Who's to Blame for CreditCard Debt: Shoppers, Banks, or Congress?

I personally feel each of the three has a share in the blame.

I just wanted to say after having a card that I used and paid in full each month for 9 years, paying cash when ever I could, there came a time when I actually needed the credit, and low interest rate. Being young, without a home to get a HELOC or some other fixed, low interest credit source, I had to use a credit card during a transition in my life. Since my balance went UP, and I was now making payments (Well above minimum, and certainly on time) my credit card company sent me a letter saying that my rate was going up nearly 15% anually, to above 20%.... Why? Why do they do that? its like buying a couch for 700 bucks, and then 3 months later the furniture store calls and says "actually that couch is 1000 dollars now, even though when you bought it, it was 700. Send us the 300$ asap please." that is bad business. Needless to say, I will bend over and pay off this balance, and then hopefully never have to use credit again. Credit is an amazing thing, and shouldn't be feared, when its given in reasonable terms. Granted I knew that "my rate could change" when I used my card, I just assumed that it "may change" when I miss payments, or do something wrong... not when I am doing the right thing. Banks deserve the high charge off rates they are facing now because of shady loansharking practices (try to lend your friend money at 15-20%... its illegal). People who got in WAY over their heads (the average american has around 7 different credit cards) are responsible for that too. I have no sympathy for either, just like you shouldn't have sympathy for me. Long story short, we should learn from this gigantic mistake. People: use credit wisely and you will be okay. Banks: be good business people and you won't be seeing tremendous losses. If both parties learn from their mistakes, I feel we will be back on track in no time.

The real problem comes about when the government steps in. When you burn your hand on a hot stove top, you are more careful next time, right? They want us to all wear mittens, so we don't get burned, thus taking away risks, and preventing people from learning important lessons. Its an idea that makes you feel good, but ultimatley it does nothing to correct irresponsibility.

Here is a defense for banks...Is it just me or does society place blame when they are partially at fault. Did the banks that extended them credit and loans cause them to default? You yourself make the ultimate decision what is financially responsible for you. Most people act in accordance. I constantly hear the excuse that banks extend credit knowing full well people can't pay it back. That does nothing good for a bank if people don't make their payments. They want people to pay. A sales offer is only an offer until you sign. I do not deny that there are some deceptive salespeople. You still always have the right to read before you sign. That does not give some people across America, who extended themselves to the hilt intentionally to try and gain an advantage or dig themselves out of a hole, a right to place unjust blame on bankers. I'm not rich because I didn't extend myself for the ultimate gain. Don't blame others for your failures. I feel bad for all the people who did right and are getting crushed on their stocks due to their overextending neighbors.

Hi Terry!
If I lost my job,etc.. I WOULD NOT be using a credit card,period.
My father is going to be 100 on his next birthday,my mother will be 95. They came to America in 1951 as war refugees.
They have never had a credit card nor did they ever purchase on credit basis other then their first home in 1959. They worked at minimum wage jobs and sent both me and my sister through school. Never looked for hand outs from the government. The community network was a basis of assistence that proved invaluable. Neighbors helped their own and pooled resources. Banks were below outhouses in esteem.
As of now, I live on a cash only budget. Can't buy it outright? Don't buy at all.
People have to understand the gain in income they realise when they do not owe monthly interrest rates they accrue by using that damn plastic card frivilously. It gets much more serious when they use it in dire straights. Exhaust all options before pulling that card out of your wallet. Burn the damn thing. It will not provide any salvation. You only dig a deeper hole.
Our society,as a whole, is to blame for our "credit crisis". No one sector can be singled out as the main culprit. No one has twisted any arms to buy into the failed system. Every sector saw dollar signs floating in the air. "Easy Money" "Easy Lifestyles". Is that the "Savage truth?"

SAVAGE SAYS: I don't write the headlines -- only the columns! And I'm glad it caught your attention! Your post is a wonderful lesson to others -- Thanks for writing.

When I first saw this article, I thought I had a pretty good idea who was to blame, "well, the consumer, of course!" But then I thought about it, and it seems to me that there is no one single person or group of people to blame, but rather, all groups are responsible to some extent or another.

Consumers who max out their credit cards, then pay only the minimums every month are a large candidate, to be sure, but what about the credit card companies who keep giving cards to these people, knowing that they will never be able to pay it back? We have three separate credit agencies in this country that keep a running tally on how well you pay your bills, and most banks that give out credit cards do a background check anyhow, so you cannot convince me that they have no inkling of whether the person they're selling a card to is capable of(or planning on!) paying back the purchases they made on plastic.

And even if they don't check these things, that doesn't absolve them of responsibility. Checking such things should be a matter of course. And requiring that someone take a program on fiscal responsibility is required when purchasing a house for the first time (where I live, anyhow), so why not with credit cards?

The government has its own share of the pie, I'm sure, but I will not comment on that, because I have no relevant data that is not hearsay to present on that matter, save perhaps setting a poor example with a billion (trillion?) dollar deficit.

But there is one group that all those pointing fingers seem to overlook, and considering my age(25), I am perfectly aware of how bad it appears for me to saddle any portion of the blame here, however I feel it is just and honest to do so. Parents often cry foul when blamed for almost anything, often saying things like "how was I supposed to know?" or "well, my parents never taught me", but if you are honest with yourself, you should realize that these things are cop outs. Did you buy your child every single thing that they ever asked for? Did you yourself spend money like it was (pardon the expression) going out of style while your child imitated you with their toy cash register and fake credit card? When they got older, did you never sit down with your child and teach them to balance a checkbook or explain them the value of a dollar?. Do you, even now, bail them out every single time they get too far behind on their bills? Just think on those things the next time you feel flabbergasted at the amount of debt your child has.

I have not touched on it much, but I must now point out that the individual is to blame as well. When you signed up for that first credit card, did you think you were simply getting free money? Were you planning to pay the money back? If so, when, and why could you not simply have saved up for your purchases? If you treat depression or some other psychological issue with "retail therapy" as the behavior seems to be called, why did you not seek help sooner, beFORE you fell into extreme debt?

Perhaps I am strange for my generation, but I am personally terrified of credit cards (I own zero for that reason), so I cannot understand how so many people can get so crazed over the urge to spend, spend, spend! money that doesnt belong to them, them, them!

In closing, I would like to state that I am not typing this to condemn any single group, or even to condemn all groups. I merely wish to point out that each has their share of the blame, and until all groups own up to that share, we will not be able to solve it, nor will it simple "go away" on its own.

No one is pointing a gun to your head when you apply for a credit card and going for a spending free.

Buying something you can't afford, using the money you don't have and unable to pay what you spend is the #1 cause of debt.

If you don't learn to be responsible for your money, no one will.

Instead of treating a credit card like a personal loan, you would do well if you treat it like a charge card. You should always pay the balance in full every month.

If this is the case, why should you have a credit card? Simple, a convenient mode of payment.

I pay cash only if I can get discount out of the transaction. Otherwise, I don't want to run the risk of being rob.

I thought I'd just post comments, but can't resist thanking you for recognizing my "mission" over all these years!

Anonymous-
Who is "you"? If you are referring to Terry Savage, YOU need to read what she has written so many times;pay off your debts.Instead of attacking her,you should be thanking her for her pleasant but persistent speaking out about the things that get US in trouble. I do agree our government should taking care of the responsible people of this country. Terry,you're the best!

As for who is the to blame. The employer and the government. Yes, I said the employer. Most workers in the country are not paid good. If everybody was paid good. They would be less people needing credit cards. The government changing the bankruptcy law was a mistake. They are baling out the wrong group. They should be baling out the consumers. For example, pay off peoples mortgage if under $200,000 for a family of 4 for a family of 2 the mortgage would have to be under $100,00. There would be no string attached. You just go to a local bank and they will wire the money to your mortgage company and it wont hurt your credit recorded or count against any type of benefit you currently get and it will be exempt from federal and state taxes. That would fix the economy real fast.

Just a note, to the Anonymous posters. Not everything on the card is frivolously. People use it for needs like a repair, furance went out and so forth.

Also, When you see someone using a card, it is not necessarily a credit card, it could be a debit card.

It is clearly the consumer to blame. When people charge everything from a cup of coffee to thousand dollar purchases it is clearly the choice of the consumer to use credit cards. Why don't you address this mania of charging everything? I grew up when credit cards were coming of age and we were taught they were to used only in an emergency. Now it's expected that everyone should carry a balance. This thinking has made the banks rich. They pay you 1% for your money and loan it back through credit cards at 20%+++. Suddenly the three dollar coffee becomes a ten dollar cup.

Show some responsibility and stop blaming everyone but the card user. I pay for every thing with cash. There is nothing wrong with that. Why bring in a third party into every little business transaction??? By using cash in as many business transactions as possible makes you a wealthy person and not the banks.

Responsible people are getting sick and tired about those idiots who carry huge debt loads. For the most part these people are stupid losers. Why does society worry about them? When are people like you and the Obama administration are going to stop focusing in the losers of society and start taking care of the responsible people of this country. Blaming the banks and congress is like blaming Seagrams for drunk driving.