In Defense Of Credit Card Companies

by Mark Brinker

A closer look at creditOver the past several weeks there have been numerous reports slamming credit card companies for their alleged shady policies and practices. I’ve even seen where certain individuals are leading a “debtor’s revolt” against the credit card companies to “send them a message”.

Ira Rheingold, director of the National Association of Consumer Advocates, has said, “Banks have done really well figuring out ways to screw people without making themselves legally liable.” On some specific items I agree wholeheartedly with this statement. 

As someone that has worked in this industry for the past 15 years helping consumers resolve their excessive credit card debt, you might be expecting me to jump on the bandwagon and further villify the credit card companies. If so, I’m sorry to dissappoint you.

The reality is that the availability of credit cards does much more good than harm. Consider the following:

Convenience

  • Can you imagine trying to make a flight or hotel reservation by going to a local travel agent and writing a check? Not a chance. Nearly everyone these days makes their travel reservations online at their convenience … with their credit card.
  • How about shopping? I don’t know about you but I do the majority of my shopping online, especially during the holidays to avoid long lines and crowded malls. Doesn’t matter if it’s 2am in the morning. I buy my stuff and UPS delivers everything right to my front door in a matter of days. But none of this would have happened without a credit card.
  • How about something as simple as putting gas in your car? I can’t remember the last time I went inside to pay with cash. Nowadays it’s pay at the pump with your credit card. Easy peasy lemon squeezy, and I’m done.

I could go on and on with more examples, but you get the point. Credit cards absolutely do make modern living very convenient. 

Commerce

  • Every year hundreds of billions of dollars are spent on goods and services using credit cards. Businesses would lose a ton of money if everyone were forced to go back to the olden days of paying via cash, check or money order.
  • I suppose you could make the argument that slowing things down a bit by going back to the old-fashioned methods of commerce could be good for the environment as well as curb overconsumption. But even if everyone stopped overconsuming, the lack of credit cards would still harm many legitimate businesses by removing a quick and easy form of payment.

So, yeah, credit cards definitely do help keep the economy moving.

THE REAL REASON WHY MANY PEOPLE ARE MAD AT CREDIT CARD COMPANIES

There is definitely room for improvement at many credit card companies. I’m not disputing that. However, what I have found is that a lot of peoples’ anger and resentment is not really about the interest, late fees or overlimit fees. It goes deeper than that.

The real issue for a lot of people is that they are mad at themselves because they spent beyond their means, plain and simple. And they want to make the credit card company out to be the bad guy because they overspent. 

There, I said it.

Let’s remember that no one puts a gun to our head (in most cases) and forces us to make purchases with our credit card. It’s all voluntary. And if you pay off your bill in full each month you don’t incur any interest or fees. Not a penny. It’s actually a pretty good deal as long as you remain disciplined about your spending.

Yes, there are certainly situations where a person might have no other choice but to temporarily use their credit cards just to get by, such as paying for unexpected medical expenses or to buy groceries for their family while they are unemployed. That’s fine. I have no problem with that.

But you have to remember that credit cards are not monopoly money. Eventually you’re going to have to pay the money back, probably with some interest. I think any reasonable person understands and accepts this.

The problem I have is when people start making bogus excuses when it comes time to pay their bills. If you owe the money, you owe the money. It doesn’t matter if your debt was incurred from a 60-inch plasma TV (that you really didn’t need) or from basic living expenses just to survive, either way you owe the money. And if you can’t pay as originally intended, then you’re going to need to explore other options for resolving your debt.

IT’S OK TO BE MAD (JUST DON’T STAY MAD TOO LONG)

If you screwed up and spent too much, just admit it and accept responsibility.

I’ve screwed up financially. I have friends and family that have screwed up financially. I’ve had clients that have screwed up financially. It’s ok. It doesn’t mean you’re a bad person. It simply means you “miscalculated”. It happens. Move on.

What really matters, though, is how you respond to your financial mistakes. Are you going to be the “victim” and blame everyone else for what happened? Or are you going to accept responsibility for what happened and immediately begin taking corrective action to try and fix the problem? That’s what really matters.

focus on solutions

 

 

 

  

 

 

 Links to debtor’s revolt articles:

http://www.huffingtonpost.com/2009/09/14/debtors-revolt-woman-refu_n_285394.html

http://www.huffingtonpost.com/2010/01/04/ben-pavone-california-law_n_410630.html

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