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The Death of the Credit Card Economy
Slate ^ | August 30, 2008 | Daniel Gross

Posted on 09/02/2008 8:12:14 AM PDT by reaganaut1

[C]onsumer credit became so pervasive that paying cash became passé. Want a new $32,530 Dodge Ram Crew pickup? Take a lease. Sick of your old house? Get a 100 percent mortgage and trade up. Face lift? Round-the-world cruise? New PC? Three-hundred dollar sushi dinner at Nobu? Whip out that plastic. It was this behavior—the endless willingness of lenders to lend and borrowers to borrow—that kept the consumer economy humming uninterrupted from the early 1990s, straight through the brief recession of 2001, until the credit meltdown of 2007.

But many of the lenders who extended credit recklessly are now acting like a single twentysomething who, after having a few bad dates, takes a vow of celibacy. Students returning to college are finding that student loans have vanished. Retailers who freely extended credit to any customer with a pulse are deploying bean counters armed with sophisticated software to sniff out potential deadbeats. And when higher rates and fees don't deter their borrowers, credit-card companies resort to slashing credit lines. "We predicted there would be some degree of spillover from the mortgage meltdown," said Curtis Arnold, founder of CardRatings.com. "But the credit line reductions by big credit card companies in the last six months have been fairly unprecedented."

(Excerpt) Read more at slate.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: bankcard; bankcards; banks; clintoneconomy; clintonlegacy; credit; creditcards; cultureofcorruption; democratscandals; economy; spending
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Thrift is a virtue. People cutting back their spending to live within their means is not a problem for the government to solve.
1 posted on 09/02/2008 8:12:14 AM PDT by reaganaut1
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To: reaganaut1
It was this behavior—the endless willingness of lenders to lend and borrowers to borrow—that kept the consumer economy humming uninterrupted from the early 1990s, straight through the brief recession of 2001

Hmmm. "early 1990s" into 2001. That would be the entirety of the Clinton era. So much for Clinton's economic genius.

2 posted on 09/02/2008 8:14:47 AM PDT by weegee (The higher taxes that Obama demands of Americans are 'Above my Pay Grade'.)
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To: reaganaut1

Agreed! Many people are going to learn the hard way, sad to say.


3 posted on 09/02/2008 8:18:30 AM PDT by cvq3842
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To: reaganaut1

ping


4 posted on 09/02/2008 8:22:29 AM PDT by lmailbvmbipfwedu
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To: reaganaut1
Thrift is a virtue. People cutting back their spending to live within their means is not a problem for the government to solve.

Amen to that.

5 posted on 09/02/2008 8:24:23 AM PDT by Centurion2000 (Strategery & Shardenfreude = Stratenshardenfreudery)
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To: reaganaut1

Dumped my credit cards and decided that a debit card was much better. the convenience of plastic, yet only use it with the funds to cover are present in the account.

Paid off my credit cards, and now live a debt/interest free life. Best move I ever made


6 posted on 09/02/2008 8:24:30 AM PDT by Ouderkirk (I will not vote for Obama not because he is black, but because he is RED)
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To: weegee

So Slate Magazine is saying it was the Decade of Fraud? I thought it was only the VRWC who thought that...


7 posted on 09/02/2008 8:24:42 AM PDT by PhatHead
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To: reaganaut1

Funny, I didn’t see the part about the dhimmicrats borrowing from social security, etc., and putting IOUs there (and calling it a “lock box”). I pay out my credit card in full each month. It’s about time the lame-brain congress critters start doing the same with my country’s budget.


8 posted on 09/02/2008 8:24:48 AM PDT by Da Coyote
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To: Da Coyote
Funny, I didn’t see the part about the dhimmicrats borrowing from social security, etc., and putting IOUs there (and calling it a “lock box”). I pay out my credit card in full each month. It’s about time the lame-brain congress critters start doing the same with my country’s budget.

Amen, brother!

I'm only 23, so I havent had credit cards all that long, but I've always paid off my balance every month and never let it ride and pick up interest. The only outstanding balances that I have on credit are the interest-free promos, and even then I set aside the cost of the item I purchased, don't touch that money, and let it accrue 3.30% in a high-yield while paying off the balance month-by-month.

Just a few years ago, when I first went to college (age 17), I got a Visa with a $500 limit "just in case." I rarely used the thing, and always paid off the balance when I did. Two years later, I received a letter stating that they had raised my credit limit to $11,800. I was a 19-year-old kid at college, on scholarship, with no job (at the time) and no assets...with the potential to get over $10K in debt at the drop of a hat???

I called and had them reduce that to $1000 immediately. Such irresponsibility on Visa's part.

9 posted on 09/02/2008 8:33:50 AM PDT by Zeppelin (Keep on FReepin' on...)
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To: Ouderkirk

Dave Ramsey? Living like no one else so later, you can live like no one else! He is an inspiration.


10 posted on 09/02/2008 8:35:15 AM PDT by silverleaf (Fasten your seat belts- it's going to be a BUMPY ride.)
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To: Ouderkirk
"Paid off my credit cards, and now live a debt/interest free life. Best move I ever made"

The only problem with debit cards is that some places won't accept them. You can live just as "debt free" with credit cards---you just have to have the discipline to pay off the balance EVERY MONTH---IN FULL.

11 posted on 09/02/2008 8:37:49 AM PDT by Wonder Warthog ( The Hog of Steel)
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To: Wonder Warthog
The only problem with debit cards is that some places won't accept them.

I have one credit card for just such occasions. However, it is very rare where such a card is not accepted as any other credit card would be.

I have not needed the services of my credit card in over 18 months. It changes the way that you plan for major purchases.

12 posted on 09/02/2008 8:46:58 AM PDT by Ouderkirk (I will not vote for Obama not because he is black, but because he is RED)
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To: Ouderkirk
I use credit cards and never carried any debt on them. You should read some of the horror stories of debit cards. Since a debit card charge goes straight out of your bank, you run the risk of your funds being unavailable during challenges to charges etc.

I once had issues with a computer reseller. Finally, I just turned it over the credit card issuer with documentation of all the issues, signed their affadavit and was done with it. Charge taken away. Probably wouldn't have happened so easily with a debit card.
13 posted on 09/02/2008 8:48:33 AM PDT by Codeflier (We just had 8 more years of a democrat president in office, we already know what happens!)
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To: Ouderkirk

Me too. I don’t own a damn thing, but I don’t owe a damn thing either.


14 posted on 09/02/2008 8:48:35 AM PDT by shorty_harris
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To: reaganaut1

I’m seeing more pre-paid credit card offers than ever, it’s driving me insane.


15 posted on 09/02/2008 8:52:05 AM PDT by eclecticEel (men who believe deeply in something, even wrong, usually triumph over men who believe in nothing)
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To: reaganaut1; All

Credit Card fees will cost you $427 this year even if you use cash.

http://money.cnn.com/2008/07/28/news/credit_card_interchange/index.htm?postversion=2008073117

This needs to change. Those of us not using electronic payments shouldn’t be forced to pay for the “rewards programs” of those that do.


16 posted on 09/02/2008 9:05:43 AM PDT by Between the Lines (I am very cognizant of my fallibility, sinfulness, and other limitations.)
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To: reaganaut1

“Thrift is a virtue. People cutting back their spending to live within their means is not a problem for the government to solve.”

You are so very correct but, unfortunately, it is a problem for the government also in that they need to learn to do the same thing.


17 posted on 09/02/2008 9:09:33 AM PDT by RonInNaples
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To: reaganaut1

I saw some figures that showed that Americans aren’t any more in private debt today than they have been historically.

I’ve always feared that our economy was driven too much by people spending next year’s money today — meaning that next year they’d have to borrow even further into the future, and eventually the whole thing would crumble.

So I took heart that it seems things aren’t getting any worse.


18 posted on 09/02/2008 9:12:16 AM PDT by CharlesWayneCT
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To: reaganaut1
Paging Dave Ramsey:

Please pick up the white courtesy phone.

19 posted on 09/02/2008 9:24:40 AM PDT by MooseMan (This space intentionally left blank.)
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To: Wonder Warthog
The only problem with debit cards is that some places won't accept them. You can live just as "debt free" with credit cards---you just have to have the discipline to pay off the balance EVERY MONTH---IN FULL.

Unless I travel out of the country, I just don't experience that very often. The only time I've had it happen in the last couple of years was at a rental car place in Hawaii. A better argument for credit cards is that you can accumulate airline miles or rebates with them and you have more recourse if you are the victim of fraud.

20 posted on 09/02/2008 9:25:03 AM PDT by elmer fudd (Fukoku kyohei)
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