By Mariam Williams
I watched the President’s town hall meeting about credit card regulation the day after I read this Time Magazine article as I took a break from revising my upcoming feature story on bankruptcy attorneys (read it in the July 10th issue of Business First, in the special section, The Business of Law). President Obama and the Senate seem to think that if the dangers of credit cards—the freedom of the card companies to change interest rates at will for no reason at all; the length of time it would take to pay off a balance if you only paid the minimum payment each month; the fees and tricks that set you back just when you’re making a dent in your debt—were spelled out to consumers in plain English and large fonts, or abolished all together, people would use the powerful pieces of plastic more wisely, or not at all, and not have so much debt.
When I worked in retail, I accepted an extra discount as motivation to encourage irresponsible spending (especially on college students; it was ridiculously easy to get them approved for credit). I often used this line when trying to push store credit cards on the wiser, more unwilling customers: “You don’t have to wait to pay it off. You can open the card to get the savings and immediately pay off the whole balance with cash or check, while you’re still here at the register. Why not save the 15% today?” Some saw that the glittering “Get 15% off your purchase and double rewards points when you open a Store Card today!” signs strategically placed on fitting room doors and at the register weren’t gold. Others “saved” 15% on that purchase and then paid almost double that amount in interest when something kept them from paying the balance off in full later in the month (just like people with adjustable rate mortgages couldn’t refinance because—oops—there was suddenly no credit available).
My own credit has NOT been damaged by my employment hiatus. Around this time last year, I was blessed to encounter a good sales woman hocking a credit protection plan that would pay a nice of chunk of my credit card balance over a set period of time in the event of major life changes or unforeseen emergencies. Due to my present misfortune, the card that still carried remnants from days when I had California dreams now shows such a healthier balance that I sometimes log into my account just to see the number and smile. I chose to close the card that had a manageable but less attractive balance and that didn’t have the insurance after getting word from Bank of America that the interest rate on that card would be going up by 5% this month, because they felt like it.
And yet, as much I enjoy lifting my middle finger to Bank of America through my credit boycott—and even though lack of disposable income has forced me to sever my ties with retail anyway—I find myself tempted to use the plastic again, to treat myself to something pretty, to enjoy a break from Kentucky, to see a show I can’t manage to get free tickets to, to have a carefree weave again, to get some work done on my car, to get a massage, to eat a lavish dinner, to buy some new computer software, to enjoy Memorial Day sales, to do any number of things I don’t need to do to survive and probably shouldn’t do even when I have the cash to do them.
The sad part is, I know what credit companies are capable of. I know the trappings of the minimum monthly payment. I know shit happens that you don’t plan for and happens so quickly that your balance has gone from $100 to $10,000 (actually, I’ve never seen a credit card balance that high, but you get the idea) before you can even make a minimum payment. I don’t need the fine print reworded, and I’m still tempted.
I fully support eliminating credit card issuers’ unfair practices. People paying off their debts in full or repaying them steadily each month shouldn’t be punished so that banks can cover the difference left by those who are defaulting, nor should those faltering due to unemployment or other unforeseen circumstances be punished. To suddenly have your interest rate doubled could easily make a manageable situation impossible. To have your credit limit dramatically cut could damage your credit score, which is something potential employers check, which could make you end up in the unemployment line longer, which could lead you to default on your payments, which gives card issuers incentive to increase everyone’s rates …
Obviously, I see the need for regulation. Our insatiable craving for stuff, however, and our economy’s dependence on it, needs to be reigned in as well, or at least rethought so that it doesn’t stand on the shaky ground of massive debt.
I’m tempted, but I haven’t done it, partly because I know better. What percentage of the American population would resist the temptation if everyone knew?
© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content. Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.