Five Myths about America’s Credit Card Debt
Robert D. Manning, author of Credit Card Nation, busts Five Myths About America’s Credit Card Debt in the Washington Post.
One such myth: Middle-class American families have long depended on bank credit cards to manage their budgets. The truth is that the widespread use of credit cards has only been going on for one generation. No one used to use plastic to buy a coffee, or a pack of gum at the drug store. Not too long ago, it was fairly standard procedure to see people taking out their checkbooks at the supermarket line. After which, it was also standard procedure to balance those checkbooks.
Credit cards only took off with the masses when the conditions were established so that banks and card issuers were assured they could make money off of the cards:
Credit card use expanded dramatically during the golden age of the industry – beginning in the early 1980s – because deregulation suddenly allowed high interest rates and penalty fees, and credit cards became a major engine of bank profits.
Here’s another “myth” that a lot of people would also realize is false if they thought about it: The credit card industry is so competitive that regulation is unnecessary. According to Manning:
The top three issuers – Bank of America, Citibank and Chase – control more than 60 percent of outstanding credit card debt. Consumer choice has declined over the past 20 years…
(Via WashingtonPost.com)
