Saturday, September 20, 2008


I do not own a consumer credit card. I buy things only when I know I have the money to pay for them, despite the dozens of solicitations I receive in the mail from credit card companies every month. Of course, that does not mean I am not in debt. My education sank me into more debt than Best Buy or GMC ever could. There was no other way for me to go to school; I had to become a debtor. I did not have $35,000 in cash each year, so I went to the bank and applied for loans. Now, more than two years after beginning to pay back my loans, I actually owe more than the amount I initially borrowed. "How can that be?" you ask. Ah, there is a price to making minimum payments, namely: "accruing recapitalized interest." Basically, it means the interest gets added to the amount you borrowed. And bigger numbers yield more interest per month, so it's an upward spiral. There is no sense trying to fight this. It's all allowed under the fine print contract. And I signed the contract while technically sane, so the law favors the bank. Sure, I needed the money to go to school, but terms are terms. It doesn't matter why you signed; it only matters that you signed. In our system, you can bargain for anything, even if you do not remember--or even really know--what you signed. That's the law.

Still, I prefer not to grant power to a creditor unless I have to. I think my education was a wise credit purchase, even though I will be paying for it until I'm in my 60s. I feel I had no choice but debt in those circumstances. But I do have a choice whether to go into consumer debt, and that is why I don't own a credit card.

Consumer credit card companies are evil. They profit from the worst, most childlike impulses that lurk in human hearts. They encourage people to go into debt by deluding them into thinking they can "get things they want" without actually paying for them. We must not forget that American society is a pervasively commercial society. Every day, we see shiny new things on television. The images burn themselves onto our minds; it is sensory. Human beings respond to what they sense, and that is why we hunger to buy what we've perceived. Advertisers play to our senses. They show us things that excite us on some level; they tell us only good things about them, heightening our excitement. They appeal to our eyes and ears. Their sensory overtures excite our emotions, not our minds. It all adds up to a ceaseless sensory barrage calculated to make you want to buy things, without even really knowing why. Credit card companies provide the means to succumb to the "buying urge."

Credit card companies have completely hypnotized the American public. Most consumers do not realize what has happened to them until it is too late. Dazzled by the sensory parade that led them to the retailer, they do not read the contracts that reduce them to perpetual debtors. Consumers want to sate the commercial lust that advertisers awakened in them; and they will sign anything to do so. To lure consumers into signing obscenely unfair contracts, credit card companies employ a host of tactics. Today, I will address only one: the "free cash back" offer.

It goes something like this: A credit card company tells both existing and potential cardholders that it will "give them $100 free if they purchase more goods with their cards." Consumers, who rarely analyze commercial messages, jump at the chance to "get $100 free." So they run out and charge $1000 on their cards. In return, the credit card company reduces their outstanding balance by $100.

This is not "free money." In essence, the credit card company induced the consumer to incur $900 net debt for a $100 gain. Any ploy that makes you incur more debt will not allow you to make a net gain. The $100 was not "free;" you paid $900 for it. Sure, you might not have to pay the $900 all at once, but it is an interest-bearing kernel that will continue to yield profits for the credit card company for years to come. And if you default, the credit card company will sell your account to someone else; they will get paid somehow, and they have a legal right to every penny. You, by contrast, have no defense at all. So what good is your "free $100" then?

Why does this bother me? It bothers me for several reasons. First, I do not like the fact that credit card companies profit from reducing millions of Americans to financial servitude. This is a debtor nation. It is difficult to see how an economy can truly flourish when millions of people have net worth in the negative figures. That is the opposite of wealth.

Second, I do not like the fact that credit card companies prey on the commercial and sensory weaknesses of American consumers. In this country, people literally lust for material objects. Advertising and continuous sensory bombardment excite consumers into a buying frenzy, even when it is not financially possible for them to buy anything. Credit card companies furnish a means to succumb to this irrational commercial behavior. That behavior, in turn, enriches the credit card company while it reduces the consumer to perpetual debt. In essence, credit card companies make money by exploiting human weakness.

Third, I do not like the fact that credit card advertising conceals the truth. It is exceedingly difficult to ascertain the subtle distortions that underlie any commercial message. Credit card offers for "free cash back" or "no-interest financing" are not what they purport to be. States require advertisers to disclose the negative implications behind any claim, but those disclosures need not be conspicuous or obvious. Credit card companies take full advantage; they never explain that "free cash back" means actually incurring more debt and yielding even more financial control to the credit card company.

Finally, credit card companies enjoy far too much power in our society. There is no equality at all between the individual consumer and the massively powerful credit card company. The credit card company dictates all the terms and enjoys all the legal advantages. Credit card companies know their contract law. They know that contract law shields them from claims that their credit agreements are "unfair" because consumers "voluntarily" entered into them. Yet there is a difference between "legal unfairness" and "actual unfairness." Relationships between credit card companies and individual consumers are "actually unfair," even if the law considers them perfectly valid. It is unfair to saddle a consumer with 18% interest for missing one payment. It is unfair to force him to travel to distant States to attend arbitration in case of dispute. And it is unfair to mislead him into thinking he is making "Free Money" by incurring more debt. Common decency tell us this, not the law. In essence, credit card companies dominate their subjects with legally-sanctioned oppression. They have all the advantages, make all the money and bear almost no risk. And they get away with it because they prey on consumers' commercial weaknesses. It is a form of absolute, private, contractual tyranny.

Do not be a debtor unless you must be a debtor. Credit card companies can only achieve their grip on a consumer if the consumer takes the fateful step to enter the relationship. The problem is that all too many consumers take that step while burning with commercial lust. To avoid the prison of debt, you must use your reason and think critically. Credit card companies dissuade consumers from both. If you understand how credit card companies operate, you can avoid their chains. This is America, after all: We should have the power to resist private tyranny, no matter how much it entices us.

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