“Credit cards went from a luxury to a convenience to a necessity to a noose.” —Steven Green, Executive Producer of In Debt We Trust
Credit card companies hate me. I am what they consider a deadbeat, their worst type of customer. I charge everything, but I always pay my bill in full, every month, and on time. They make nothing off me, and they’d probably just as soon not have me as a customer at all. I’m nothing but a tease to them; and they’re always holding out the hope that I’ll slip one month, and trigger off all those fees just waiting to be sprung. And I guess that’s why they tolerate me—they hope that I could become someone like, well, probably like you. (“You” being the average American consumer, as that’s who this film is directed at, but Americans are not standing alone in the sinkhole of personal debt.)
See, if you’ve got a running balance on your credit card(s) from month to month, then they like you. They like that you might spend with abandon on items you can’t really afford, without ever thinking about the real cost of these items while the unpaid balance languishes on your card. They like that you might end up spending 20-50 percent on the item, by the time you finally pay it off, than you would if you were paying by cash. And they really like it when you pay the minimum balance every month, which triggers interest rates to kick in and start accruing rapidly on top of the base purchase balance. And they really, really like it when you miss your payment by a day or two, because then they can pile a “late fee” on top of your already fee-heavy balance.
None of this should be news to you, nor should it come as a surprise. Indeed, most of In Debt We Trust articulates what we already know about how credit cards work—or at least, as responsible consumers, what we should know. Too bad, then, that it seems by our spending habits that we’ve forgotten such critical information.
It’s not as if the credit card companies are withholding information; it’s all laid out in front of you, the terms readily available before you sign your name on the back of the card and start using it. Of course, these terms are written in tiny print across a 14-page foldout couched in the densest, most impenetrably obtuse terms of legalese and finacialese, nearly unintelligible to the layman, and probably unintelligible, too, to those working in the legal and financial professions. But that information provided to credit card consumers covers all the bases, lays in plain site every “trap” the card companies use to ensnare you in a cycle of Sisyphean debt. But who reads all that? I don’t, you probably don’t, and I doubt that most people working for the card companies do, either. But it’s all there, and if we become weighed down by mountains of every accumulating debt, we only have ourselves to blame.
Or do we? Can we live without credit cards, and without an attendant state of perpetual debt? These are the questions that director, writer and producer Danny Schechter (less unctuous than Michael Moore) poses as that beginning of In Debt We Trust is often surprisingly entertaining but always with an ominous dark cloud hovering overhead. The inconvenient truth presented here is that long before the seas rise and wash out cities, a looming financial Armageddon could plunge us into a financial catastrophe that would make the Depression look like boom times.
The “financialization” of American society, per Schechter (and many financial experts) has resulted in an entirely consumer-driven economy that is designed specifically and deliberately to perpetuate a state of constant and insurmountable debt in its citizens. We (the US citizens) spend more than we earn, we save exactly squat (the national savings rate is at precisely zero) and we see what used to be considered the hallmarks of American success—the car, the house, the college education— growing further and further beyond our means. Unless we take out a loan, that is. Obtaining such things is virtually impossible if we haven’t established “credit”, and thus allowed our finances to go into a “debit” state. Ah . . . there’s the rub.
Indeed, this is one of the great tricks that banks and credit card companies have managed to pull on US citizens: almost every major aspect of our modern financial lives are tied into the use of credit cards and our credit scores (an arbitrarily determined number assigned as an indicator of trust for the lenders, a trust which the companies routinely violate, in turn, with impunity, e.g., you’ll probably qualify for a mortgage well beyond your means). Woe to those who don’t have a credit card and an established credit (actually a debit) line who try to: rent a car; buy a car; rent a hotel room; pay for college; buy a house; book a flight. Credit is no longer a luxury (of the middle and upper classes), but a currency of necessity; more important than cash money (lower classes still use cash, barter, and alternative currencies).
But it wasn’t always this way. The financial industry, in collusion with politicians from both sides of the political divide, have, in the last 30 years, worked tirelessly to consolidate, entrench, and deregulate terms of credit, loans, and interest. Ten major banks control 90 percent of the wealth moving through America. They issue 1.5 billion cards to 158 million users (that’s about 10 cards per person). They offer throw-ins, freebees, and other illusions of consumer benefit: “0% interest rates” (which expire quickly); no annual fees; bonuses for moving debts from other cards. And then they market the hell out of the cards, spending tens of millions selling the good life, the easy life that is attendant with charge-charge-charging (viz. especially the brilliant “Priceless” MasterCard ad campaign, which pitches warm fuzzy life experiences beyond value, all for spending piddling amounts on the card). But where are the ads warning about the consequences of amassing debt, of spending way beyond your means, of being mired for years or decades in insolvency and bankruptcy?
If the statistics on college aged kids, and 20- and 30-somethings, and their credit card debts are any indication of the state of the consumer in this society, an entire generation is going to be buried alive by the consequences of irresponsible spending which they are encouraged at nearly every turn in life, to do. Credit card companies prey on college age people, particularly; they swarm over college campuses at the start of each semester, often the first people that greet students as they arrive on their first day. They give young people huge credit limits with little regard for their ability to pay back, knowing full well that if they can hook them in to using credit cards at this stage in their lives, they will be roped in for life. And it works: coming out of college, kids are usually saddled with an average of $20,000 worth of debt, and that’s in addition to student loans. And what awaits them is even worse, as they try to establish themselves in careers and life, always behind the eight ball: more loans, more credit cards—all thrown into an endless loop of debt which will only perpetuate and possibly escalate.
But even more sinister than targeting middle class college kids, the credit companies are most intent on hooking and catching the poor, the desperate, those living on the very cusp of ruin, with mounting bills and costs and few ways to make ends meet. The very people who the least means to meet basic needs sign up for multiple cards, playing them off one another in a perpetual shell game that can only end in ruin. And when the banks come a-knocking for collection, people are forced to take out short term, high interest loans on their cars, or mortgage their house (if they own one), or take out an “advance” on a credit card – cash advances are charged a steep interest rate. In the poorer neighborhoods throughout the US check cashing joints will cash a payroll check for a fee, rent-to-own stores charge high interest on furniture and electronics, and tax prep storefronts offer loans against tax returns. Indeed, loaners camp outside army and naval bases and offer quick, high interest loans, secured against future paychecks, for cash-strapped military personnel. Such operations are all just fronts really; just some hydra heads of many backed by the companies and banks that profit from others’ debt.
Make no mistake about it: the banks and the credit cards companies are running the show, in collusion with and sanctioned by the government, by politicians from both parties. They have everyone in their pockets. In 2005, $140 million worth of contributions from banks, card companies, real estate, and business associations, pushed through legislation that revised bankruptcy laws, making it harder to declare bankruptcy, and easier (naturally) for companies to completely destroy a debtor’s life. It helps also, that most of the committees in charge of banking regulations are dominated by members from states where the banks and companies make their headquarters (Delaware and the Dakotas, as you’ll see identified somewhere on the small print in your monthly statement).
As consumers the odds are stacked against us; the house wins every time. So, then, what’s the solution? Educating the public could have a backlash effect: if everyone suddenly wised up and cut up their cards, the whole economy may come crashing down because the debt itself is only a symptom of wider underlying forces of disparity in wages versus the ever escalating costs of daily life. It seems we’re living in a neo-feudal state where we’ve become perpetually enslaved to those who can front us the money we need to meet basic needs such as housing and transportation.
What is the solution? I don’t know that Schechter offers any—maybe because there is no solution. Maybe we sit tight, wait for the economy to go to hell, and hope that we have enough stashed under the mattress while our neighbors collapse around us. Or maybe it’s as simple as choosing to trim our personal excesses. After all, the credit card companies are not forcing us to buy HD TVs, second cars, and extensive wardrobes.
What annoys me about this film is little or no mention of what role personal responsibility plays in all this. (With an understanding that a medical crises or the loss of a job can devastate a family’s economic situation, forcing them to use credit merely to sustain themselves and this, of course, and be disastrous.) But I’m talking about the relatively affluent who wrack-up unnecessary credit card debt. As vile and usurious as the credit card companies’ terms are, those appealing ads to buy (you name the luxury item) are not the equivalent of holding a gun to our heads. In many cases, we choose to charge it without giving it a second thought. This film is worth the cost (you can charge it on Amazon.com), as it will get you thinking about your personal budget – and you should be thinking about your personal budget.
Extras for the DVD are scanty, but that matters little, as the film covers the subject pretty thoroughly. Extras include three short interviews with Lorraine Bracco (who went through bankruptcy a few years ago), writer/ director/ producer Schechter and executive producer Steven Green (quoted above) don’t really add much to what’s already in the film itself. The real bulk of supplementary materials are to be found online at InDebtWeTrust.org.
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