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I have been inundated with some of the most articulate and well-informed mail I've ever received. Every piece, whether the writer agreed with me or not, has been a pleasure to read. I say that in hopes that those writers are reading this because it's going to be impossible to do my usual personal replies in this case.
Today I want to share a few excerpts from the mail with you. There are two themes running through it. One is that the credit card companies bear some responsibility for the avalanche of debt that has buried too many people in recent years. The other is that individuals are responsible for the debt they incur and it is folly to blame companies in the loan-making business for successfully persuading people to use their services.
Here are some typical comments:
Dawn Schaefer wrote:
Gerald Groot wrote:
Lisa Kouvolo wrote:
"With my credit history, I couldn't get anyone to give me a card. Do you know how hard it is to rent a car without a credit card? But BBCH (Bank for Bad Credit Histories) gave me a card with a $1000 limit! Now all my friends are asking me how I got the card, and 'what's the number?' Well, it's 1-800-SUCKERS...."
An AOL reader:
Marty Gold wrote:
They make money by loaning money, and charging absurd interest rates. That's what they do! But have you ever seen a credit card company hold a gun to someone's head and say "You must charge!"
Chad Beck wrote:
It pains me somewhat, but I have to come down on the personal responsibility side of this debate -- mostly, anyway. Most readers who wrote blaming the credit card companies also expressed the understanding that they were partly to blame. No one is trying to weasel out of their obligations.
The fact is that despite the best attempts of the government, our parents, and society in general to protect us from ourselves, the world is a rough place. It's tough to have to pay the price for youthful ignorance. When has it ever been different?
Having said that, I also blame the credit card companies. Yeah, they are just doing what credit card companies do. And yes, they have never forced anyone to charge a trip to Vegas over spring break, but they have done their very best to create a culture of irresponsible spending.
Like movies that portray painless violence (real people, when hit by bullets, usually froth at the mouth, vomit, go into convulsions, bleed copiously and/or scream a whole lot), and the fast food industry that gets rich off American's ill health, and that whole "S" word thing, credit card companies have no real incentive to promote responsible behavior.
A pox on all their houses! But I don't know what to do about it. Taking on American culture is a bit much for me, and frankly, focusing on "doing something about it," just takes the emphasis away from where it needs to be. Changing the laws may help a bit, but I don't see them changing enough to actually keep people from abusing credit cards -- and I don't think anyone would want such oppressive laws. So it's up to each of us to protect ourselves.
Yes, it would be nice to see the credit card companies, either voluntarily or not, stop sending cards to people who were running up debt beyond a certain level. And it would be even better if they would warn people that the minimum monthly payment won't pay off the debt for 30 years, and that they will be paying many times the original purchase price in interest during those years.
It would be even better if they had a few ads featuring scenes from a credit counseling service. And it would be WONDERFUL if they would make every first-time credit card holder pay off their bills in full every month for at least a year. Maybe then the link between buying something and having to pay for it would be firmly established in the first-time charger's mind.
But none of that is going to make one bit of difference to people who are already in trouble and a lot of it won't stop people from succumbing to the lure of easy buying.
We need to teach our children well, and we need to practice what we preach. It's pretty simple.
I'm going to give this topic a rest for a while now and get back to the Foolish Four and investing. But this war isn't over.
Fool on and prosper!
I can almost see these credit card companies as drug dealers. Telling you how great your life will be if you hook up with them. But they don't tell you how hard it will be when that TV, vacation, clothes and the kitchen sink add up those monthly payments that you have to work for two weeks to pay every month! I don't blame the companies for my debt, but they shouldn't make owning a credit card look so glamorous.
It is about time people started complaining, and complaining loudly where it hurts most -- in the pocket books of the credit card companies. After all, they're at fault for starting this whole credit card mess that has gotten many Americans into financial ruin while the credit card companies laugh all the way to the bank -- so to speak.
I've been shocked recently to see ads that say things like "get the credit you *deserve* (emphasis CLEARLY theirs) and then go on to show actors saying things like:
I strongly agree that the targeting of students is tacky but the credit companies are hoping these people will begin to establish lifelong patterns of depending on credit. Getting out of debt is one of the hardest things to accomplish (mentally and physically) but one of the most rewarding.
How can you blame the credit card companies at all?
It may be the case that many consumers allow themselves to get into huge debt. But I see credit card companies as an enabler. In other words, they use socially irresponsible and reprehensible tactics, such as raising credit limits when they were not even solicited to do so and sending pre-approved mail to people already struggling with debt. It's akin to offering alcohol to an alcoholic.