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.

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.

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!

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.

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.

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 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?

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.

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.

Jeff, where did you find this average American family?

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.

Elizabeth Warren for Fed Chief!!!

Elizabeth Warren for Fed Chief!!!

Elizabeth Warren for Fed Chief!!!

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.

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?