# are credit card companies to blame for consumer debt? **URL:** \ **Category:** Great Debates\ **Created:** [November 30, 2004, 10:04am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305 "2004-11-30T10:04:25Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [November 30, 2004, 11:19pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/41 "2004-11-30T23:19:46Z")
> [@sleestak](#): > > Well. how exactly do credit card companies get someone into debt? Do the companies force the people to go out and buy stuff? Do the companie tell people that if they don’t buy a cretain amount of stuff every month that they will lose the credit cards? Do they put people in headlocks and give them noogies until they buy that shiny little object that they really do not need? > > Nope. If people do not understand compound interest it is their own problem, not the credit card companies. > > Slee No, but they do try to sign on people who are not really educated about credit. Does anyone here have a problem with mandatory disclosure on credit card forms? ie disclosing info that shows what the consequences will be to a persons credit rating, ability to get a loan and how much interest they’ll have to pay over time if they only make the minimum payments? ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [November 30, 2004, 11:47pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/42 "2004-11-30T23:47:08Z")
> [@dorfl](#): > > Get real. Predatory is if somebody forces you to sign something. See how many hats you can pick up and use them as dart targets. Does it bother you at all that so many lenders, so many supposedly responsible and ethical financial institutions, have adopted an unscrupulous and irresponsible lending practice by extending easy (and expensive) credit to millions of people who shouldn’t have easy (and expensive) credit? Is it possible that we would all be better off if millions of low income families, instead of paying out a substantial part of their badly needed incomes to pay exorbitant interest, were instead spending the money on their kids or on medical care? Isn’t it likely that this will have serious consequences for the national economy somewhere down the road? This isn’t just an issue between creditor and debtor. It’s an issue for the entire community. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [December 1, 2004, 1:56am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/43 "2004-12-01T01:56:16Z")
What are all these low income families buying on their expensive credit? They must have bought something with the money they borrowed. Is it the credit card company’s fault if they spend it on garbage? If they didn’t waste the money, who are you to say they shouldn’t be allowed to have credit to buy necessities? Grow up and take responsibility for your spending, and allow others to be responsible for their own spending. You’re not a child, and neither are they. If you’re not grown up enough to manage the simplest financial transaction you shouldn’t be allowed to live on your own. There is no magic behind using a credit card… there are occasional pitfalls like Hampshire’s and Snenc’s but if you’re not living with blinders on, you can at least manage the situation. ---
**Author:** ![Airman\_Doors\_USAF](https://avatars.discourse-cdn.com/v4/letter/a/e36b37/32.png) [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)\ **Post date:** [December 1, 2004, 2:16am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/44 "2004-12-01T02:16:04Z")
And this, my friends, is why I don’t have a credit card. It’s great for short-term emrgencies, but if I can’t pay the bill now, how am I to think that I’ll be able to pay it at 20% annually later? It’s robbing Peter to pay Paul, and I don’t need it. ---
**Author:** ![Beware\_of\_Doug](https://avatars.discourse-cdn.com/v4/letter/b/278dde/32.png) [@Beware\_of\_Doug](https://boards.straightdope.com/u/Beware_of_Doug)\ **Post date:** [December 1, 2004, 3:43am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/45 "2004-12-01T03:43:24Z")
Charging yourself into a hole is wrong. But it’s a dumb, ought-to-know-better kind of wrong. Trying to sucker young/poor/plain dumb people into doing so by marketing blitzes and irresistible offers is a _smart_ kind of wrong. A know-better-but-don’t-care kind of wrong. What’s worse? Funny how often those who prate about personal responsibility don’t have any particular scruples about corporate or institutional responsibility. :dubious: ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [December 1, 2004, 4:17am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/46 "2004-12-01T04:17:22Z")
> [@spoke-](#): > > Are you saying you see no moral or ethical problems with this scenario, **msmith537**? Well… no… I guess I don’t. Sorry, but you won’t get any sympathy from me for these people. Basically you are arguing that the credit card companies are evil because they won’t allow John Doe to take advantage of bankruptcy in order to live above his means. Maybe Mr Doe shouldn’t have charged his way into bankruptcy in the first place. I guess because CapitalOne or MBNA are big corporations they should pick up the tab. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [December 1, 2004, 4:18am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/47 "2004-12-01T04:18:24Z")
> [@spoke-](#): > > Are you saying you see no moral or ethical problems with this scenario, **msmith537**? Well… no… I guess I don’t. Sorry, but you won’t get any sympathy from me for these people. Basically you are arguing that the credit card companies are evil because they won’t allow John Doe to take advantage of bankruptcy in order to live above his means. Maybe Mr Doe shouldn’t have charged his way into bankruptcy in the first place. I guess because CapitalOne or MBNA are big corporations they should pick up the tab. ---
**Author:** ![Mr.Miskatonic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mr.miskatonic/32/310_2.png) [@Mr.Miskatonic](https://boards.straightdope.com/u/Mr.Miskatonic)\ **Post date:** [December 1, 2004, 11:56am UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/48 "2004-12-01T11:56:09Z")
> [@gazpacho](#): > > When do interest rates become usurious? At the same time fish become obnoxious! ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [December 1, 2004, 12:54pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/49 "2004-12-01T12:54:18Z")
> [@Beware of Doug](#): > > Funny how often those who prate about personal responsibility don’t have any particular scruples about corporate or institutional responsibility. :dubious: Personal responsibility is about not transferring your personal, self created problems to others. You overspend on credit, it is your fault. Corporate responsibility is there, but it is responsibility towards the financial health of the corporation not the financial health of their customer. If CCC’s were going under left and right because of poor decisions on offering credit, that is what they are responsible for. You are responsible for you, I am responsible for me. I love how people want to treat others like little children. Freely offered services are bad because the customer is too stupid to use it correctly. If one adult wants to offer another adult a line of credit with reasonable terms, who has justification to prevent that? ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [December 1, 2004, 2:01pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/50 "2004-12-01T14:01:29Z")
> [@Beware of Doug](#): > > Funny how often those who prate about personal responsibility don’t have any particular scruples about corporate or institutional responsibility. :dubious: I agree totally. But, of course, we have the usual suspects who only see personal responsibility as a one-way street. For them, I guess, it is the way should work…that corporations should be free to entice people to get in over their head with debt and then use their political influence to change the rules on them in regards to bankrupcy. This is part of what makes a libertarian philosophy so morally bankrupt in actual practice. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [December 1, 2004, 2:08pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/51 "2004-12-01T14:08:46Z")
By the way, personally, I might be willing to go along with a tightening up of the bankrupcy laws but I would tie it to other laws that tighten up on predatory lending practices and the sort of constant barrage of enticing of people further into debt. Because I believe in responsibility for **everyone** , not just the poorer segments of society. And, like **Beware of Doug** , I believe that those who actually know better should be held to at least as high a standard as those who might not. ---
**Author:** ![Neurotik](https://avatars.discourse-cdn.com/v4/letter/n/91b2a8/32.png) [@Neurotik](https://boards.straightdope.com/u/Neurotik)\ **Post date:** [December 1, 2004, 2:15pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/52 "2004-12-01T14:15:32Z")
> [@msmith537](#): > > Sorry, but you won’t get any sympathy from me for these people. Basically you are arguing that the credit card companies are evil because they won’t allow John Doe to take advantage of bankruptcy in order to live above his means. Maybe Mr Doe shouldn’t have charged his way into bankruptcy in the first place. > > I guess because CapitalOne or MBNA are big corporations they should pick up the tab. Since they were the ones who issued him the credit card, knowing the current bankruptcy laws, and after knowing what his income level was, why shouldn’t CapOne and MBNA have to pick up the tab? Why don’t big corporations have to take responsibility for their actions just as much as John Doe? They knew going in to the game that if John Doe went bankrupt they weren’t going to see their money. Not only that, they also should have had a pretty good idea of what level income can sustain what sort of credit balance without going into bankruptcy. And even more so, they should have known what his income level was. The credit card company decided to push the envelope and continuously up John Doe’s credit card max, gambling that they can walk the thin edge between maximum profitability off of a high credit balance and the client going into bankruptcy. When they lose the gamble , they seek to change the rules. It’s analogous to sitting down at blackjack, placing your bet, drawing a 20, watching the dealer bust with a 23, then before you can collect your winnings, having the casino change the rules so that over 24 is now a bust and you lose. This is, of course, the typical hypocrisy of many conservatives who spout the “personal responsibility” mantra over and over - for some reason, it never applies to the wealthy or to large businesses. ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [December 1, 2004, 2:29pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/53 "2004-12-01T14:29:54Z")
> [@Cheesesteak](#): > > If one adult wants to offer another adult a line of credit with reasonable terms, who has justification to prevent that? But the terms _aren’t_ reasonable, and the cards are marketed in such a way as to keep many, if not most, of their customers in the dark as to what the terms of the contract actually are. You seem to be saying that it’s okay to cheat someone just because you can. And as I’ve pointed out before, the growing number of bankruptcies–we seem to set a new record every year–can’t be a healthy thing for the national economy. This isn’t just an issue between unscrupulous lenders and naive or shortsighted borrowers, it’s something that will affect the entire community. When an individual or a family gets into financial trouble, it isn’t just that individual or just that family that suffers. Please try to understand that it’s the _banks,_ not the _borrowers_, that create these situations. The community has every right to require banks and other financial institutions to use responsible and ethical lending practices. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [December 1, 2004, 2:50pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/54 "2004-12-01T14:50:56Z")
See, in my world, if a person isn’t comfortable with the terms of an agreement, they are free to NOT agree to them. The problems here are not with the terms of agreement, they are with people overspending. It is rare that a person gets caught up in unusual terms, mostly it’s just difficult managing to pay for the things you’ve bought. The interest you pay is listed on every single bill, VERY clearly. The amount you’ve let carry over, your payments and your purchases are listed in excruciating detail, every single month. You honestly think that people are in debt up to their eyeballs because there was a contract term they were unaware of? The only contract term they’re having a problem with is the one that says “You will pay back the money you borrowed.” It’s also pathetically sad that we expect corporations to tell US what we can and cannot afford, rather than taking the responsibility to know that for ourselves. It’s a nanny state taken to the extreme, making the lender responsible for the borrower’s indulgences. Capital One should pick up the tab when their customer buys more than he can afford. The mind boggles… No wonder our entire society shirks personal responsibility, nobody wants the average Joe to have any! “Don’t worry Joe, we all know you’re just too simple minded to manage a credit card, it’s not your fault.” ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [December 1, 2004, 3:20pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/55 "2004-12-01T15:20:50Z")
> [@Cheesesteak](#): > > See, in my world, if a person isn’t comfortable with the terms of an agreement, they are free to NOT agree to them. " But you see, in _my_ world, when you manipulate people into signing contracts they don’t understand, knowing full well that the terms of the contract will mean financial disaster for many of them, that makes you a cheat and a liar. But I guess you’re right. It’s not poor and working people who are being cheated and exploited here. It’s the poor, innocent bankers who expect a guy who makes $11 an hour to pay back twenty grand at thirty per cent annual interest. Won’t someone think of the poor bankers? :rolleyes: You astound me. You look at the serious problem with banks and other financial institutions using reckless and irresponsible lending practices, and you manage to persuade yourself that the real problem is poor and working class people who don’t want to pay their bills. Usually it’s the lefties who upset me with cheap, simple-minded moralizing. Would it kill you to admit that what the banks are doing is grossly immoral and damaging to the nation? Or will it take another disaster on the Enron scale to get you to see that the credit card industry is dangerously out of control? ---
**Author:** ![Mr.Duality](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mr.duality/32/4098_2.png) [@Mr.Duality](https://boards.straightdope.com/u/Mr.Duality)\ **Post date:** [December 1, 2004, 3:38pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/56 "2004-12-01T15:38:16Z")
Heard a story on NPR recently on this topic. Seems there used to be a legal limits on how CC companies could change terms & raise rates, but _currently there are no legal limits._ I once had a CC account with Providian. At a point when I had a fairly large balance on that card, Providian sold the account to Aspire which had much worse terms. I soon paid off the Aspire account and closed it. For the past 3 months Providian has sent me an average of 2 solicitations per week. I’ve returned about 9 of the postage-paid envelopes filled with leftover floor tiles from when I had the kitchen floor resurfaced. I reccomend that all of you start returning postage-paid envelopes from CC companies with the heaviest material you can stuff into them (sand or gravel or whatever), so as to cost the CC companies as much in postage charges as possible. If enough people do that, maybe the madness will abate. ---
**Author:** ![Mr.Duality](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mr.duality/32/4098_2.png) [@Mr.Duality](https://boards.straightdope.com/u/Mr.Duality)\ **Post date:** [December 1, 2004, 3:44pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/57 "2004-12-01T15:44:22Z")
Amending my previous post: sand or gravel would be a bad idea. It might leak out and damage mail-sorting machines at the post office. Use old newspaper or something heavier if possible. ---
**Author:** ![scotandrsn](https://avatars.discourse-cdn.com/v4/letter/s/a4c791/32.png) [@scotandrsn](https://boards.straightdope.com/u/scotandrsn)\ **Post date:** [December 1, 2004, 3:46pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/58 "2004-12-01T15:46:56Z")
> [@LonesomePolecat](#): > > But you see, in _my_ world, when you manipulate people into signing contracts they don’t understand, knowing full well that the terms of the contract will mean financial disaster for many of them, that makes you a cheat and a liar. Certainly, and a healthy society does not allow its citizens to become easy prey for the cheats and liars of the world. I agree that the practices of the credit card companies are reprehensible. But if a person can not take responsibility for their own financial well-being, it’s not the bank’s problem. “A sucker and his money are soon parted”, as they say. If people were not so eager to believe that they will somehow never really have to pay for what they buy, what people here are calling “predatory lending practices” would disappear. Now there are cases where I think there should be some better oversight, such as extending credit to the senile or physiologically feeble-minded. Perhaps a guardian should be able to register with credit bureaus as a go-to person who must give consent before an agreement is valid. I would support such legislation. But for everybody else? Take some personal responsibility. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [December 1, 2004, 4:59pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/59 "2004-12-01T16:59:01Z")
> [@msmith537](#): > > The thing is, no money is actually made by Visa until that credit and interest is payed. It is entirely possible for a company with a great Balance Sheet to go out of business because it is not generating enough cash (basically having a crappy bottom line which is found on the Income Statement). It is to Visa’s benefit to aggregate that debt from bad customers and sell it to a company that will collect a fraction of it for a profit (usually IIRC they get paid as a % of what they collect) and then write some of it off. Actually the CC companies make right around 2% on each transaction. Doesn’t sound like too much, but if you skimmed 2% off of the sales of the local Wal-Mart and handed it to me, it would certainly exceed my annual income. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [December 1, 2004, 5:22pm UTC](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305/60 "2004-12-01T17:22:41Z")
This “take responsibility for yourself” advice would be great if everyone were as sophisticated as those on this message board. Unfortunately the financially **un** sophisticated make up a large percentage of our society. Sorry, but I don’t buy into the “They’re suckers, screw 'em!” argument. It ignores the cost to society as a whole if a large percentage of its population is driven into bankruptcy and poverty. We all (sophisticated and unsophisticated alike) would get the blowback from such an outcome, in the form of high crime rates and a crippled economy. [Previous page](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305.md?page=2) [Next page](https://boards.straightdope.com/t/are-credit-card-companies-to-blame-for-consumer-debt/277305.md?page=4)