thank you

I’m sorry I wasn’t more clear. Keep in mind that there is only so much information that I can put in a blog entry! I don’t think the increasing (and already high) amount of consumer debt is a good thing - here’s a recent article on it, which you may have to cut and paste: http://www1.pressdemocrat.com/article/20080224/NEWS/802240307/1033/NEWS01

I think that the credit card industry is not only ripe for abuse - there is lots of abuse now. In fact, credit card companies specifically target people who are in the worst financial shape, and those least likely to use their cards responsibly. In industry speak, these people are known as “revolvers” - those people who will carry a balance from month to month, either out of necessity or habit. They are the recipients of high rates and fees, and the primary source of profit. The 35-40% of people who pay off their balances in full each month are known as “deadbeats” - they are money losers for the industry.

While industry policies have always been draconian (the words of an ICCR member who used to work in the CC division of a national bank) they are becoming more that way as banks hard-hit by the sub-prime crisis are hoping to offset some of their mammoth losses by squeezing their credit card divisions for more profit. One unfair policy is universal default, which penalizes consumers who make as little as one late payment on one card with increased rates and fees on all of their other credit lines, even if they have never been late or in default on another account.

While lenders blame individuals’ lack of personal responsibility for getting in over their heads, they are usually complicit in consumers’ march toward insolvency. And lenders expect (and usually receive) government bailouts and assistance when they make extremely poor judgments with their lending policies.

For information on why the practices of credit card practices are predatory, “Maxed Out” and “Credit Card Nation” really are good sources, as is the documentary “In Debt We Trust.” I would also be happy to send you any number of files I have on the subject.

In regard to your comment about the ability/inability of households to obtain credit cards, I don’t know if it’s that simple. For instance, I have the ability to get a credit card and use it wisely, but choose not to because I don’t want to support the industry.

-Chris

Thanks for the report of the ICCR summit on credit card abuses. There is no question that it is an area of the financial services industry that is ripe with the potential for abuse by provider and user alike.

However, simply to say that “credit card debt has reach an all time high” with the implication that this is obviously a part of the problem does not tell the whole story. That “all time high” usage might be simply because more Americans than ever have learned how to use credit cards to keep track of monthly expenses, but are paying their balance off each month, in which case it is a positive rather than negative indicator pointing to more astute financial management. Or it could indicate that Americans who use credit cards are using them to a greater extent, thus receiving more of the various benefits that come with credit card use (0% credit for 30 days, free travel insurance, free rental car insurance deductable, etc), another positive indicator.

As reported on MSN recently, Federal Reserve data shows that one third of all households pay off their credit card balances in full each month, indicating I believe an efficient use of a credit card. It might be an indication of a problem that 43% of American households carry a credit card balance over from month to month, and that balance at that time was $2,200 or less, but it would be helpful to know if that number was increasing or decreasing at the same rate of growth in the use of cards per se. One quarter of households do not have credit cards at all, indicating the inability to get one, or the refusal to use one out of recognition of their own inability to use it wisely.

To wit, we need to know more!
Lynn

Unfortunately, as a financial services company, MMA is basically limited to investing in publicly traded corporations. As with any other publicly traded retailer, Wal-Mart’s success will inevitably knock locally owned stores out of business. Since we can’t ask Wal-Mart to close down its stores, our best option is to make Wal-Mart’s operations more sustainable in the hope that our efforts will lead to global social and ecological improvements, and pressure other retailers to do the same.

There probably isn’t a good answer to this one, but that is a big concern for me.