recovering from.

Virtual money has enabled amazing things. One could say that the web would not have gotten traction without it (specific example, Amazon). The convenience of swiping a card instead of dealing with bills and coins makes life easier in almost every instance, except when it comes to people visualizing their now time-shifted debt.

No matter what the interest rate, the time-shifting of debt makes for a disconnect between the buying transaction and the actual paying transaction and over time that connection gets looser and looser. Even if one pays one’s credit card balance in full every month, there is still a disconnect which for some can be a liability.

Couple that with our “gotta have it” material world and I see a real disaster on the horizon with even more fallout than our current mortgage mess.

There is also a macro side to this and I hope you’ll discuss things the federal government can do to crack down on predatory credit card companies and provide debt counseling for people caught up in this as well as moderate the use of bankruptcy by irresponsible individuals to quickly wipe out debt, leaving their debtors high and dry.

The same regulators who watched as americans piled into the mortgage debacle are now watching as the credit card issuers are driving themselves and their card holders into an uncertain end.

The purpose of organised government is to save us from our selfish selves for the coomon good.

But the same politicians who act as if we have a God given right to the $2.00 gallon gasoline are now acting as if we have a right to spend money we do not have – to keep us happy and them in office.

May god save us.

Eugene

Credit card issuers thrive with risk. They’re the house, as in “Thte House never loses.” Hidden fees, exorbitant compounding interest, short deadlines for payment, instantaneous account monitoring. The entire business model is a hedge against risk.

Not sure I agree that the credit card companies have the bulk of the responsibility here. If we didn’t use them they’d be out of business (drugs come to mind). If people didn’t go nuts with buying houses they couldn’t afford with bad mortgages…

At some point we have to take some responsibility for getting ourselves into debt (he says with no balance on his card).

When I brought in my mail last Friday, there were two intersting pieces. One was a demand letter from a collection agency that has been demanding my 21-year old daughter pay defaulted credit card charges. Another was an offer for a new credit card.

The banks offering these cards are defrauding the American public as did the Savings and Loans and as did Fannie and Freddie.

We are facing yet another case of private profit and public risk.

It is insane that any company would offer my daughter credit, given her history of default. These companise, however, thrive.

As may others repeat her actions, debt, fees, penalties will accumulate. At some point, these people will no longer be able to pay, the debts will be declared “bad debts”, and written off.

When the credit card bubble bursts, these banks will whine to Congress they are too big to fail and the taxpayers will bail them out.

When will enough be enough? The “smart market” knows enough to let poorly run companies go bankrupt.

My credit card company has discovered another way to increase their profit. They don’t mail us our statement. We don’t get a bill, we don’t send a paymentm, they charge us for a late payment.

I think it’s interesting how if you are only 2 days late, not 60, not 30, just 2 they can double your rate. Or if they repull your credit report and don’t like what they see, even though you’ve never missed a payment, they can double your rate. Thereby making it much harder to make the payments and let’s not forget how they changed the bankruptcy laws to make it harder to declare bankruptcy which they helped to push you into. It seems we have no protection as consumers anymore.

Thanks to your guest for pointing out that many people accure large debt because their salaries simply can’t cover the costs of a very simple lifestyle. A single parent with 40,000 is often just trying to feed their kids and fill the car to get to work, yet they are often shamed with comments like ‘just live within your means’. Salaries are not increasing while costs go up. Many people wouldn’t use credit cards if we had a healthy sustainable economy that didn’t rely on growing consumer spending.

I’m old enough to remember a time when you could deduct credit card interest from your taxes, so it’s interesting to speculate on the economic effect of re-instating that deduction. Would it help the debt-burdened or just encourage more bad behavior?

Didn’t the government just recently pass new laws to make it much harder to declare bankruptcy?

It’s time to bring back usury laws.
The credit card company’s should not be able to charge more then 10%.

They should not be able to charge anymore than 2% or 3% in penalties for late payment. They should not be able to charge an increase for your late payment of your gas bill.

I could go on, but these companies are nothing more than legal loan sharks.

On the other side of the coin people should stop living beyond their means.

For the poor folk who use these things to get buy month to month, I don’t know what to say.

The health care issues is tied to this as well.

We need a good national health care system, and we need to go back to being frugal.

There is a much larger issue here. People need to use credit cards because it has been the economic policy of the US and Fed Reserve Bank for the last 30 years to keep wages depressed for the majority of working people.

Allowing easy credit enabled the acceptance of the political/economic status quo that benefits the payers of wages, the corporations and the goverment. Enormous frustration would have quickly built up without it. While productivity has increased, wages have not kept up with the additional value provided by American workers. Additionally, measures of inflation have been manipulated to hide the rising costs of education, health care and energy that people have had to deal with on static or decreasing wages.

But rather than address the root cause, which is the payment of real living wages in this country, there is blaming the people for being morally deficient for incurring credit card debt. It is an old game.

It seems to me that Congress passed a law which said that bankruptcy did NOT relieve one of credit card debt.
Please comment.

very helpful comments by Elizabeth Warren on debt consolidation being a dangerous business. Many people get lured into debt consolidation by radio / tv advertisements, and refinance their mortgages to pay back their non-secured debt. These people frequently lose their homes as a result of greatly increased mortgage. If they had declared bankruptcy instead of going with ‘debt consolidation’, they would have gotten to keep their homes.

A person should know that if he/she declares that his/her home is a “homestead” it cannot be taken to pay off debts.

Who is this guy? Putting things in perspective?
Give me a break. I suspect this guy is a shill for the industry.

I pay on time and I have never been late.
Yet my rate has gone up every few months. I have no control over this. I suppose it’s due to some late phone bill payments.

This should not be allowed.

Bring back the usury laws!

What has led to the lack of transparency and the voluminous documentation describing terms, conditions, etc. for all credit arrangements?

I would like to slightly disagree with Professor Warren’s comments on debt consolidation. The National Consumer Credit Counseling is a non-profit organization, which counsels and assists consumers with debt.

I struggled for many years to get out from under credit card debt – due to high interest rates, etc it became impossible. I struggled to keep up with even miniumum payments and began to go into default. I finally sought help through the local chapter of this agency. As one of their services, they were able to negotiate low interest rates and a reasonable repayment plan with each of my credit card holders. They worked with me to set up a budget and negotiated a repayment plan that I could afford. I send one check to NCCCS each month and they dispurse it to my creditors. I began with $37,000 in credit card debt and am now down to $14,000. I expect to be clear of this debt within 14 months.

This has enabled me to pay off this debt and also taught me how to live within my budget. I have not used any credit cards at all for over two years. It was difficult at first, and with rising oil bills, it continues to be a struggle. But I am not racking up more debt – as I am unable to use my cards until I finish the plan. This forces me to explore other ways to live within my means and will be a path I will continue to follow once my debt is paid.

The agency that I used is found at http://www.moneymanagment.org. Thre are other links but be sure that you use an agency that is a member of NCCCS and Non-profit! They can also help you determine if bankruptcy is your best option and/or help you with budgeting, etc.

This has been a lifesaver for me. Good luck!

I have stopped using my credit card.

My debit card gives me just the same convenience. I never pay any late fees. I never pay any interest.

Complaint: The show never took the issue to forecast disaster possibilities ala sub-prime mortgage crisis. How might this decontrolled credit industry fail and take more people into bankrupty?

To John: debit cards might not be as safe as they seem.

Check the contract on your debit card–the bank might give you insufficient protection against unauthorized charges.

By law, credit card companies are required to reimburse you for unauthorized purchases/identity theft. In contrast, with debit cards you are on your own.

But do check your contract to be sure.

The Cards are in the business to make money. It is a business deal. There is no morality except profit. At the moment that the Card companies are no longer viable, they close up shop and go into bankruptcy. The consumer should have that same courage. There is no great moral responsibility, just a business deal.

I was underwater in card debt several years ago. I had long since stopped incurring new debt and was just wrestling with the compounded interest. The stress of it all was breaking me every day. One day, walking through the woods, I realized that there was nothing about me in that deal, and that I would never get out from under it. I filed for bankruptcy with the assistance of a great lawyer. Our date came. The whole thing took about 2 minutes in front of the court. My lawyer walked me out and said “have a nice life.”

There was nothing personal about the debt. Not for the company. Not for me. Just business. And then life goes on.

Four plus years later, I have a car that I own. I have a condo that I own. I do everything in cash, if I can, but try to use a credit card for the credit record it lends. The weight lifted by that move, to declare bankruptcy, is amazing.

While discussion of how corporate lenders should be better regulated to protect consumers is critically important, I would like to see the financial education level of the average American addressed -because it is @ this critical juncture where American’s are left educationally high & dry, completely vulnerable to predatory lenders. Our educational system teaches our children to read, write, use computers, proper dental hygiene, about reproductive health, how to drive -all important skills. But, our schools do not provide a basic financial education, which is equally important, including: balancing checkbooks, the financial basics of running a household, the benefits of building good credit scores & proper maintenance of them. Especially in light of current economic conditions, why don’t our schools properly prepare our children financially?

In Massachusetts a “homestead” declaration on your residence will *not* protect your home if you default on the mortgage used to purchase the home or on any second/third mortgages on the house, which you have declared as your homestead.

That is why “debt consolidation” aka refinancing your home to pay back unsecured debt, is a bad idea. Bankruptcy is a safer way.

The credit crisis can be solved by fostering good old fashioned values: Don’t spend more than you earn. Keep only one credit card, destroy all the others. The only “good” debt is a mortgage on your primary residence, if you are in the adult earning years and the mortgage interest write-off is helpful on your taxes. A recent front page article in our local newspaper (Burlington, Vermont) showed how we could avert the energy crisis by living as we did in 1969. There was one car per family, not two or three. Houses were about half the square footage of the average being built in the current decade. During the Great Depression of the 1930’s, people had two sets of clothes: everyday work clothes and Sunday best, for church, weddings and funerals. Closets were a fraction of the size of those in today’s new homes. You can be sure that a piece of equipment (such as a personal computer) was not considered obsolete three or four years later.

A retail design expert speaking in a workshop to a group of town planners and citizens here indicated that their job was to get all of us to buy things we don’t need. I thank the example of my parents who lived through the Great Depression that I have never lived that way. I have no debt whatsoever and have always maintained a balance in savings that would allow for living six months or more without a job during periods of unemployment. The only time I have carried a credit card balance was when I moved to a different used house and bought new appliances for it. “Rainy days” occur from time to time in our economic lives and we need to be ever prudent to be ready for these times.

When I was in college in the late 1960’s, a statistic shocked me: The United States of America had six percent of the world’s population and consumed 56 percent of the world’s resources. We can’t go on living like this. There is a reason that radical elements of the Muslim population hate us. It’s not just about religion. Its about conspicuous consumption, too.

David
Burlington, Vermont

To David in Burlington Vermont, Amen brother!

Oh you forgot besides the 3 or more SUV’s and pick up trucks that they don’t need for work, the average American family also has several recreational vehicles.

Why is it that people think they need all this stuff?
I also think the problem is this country has shifted from a manufacturing base to a consuming base.

The economy is supported by people going to the mall and shopping, not making things.

Who is the largest employer in the US, Walmart.

What did George Bush ask America to do after 9/11.
Go shopping!

Need I say more?

THE FOXES ARE GUARDING THE HENHOUSE, and the media, and you name it….

Of course we should demand the return of the usary
laws. In God we trust. Man, not so much.

As someone who is just taking their first tentative steps out into the financial-independence (I have just graduated from college) this show really helped shore up my belief that I will never get a credit card. Like someone said earlier, my debit card serves just fine for those times I don’t have cash.

Living in a place like Burlington, Vermont though is a very good place to realize that absurd consumption is the root of this problem, along with unethical lending practices.

Again, as evidenced by most of these comments: where’s the basic financial education we should have rec’d by the time we graduated high school? With basic financial education, we would all:
1. be wary of credit card vendors.
2. understand that credit limits aren’t disposable income.
3. understand what disposable income is.
4. understand that debit cards do not offer the same benefits as credit cards -if used properly.
5. understand how to properly evaluate our income -vs- expenses and actually be able to develop a working budget. Truly, how many people can really perform this most BASIC of financial tasks???
6. actually understand what it means to “live within one’s means”.

I love to give examples of poor or misleading data to my science classes and today some either incomplete or deliberately misleading data was given to counter Ms. Warren’s assertion that credit card companies are “tricky”. When the governmental survey was quoted as recording 90% or so of respondents stated that “learning the details of their credit agreements was straightforward” – the logical follow-up would be to check to see if they really understood their agreements in the first place. If you are being successfully tricked you don’t know it! I wish someone would have called him on that.

Here is the only real solution to this whole mess. Make interest illeagal as it had been for centuries before. Have partnerships, cooperatives and charity as a replacement for interest , where the debtor shares whatever profit or loss the business may incur.

Interest is not a moral practice. The three religions, Judaism (Exodus Chapiter 22, verse 25) and Levitic (Chapitre 25, verse 34 to 46), Christinaity (Luke chapiter 6, verses 34 and 35) and Islam (Quran 2.275-279) all forbid interest. And for a good reason, not only because it is forbidden by God but also since one side becomes a parasite to the other side, one side is always winning and one side is always losing.

Muslims today continue to live, buy homes, make investements etc… without the use of interest since Islamic contract law prohibits trading on credit; monetary or other exchange values (i.e. gold, silver, etc.) transactions must be made on the spot. Usury, defined as charging a fee for the use of money, violates this principle, since usury essentially means buying money on credit. Islamic scholars argue that usury also implies that the party in debt guarantees to pay the required amounts on refixed dates. Such guarantees, however, are impossible to make, as every business and venture runs the risk of failing. In a business where money is lent, the debtor only provides the capital yet is guaranteed a fixed amount of profit. The debtee, however, puts in time and effort, but is made to bear the risk of loss. Muslim scholars argue that such practice is unjust. As an alternative to usury, Islam strongly encourages charity and direct investment, where the debtor shares whatever profit or loss the business may incur.

I would like to know whether Prof. Sawicki takes funding from the credit card industy. I’ve heard him speak in favor of the bankruptcy reform laws that were passed a couple of years ago, and I believe he’s the only academic who supported that legislation, which everyone is aware was written by the credit card lobby. In fact, not even Bankruptcy Court judges supported these new laws that were designed to squeeze working class Americans. If the good professor makes his living selling his soul to the credit card loansharks that’s fine, but he shouldn’t be presented on your show as an unbaised opinion in support of corporate greed. His ties to the credit card industry should be fully disclosed.

Consumer credit card debt is a very important topic, and was happy to read that Professor Elizabeth Warren was going to speak on the topic. However I was very dissatisfied with the way the guest host, Jayne Clason, moderated the discussion. In my opinion Ms. Clason was rude to Professor Warren and on several occasions, very abruptly cut her off as Professor Warren made important points about consumer debt.

I also believe the discussion veered way off course with the introduction of Todd Zweicki before Professor Warren could adequately address the issue of the potential for another national credit crisis based on excessive credit card debt.

As a husband, father, and small business owner that has stellar credit and very little debt, I lose sleep every night wondering how many of my neighbors homes might be foreclosed on due to unmanagable debt, and how many foreclosures in one area are needed to make an area unattractive to live in.

How will our country survive yet another financial crisis of a national scale, if credit card debt goes the same way as subprime mortgages?

I hope there will be another forum for this discussion where I can hear more from Professor Warren.

Thank-you for having Professor Warren on, she is great and I recommend her books for friends and family who are facing financial and budgeting difficulties. She takes complex financial information and translates it into everyday language we can all understand. In addition she is compassionate but has common sense. The world needs more Professor Warrens! Honestly, I wish she would run for President.

I have to say, the comments from one of the callers hit the nail on the head – I’m sick and tired of all this “personal responsibility” line that we hear over and over and over again. You need legal representation to get through most of these contracts. My health insurance contract was dozens of pages. It’s absolutely dishonest and ridiculous.

Not only do they know it, but they target audiences that they KNOW won’t comprehend what they’re signing – college / high school students, poor folk, etc. My brother recently went to college – first few days there he receives a credit card offer (and not a good one – I had to explain the fine print). Every time he checks his mail there’s a new “special low introductory rate” waiting for him.

Critics of regulation usually whine that the education should have come from the government or come at home. Well, fact of the matter is that it often doesn’t, and, while we need to fix that, the credit industry completely shirks its responsibility to educate the public.

One last note – I can’t remember the name of the other guest (the credit industry apologist), but I found his comment that the credit card industry is so successful because it’s giving consumers what they want particularly disingenuous. It’s fairly obvious from many of these comments that we DON’t want what they’re feedin’ us.

Elizabeth is right on the money, or debt, so to speak! Todd is from another planet and as one writer said, a shill for the industry. Why didn’t anyone mention the humungous salaries of CEOs at Bank of America, Capital One, etc.?

Thanks, On Point, for keeping us informed & madder than heck!

What baloney! — who were they surveying, credit card executives? I don’t know of anyone else happy with the services of credit card lenders. We’re not that stupid. They gouge us with fees and high rates, charge us interest on balances we already paid off, and decide to hike interest rates whenever they please. I don’t think the Federal Reserve is supporting greater regulation of credit card lenders because Americans are so completely satisified.

The credit industry apologist also says American are already cutting back on credit card use. The Federal Reserve just said that installment loan debt is at an all time high. It’s too bad Prof. Warren wasn’t given an opportunity to respond to that ludacris assertion as well.

On point is trying to present both sides so they can say to the Right wing factions of this country, ’see we are fair and balanced’… I have two words for them in this case, but this forum being lead on a civil tone I won’t.

Jayne Clayson should have nailed that arrogant shill Prof. Sawicki. Where does he get his information? It was not only wrong it was toting the party line.

I have to say I am between the oil companies, financial institutions, insurance companies and the credit card loan sharks I have had enough and I don’t even have more $200 in credit card debt. I sick and tired of hearing about how wonderful our system is.

People are tapped out, we are prayed upon by big business and they are milking every once out this country and majority of middle classes.

Enough, do a program on how evil and corrupt this system is. How it is designed to make people bankrupt.

What kind of system allows a company to charge someone fees in the tens of thousands for getting into debt.

This is the reality, if you get into debt for only $4000 or $5000 and you are late for just one payment your cooked. Before you know it it will upwards of $25,000.

This is criminal and should be stopped.

Credit score: 790
Credit card rate: 18.95%

Never been late; pay in full every month.

On educating children: I teach high school. My students–all college-bound–think that it’s illegal to pay off your house. They also think that you have to have at least three credit cards to be legally considered an adult, that the IRS won’t accept your return if it’s not prepared by H.R. Block. Is it any wonder that the process of applying for student financial aid is intimidating for them?

People are not worried about their debt. People need to learn to deny their own desires. It is a dubious conjecture that the majority of this debt is to make ends meet. How many people need to waste their money on new flat screen TVs, new IPods, new cell phones, or extravagant cell phone plans? People should need to get off this consumerism drug. Most households are wasting $100 on cable TV or satellite TV. That is $100 that could be used to pay down their debt. Change to a pay as you go cell plan and that money can go to pay down debt. Change your idea of what is important, love watching your wealth grow and not getting things that you really do not need.

I agree that credit card companies are out of control. But so is a kid in a candy store. The problem is that when it comes to credit cards very few of us can resist the temptation. So do we outlaw credit cards or do we educate people on how to handle credit responsibly? In the short run we may need to put some restraints on credit card issuers but in the long run we need to do a better job of educating our citizens about personal finances.

The guest (I forgot his name) who was defending the credit card industry seemed to dismiss some of the points raised by Ms. Warren and others by saying we live in a free society. We often hear terms like free society and freedom used (”they hate us for our freedom” etc.) without those terms ever being defined. It almost sounded like the guest who defended the credit card industry was suggesting that a free society is one in which we all have the license to take advantage of each other.

What kind of logic do they teach at George Mason Law School? Todd Zywicki says that if 90% of consumers think they’re getting the truth about their credit cards, they are! Chris Leydon would never have let a guest get away with that kind of nonsense, but Jane Clayson did. These kinds of discussion need to be refereed, especially with guests like Zywicki.

“It almost sounded like the guest who defended the credit card industry was suggesting that a free society is one in which we all have the license to take advantage of each other”…

Guess what? True ‘nuf!
Remember “Caveat emptor”?
Same goes when you’re “buying” money.

But I’m extreme — never have used a credit card.
In fact, I have a small file where I’ve kept offers from credit card companies and banks making dishonest offers on which I’ve scrawled things like “More Fraud!”; “Liars!” (I get mad.)

It’s a dirty, lousy wake-up call is what it is.

And something has to change because the center (could just say “the middle class”) will not hold.

I am not remotely anti-American or even anti-Capitalist. But without personal responsibility — on both sides of the debt equation — the whole thing reverts to a tangle of greed, our “better nature” is trumped, and we will have to bid what has proven for some time to be a pretty sweet little American Dream adieu.

I’d like to believe it’s not to late to get a better grip on things.

The free market people need to put credit cards into perspective. First of all credit has is not like other products and never has been. The Bible, Koran, and Torah all talk about usury and for good reason. People have known for thousands of years that an unregulated credit market hurts societies because too many people are always willing to take free money. Unregulated credit has been a leading cause of social unrest for thousands of years and it really does look like societies never learn. The government has to regulate credit because it has never and will never be able to regulate itself with market forces.

Do you think we could start a grass roots campaign to replace Ben Berneke with Elizabeth Warren! We might have a fighting chance at becoming something more than a third would country if she was in office.

Elizabeth Warren for Fed Chief!!!

Elizabeth Warren for Fed Chief!!!

Elizabeth Warren for Fed Chief!!!

There was a time when people bought items such as washing machines and TV’s on credit from the establishment that sold them. If you fell behind you received a warning and if you could not make the payments the item was repossessed. This still happens with cars.

As I sated before Todd Zywicki sounds like he is working for the credit card industry and his speech sounded just like it was scripted by them.

There was a program on this very topic, I think it was on Frontline or Bill Moyers’ program. It was an excellent program that exposed the credit card industry for what they are, legal loan sharks.

The agreements are deliberately written to confuse people and to be so hard to understand, they interviewed several lawyers who could not make heads or tails of the language used in them.

I agree that some people make bad decisions, but how many people are doing so out of desperation.
For instance paying medical bills with a credit card.

The system is rigged to screw working people at the expense of profits.

These industries have high paid lobbyist to do their bidding in Washington.There is more to this then people spending beyond their means.

“besides the 3 or more SUV’s and pick up trucks that they don’t need for work, the average American family also has several recreational vehicles”

Jeff, where did you find this average American family?

It is easy to blame the credit card companies as well as it is consumers who do not exercise financial responsibility, but the fact remains that for every person who lives above their means there are many more who are just using credit cards to survive.

Our economy has been one where spending has been funded through easy credit. We have an economy where far too many people live paycheck to paycheck. Wages have not kept pace with inflation. Many people have lost jobs or have been forced to take lower paying jobs due to globalization. Even if you get tough on predatory lending practices and the availability of easy credit, you are not solving the problem. It is not the availability of easy credit that is the problem, it is the need for that credit. We need to fix the economy so that we have more better paying jobs. If the world economy depends on US consumer spending, lets let that spending be based on real money earned though wages instead spending based on credit.

A response to the credit card companies’ mass mailings

Without discounting the broader issues discussed on the show and in the comments here, I wanted to offer a small, practical response to the mass mailings sent out by the credit card companies. Every offer includes a postage-paid, self-addressed envelope. Send those envelopes back empty and make the companies pay the postage; if you’re really mad, stuff the envelope with anonymous paper from that day’s junk mail. If enough people did this, perhaps the expense would become prohibitive. I would appreciate not having the extra junk in my mailbox, especially when it includes potentially sensitive information that needs to be shredded. More broadly, probably a good thing to crimp these companies’ excessive marketing of potentially dangerous credit.

My sister lives in Phoenix, almost everyone of her neighbors has to or more SUV’s, and a boat.

I next door neighbor has two boats in his yard, and I am surrounded by SUV’s.

RUV’s are all over the place. You wont see this in the city, but in burbs it’s rampant.

I don’t have government stats on this, which I would not trust anyway. When you drive on the road what do you see, SUV’s and pick up trucks. That’s the majority of vehicles that are out there. Go to any lake and what do you see, lots of boats and sea-doos.

I have a friend who used to live in Vermont and he had trails going through his property that for years he and his family used for cross country skiing. Then the ski-doos arived. They won, he stopped skiing as there were to many people doing this, and it was on his land, his trails.

The subtext of your question Alex is that you’re saying: I’m full of BS or you don’t believe people live like this. Have you ever been out West?

Sorry about the typos, it should read; My sister lives in Phoenix, almost every one of her neighbors has two or more SUV’s, a boat or an RUV.

This is from today’s Editorial page of the NY Times.

“When the Federal Reserve asked for comments on its proposed rules on abusive credit card practices, an astonishing 56,000 poured in.”
New York Times, 8/6/08.

http://www.nytimes.com/2008/08/06/opinion/06wed1.html?ref=opinion

I wish to comment on the final call-in on your program. The listener from Maynard, Mass. commented that she is tired of hearing about the need for personal responsibility when it comes to spending, and that “everyone she knows” is drowning in this economy. The generalization seemed to be that we are all accepting ever-increasing credit card debt out of necessity and that we are all the victims.

My wife and I also live in the high-cost Boston area.
We have only own credit card.
We use it sparingly, and NEVER for cash advances.
We decline all offers for additional cards.
We almost never carry a revolving balance on our card. We pay it off ASAP when we do.
We use our debit card for most purchases.
We currently have zero revolving debt.

How can we do this? By making choices. We have middle class salaries but choose to be careful consumers. We chose to own a small, efficient home and a small mortgage well within our means to pay. We choose to own reliable, economical vehicles purchased with loans as small as possible. We keep our cars for as long as we can after they are paid off. Because of these and other responsible fiscal choices, we can take nice vacations, contribute to charities, live green, make an extra mortage payment once a year (this pays off a 30-year loan in 23) and maintain about three months salary in an emergency fund (earmarked for real emergencies).

Oh, and we save for our retirement and our childrens’ educations too. Retirement savings? Since we were 21. Childrens’ educations? Since six years before either of them was born.

My wife and I were raised to live within our means and to save for the future. Personally, I’m tired of people complaining about having to accept personal responsibility for their spending and I wish they would start accepting some.

I am a middle-class American and I am not worried about the mortage lending crisis, the energy crisis, or the coming credit card crisis. They do not apply to me.

Charles, I do agree we should take responsibility for our actions, read the editorial in today’s NY times on this very subject, the link is above.

I also can’t help but notice your complete lack of regard for your community. You know if enough people start to default and the economy does go further South it will effect you.

You started saving for you retirement at age 21. Hmmm that’s interesting. You must be the only 21 year old who has done that.

Anyway this not about you or me, who like you does not have any credit card debt. I do have a mortgage, and have seen my house value drop by 100K this year. I assume yours has as well. So the current crisis has effected you.

Try getting a loan to fix the roof this year.

3 months is not enough savings for an emergency by the way. If you or your wife loses your jobs then what?

Are you over 40? if you are chances are you won’t find a job very quickly. If you’re over 50 forget it.

[i]My credit card company has discovered another way to increase their profit. They don’t mail us our statement. We don’t get a bill, we don’t send a paymentm, they charge us for a late payment.[/i]

Good grief. You can pay online (you obviously have a computer because you posted a message here) or you can arrange to transfer the money automatically.

We use a credit card strictly for convenience (e.g., when we travel) and our full balance is paid off automatically at the end of every month, so we haven’t paid a penny of interest in decades!

Clinton says, “As someone who is just taking their first tentative steps out into the financial-independence (I have just graduated from college) this show really helped shore up my belief that I will never get a credit card.”

I think that’s an extreme overreaction. Credit cards are very convenient, especially when traveling or making expensive purchases (because they often make it easier to get your money back or dispute bills).

The KEY is to pay off the balance IN FULL every month so you don’t incur interest charges. Good credit cards allow these payments to be made automatically. My wife and I have done this for decades and we’ve never paid a penny in interest.

Don’t throw out the baby with the bathwater.

“the fact remains that for every person who lives above their means there are many more who are just using credit cards to survive.”

Several people here have asserted this but it makes no sense. If you’re too poor to afford to pay $X, then how does paying $X + 19% make it more affordable? Granted you can kite it along by just making the minimum payment for a few months but it would catch up with you REAL fast. So I don’t see any plausible way that credit cards would offer a survival strategy for poor people.

Most people who are up to their ears in debt in the US are not too poor to keep food on the table and a roof over their heads, but they ALSO want a flat-screen TV and a new car and a trip and a restaurant meal, etc, etc.

IT’s kind of a catch 22, because we are consumers. Theres so many more things out there to buy and everybody wants it all NOW. Those in moderate incomes levels think they can live like those who are super wealthy. Stop living like you make $250,000 + a year when you make like…$60,000. We are celebrity obsessed as Americans. All eyes are on what they wear, where they live and where they go. I think we’re running around blinded and in total denial of reality.
It’s our lust for materialism that got us here, let’s face it. If we didn’t have an attitude of “entitlement” ie, I deserve it, I work for it, we wouldn’t be in this consumer mess!!