Are You a Credit Card Junkie?
If you haven’t seen the movie Maxed Out, go watch it now (you can stream it on Netflix). Not to say that there’s anything completely revelatory about it – we all know that the credit card industry is predatory and heartless by nature. But Maxed Out highlights how dire the situation really is. And the issue doesn’t fall squarely on lack of legislation and or poor personal restraint – it’s about the whole package: how credit is marketed, how credit card companies profit, how credit card companies treat their customers and the political attitudes towards the credit industry.
One of the most apt characterizations of the credit-industrial complex was by Harvard Professor Liz Warren (among others) who likened consumer lending institutions to drug dealers. Warren says:
“One of the most popular customers of credit card companies right now [are] people who have been through bankruptcy. The reason, as one of the vice presidents of Mastercard once explained to me, is that they they have two things about them: One, that they can’t file for bankruptcy again and the second is that they have a taste for credit. And I said, ‘What does that mean?’ He said ‘Well, they’re willing to make minimum monthly payments forever. And that’s where we make our money.’”
That’s not customer loyalty. That’s codependency.
As we all know, credit card debt is one of the toughest vices to kick. And according to the movie, the average American household spends $1,305 on credit card interest payments every year. That’s one costly habit.
When did you get hooked on credit?
Maxed Out goes on to discuss how credit cards reel customers in. As we’ve discussed at length here at MYC, one of the oldest tricks in the book is to target young college students who just turned 18, are cash-strapped and relatively financially illiterate. They setup booths on campus (or, as of February 2010, just a little bit off campus) and offer free T-shirts, free sandwiches or some other throwaway trinket. After that, they start mailing them “convenience checks,” cash advances and other costly incentives that encourage them to spend, spend, spend – whether it’s on books, beer or room and board. In the movie, we meet the mother of one college student who came home with $12,000 of debt after the first semester. This is debt that follows students long after they’ve graduated, if they do it all. In fact, Duck9.com found that “financial pressure” was the number one reason for students dropping out of college, trumping both academic disqualification, health problems and poor social fit.
Who are the pushers?
The debt collectors interviewed in Maxed Out don’t hesitate to discuss the mind games they play with debtors. According to one pair of high octane collectors:
“I got you on the phone, I was best friends with you, I found out everyrthing I could about you and that gives me power. Information is power. ”
“You attack pride fear integrity, a person’s honor… I like to make the analogy that you’re like this pirate on this pirate ship and you got that person and you’re walking them out on the plank and you walk ‘em out as far as you can out on that plank without pushing them off and then you bring them back to get what you want from them.”
Of course, it’s easy to categorize the payday loan sharks and the debt collectors who harass your family members and neighbors over your debt as a different class of the lending industry, the seedyunderbelly of an otherwise ethical, conscientious industry. But as the film points out, major banks, like Wells Fargo and Bank of America, fund or outright own the largest cash checking companies. That’s because they want to keep you in debt. They want to keep you out on that plank.
How does your credit addiction affect your life?
As with other addictions, such as alcoholism and drug abuse, it’s difficult to distinguish when a pattern of behavior has crossed the line between overexuberence and full-blown addiction. The easiest test is to look at how credit affects your life. Ask yourself these questions:
Has your credit card debt been affecting your personal relationships?
Tension in long-term relationships is often either caused by or manifested in clashes over finances. “Money problems” are often cited as the number one reason for divorce.
What was your last fight about with your spouse or significant other? Do you keep any secrets from them? If so, are they about money? In a credit-obsessed country where over half of marriages end in divorce, could there be a connection?
Have you compromised your goals or career for the sake of paying off debt?
We’re all familiar with the depressing notion of a “crack whore.” It’s someone so addicted to crack cocaine that they sell their body, their dignity and their health just to feed their addiction. Maybe that’s an overblown analogy to draw. But maybe it’s not. Ask yourself this:
- Do you hate what you do for a living? Would you be working at your current job if you didn’t have so many bills to pay?
- What would you be doing with your life if you were debt free?
- Do you work overtime in order to make ends meet?
- Would you consider yourself a wage slave or a debt peon?
As pointed out in the Wisebread article I linked above, many people object to the idea that they are shackled by credit card debt. The author of the piece says:
Those making free choices aren’t slaves, they said, even if their poor choices result in a hard life. There’s some truth to that. But there’s also some truth to the notion that our system makes it easy–almost automatic–for people to trap themselves.
It’s undeniable that most roads lead to debt. It’s nearly impossible to get an education, a car and a home without going thousands of dollars into debt (unless you’re wealthy to begin with). In order to finance these important steps in life, you do have to play with fire to a certain degree. And it’s all too easy to get burned.
How do you get out of debt?
How does one get out of debt? It’s not easy. Hardly anyone can do it by themselves. Debt therapy, financial self help and personal finance advice has become a bona fide industry in itself (Suze Ormann, David Ramsey, the vast universe of personal finance and debt management blogs with millions of readers worldwide). You are constantly hearing terms like debt counseling, debt rehabilitation, debt consolidation. And then, of course, there’s bankruptcy – the government-sponsored halfway house between debt and a supposedly clean slate (though your credit rating will be besmirched for years to come). Debt, like addiction, cannot be broken without intervention.
And then, as sadly illustrated by Maxed Out, there are some that do get pushed all the way off that plank by debt. There are the ones that feel so overwhelmed that they choose to disappear – to abandon their families and drive away, on the run from their own insurmountable debt. More tragically, some choose to end their own lives.
Living in harmony with credit and debt
Like drugs and alcohol, people react differently to credit. Some are naturally averse to it (“I never touch the stuff”), some carry on healthy relationships with credit and others become fatally addicted to it, falling into a vicious cycle of mutual abuse. Every single advertisement for a malt liquor or beer implores you to “enjoy responsibly.” Meanwhile, all credit card companies can talk about is all the “rewards” you’ll receive for overspending.
Something fundamental has to change about the way our society coexists with credit and debt. An arrangement where credit and debt serve to help us, rather than merely profit from us, is hard to imagine. But the first step to overcoming any harmful addiction is admitting that you have a problem. Films like Maxed Out signify that we as a society are reaching a breaking point and we are finally realizing that something has to change. How will that change happen? Will someone or something intervene? Or will we breakdown, fall apart or self-destruct?
Are you addicted to credit card debt? Do you feel victimized by the credit card industry? Or do you feel that it’s just a matter of will power and personal responsibility? Let us know your thoughts in the comments.
Photo remixed from ad-vantage and stopnlook.
Related posts: